Who needs to comply

 

 

The concept of a 'FMC reporting entity' is broader than the definition of an 'issuer' under the Financial Reporting (FRA) Act 1993, although it doesn't cover all financial market participants.

For 'FMC reporting entity' the definition:

  • includes most entities who were 'issuers' previously, as well as most market service license holders under the Financial Markets Supervisors Act and FMC Act.
  • does not include - brokers, QFEs, financial adviser businesses, licensed auditors and audit firms, licensed independent trustees, retirement village operators or certain closely-held equity issuers.

FMC reporting entities

Issuers of financial products under regulated offers

- those who make regulated offers under the FMC Act and, subject to a transitional period, those who made public offers under the Securities Act

- except closely-held companies that are only FMC reporting entities as equity issuers 

Market services licensees (except independent trustees of restricted schemes)

- MIS managers, DIMS providers, derivatives issuers, providers of peer-to-peer lending services and crowd funding services
Licensed supervisors - under the Financial Markets Supervisors Act 2011
Listed issuers - those listed on a market licensed under the FMC Act
Operators of licensed markets - except overseas-regulated markets
Recipients of money from conduit issuers - recipients of funds from regulated offers under the FMC Act and, subject to a transitional period, recipients of money from public offers under the Securities Act
Registered banks - under the Reserve Bank of New Zealand Act 1989
Licensed insurers - under the Insurance (Prudential Supervision) Act 2010
Credit unions - under the Friendly Societies and Credit Unions Act 1982
Building societies - under the Building Societies Act 1965
People specified in regulations under clause 27A of Schedule 1 of the Act - people that have gained more than 50 shareholders through small offers under Schedule 1 of the FMC Act

We cannot exempt entities from being a FMC reporting entity, but we can vary their reporting obligations using our exemption and public accountability designation power. See our exemptions section for more details.

Some extra points

One-person superannuation schemes

Schedule 3 of the Financial Markets Conduct Act 2013 allows the FMA to approve single-person self-managed superannuation schemes that meet certain criteria (Schedule 3 Schemes). Previously, these types of schemes were not ‘issuers’ as defined in the now repealed Financial Reporting Act 1993 and could prepare special purpose financial statements where scheme members are able to obtain special purpose information that meets their needs. This is permitted by NZ IAS 26 Accounting and Reporting by Retirement Benefit Plans paragraph 1.5.

Schedule 3 Schemes are not FMC reporting entities therefore Part 7 does not apply. Regulation 113 of the Financial Markets Conduct Regulations 2014 requires Schedule 3 Schemes to prepare financial statements that comply with generally accepted accounting practice and send a copy of these financial statements to the FMA. In complying with  this requirement we consider that NZ IAS 26 still applies including paragraph 1.5. Accordingly we are accepting special purpose financial statements. The exact content of the special purpose financial statement is not prescribed and therefore is at the discretion of the trustees. As such, we suggest special purpose financial statements include a profit and loss, balance sheet, cash flow statement, as well as appropriate accounting policies and notes that reflect the investments of the scheme.

Retirement villages

Retirement village operators were considered issuers under the Financial Reporting Act 1993. However, retirement village operators are not FMC reporting entities under the FMC Act. There is no need for retirement village operators to opt into the FMC Act.

The Financial Reporting Act 1993 ceased to apply to retirement village operators for accounting periods beginning on or after 1 April 2014. The financial reporting obligations for retirement villages can be found in the Retirement Villages Act 2003.

Small to medium DIMS providers

Closely-held equity issuers

If a company is an FMC reporting entity as a result of issuing equity securities that are voting products, they do not fall under the ‘FMC reporting entities’ reporting requirement if the entity has:

  • 50 or fewer shareholders; or
  • fewer than 50 parcels of shares

Instead the obligations in the Companies Act 1993 will apply.

Note, this is an increase from the Financial Reporting Act 1993 similar exception, of 25 shareholders. Under the FMC Act, however, the shares must be voting products. Voting products is a defined term and includes ordinary shares and certain products that are convertible to ordinary shares.

This means that issuers of non-voting equity products will not be able to take advantage of this statutory exemption under the FMC Act, even if they were able to use the exemption under the Financial Reporting Act 1993.

The 50-shareholder or parcels-of-shares rules are consistent with the Takeovers Code. The Takeovers Panel’s Guidance Note on Small Code Companies (April 2013) is useful to help you with how to count shareholders for this purpose.