What's changing

 

Financial Reporting Act vs. Financial Markets Conduct Act obligations

Many of the requirements for FMC reporting entities under the Financial Markets Conduct Act (FMC Act) are similar to those for issuers under the Financial Reporting Act 1993 (FR Act). However, there are some key differences:

Key changes

  Currently (under FRA) FMC Reporting Entities
Entities with subsidiaries Have to prepare both parent entity and group financial statements. Will not have to prepare parent entity financial statements if they have subsidiaries – they will only need to prepare financial statements for their group
Time frames Five months for preparation and audit with an additional 20 working days for lodgement. Four months for preparation, audit and lodgement.
Overseas companies use of GAAP Allowed to use financial statements prepared under overseas GAAP if considered equivalent to NZ GAAP by the Companies Registrar. Not allowed to use financial statements prepared under overseas GAAP – unless specified in an exemption notice.
Public accountability designation All issuers are considered are publicly accountable and must report using full NZ GAAP eg, NZ IFRS. FMC Reporting Entities will be designated as having higher public accountability or not.  Those that do not have higher public accountability may be able to report using reduced disclosure standards.

FMC reporting entity obligations

As an FMC reporting entity, you will have to:

  • keep proper accounting records to help you prepare compliant financial statements — records must be kept in English and a copy must be kept in New Zealand
  • prepare financial statements for your group's operations — those financial statements must comply with generally accepted accounting practice in New Zealand
  • if you are a manager of one or more registered schemes, prepare financial statements for each scheme — those financial statements must comply with generally accepted accounting practice in New Zealand
  • have your financial statements audited by a licensed auditor or registered audit firm; and
  • lodge your financial statements and the audited report on them with the Companies Office within four months after your balance date.

Additional obligations for overseas companies that are FMC reporting entities

If you are a company incorporated outside New Zealand, you will also need to prepare, have audited and lodge financial statements for your New Zealand business (if any) that complies with generally accepted accounting practice in New Zealand. 

Exemptions

We can vary the reporting obligations of FMC reporting entities using our exemption and public accountability designation power.  See our exemptions page for more details.