The concept of an 'FMC reporting entity' is broader than the definition of an 'issuer'.
FMC reporting entity types | Specifically: |
Issuers of financial products under-regulated offers | Those who make regulated offers under the FMC 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 and crowdfunding service providers |
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 |
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 FMC Act | People that have gained more than 50 shareholders through small offers under Schedule 1 of the FMC Act |
NOTE: We cannot exempt businesses from being an 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.
All FMC reporting entities must prepare their financial statements in line with the requirements in Part 7 of the FMC Act.
As an FMC reporting entity, you must do all of the following:
If you are an FMC reporting entity at any point during an accounting period, you are required to comply with these requirements for the full accounting period. Many of the requirements for FMC reporting entities are similar to those for issuers under the Financial Reporting Act 1993. Some of those key changes are:
Key changes | ||
Under the Financial Reporting Act | Under the Financial Markets Conduct Act | |
Entities with subsidiaries | Have to prepare both parent entity and group financial statements. | Do 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 | 5 months for preparation and audit with an additional 20 working days for lodgement. | 4 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. |
If you are a manager of one or more registered schemes, you will also need to prepare, have audited and lodge financial statements:
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.
We can vary the reporting obligations of FMC reporting entities using exemption notices and our public accountability variation power. For example, we have put in place exemptions that provide for:
For more details or to see if you qualify, see our financial reporting exemptions section.
We cannot exempt businesses from being an 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.
If an issuer makes a regulated offer of equity securities that are voting products, they are not an FMC reporting entity if they have:
Instead the obligations in the Companies Act 1993 apply.
Note: 'voting products' is a defined term and includes ordinary shares and certain products that are convertible to ordinary shares.
This means issuers of non-voting equity products won’t be able to take advantage of the statutory exemption under the FMC Act, even if they were able to use it 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 is useful to help how to count shareholders for this purpose.
There are exclusions under Schedule 1 of the FMC Act that allow some offers to be made without having to provide all the usual documentation required, ie product disclosure statements.
One of those exclusions is for small personal offers of debt and equity - see clause 12 of Schedule 1. It allows you to make small offers over a 12-month period that can, in total, involve up to 20 investors and raise up to $2 million without having to produce full documentation. Any offer that would result in you exceeding either or both those limits requires full documentation under part 3 of the FMC Act.
If, over several 12-month periods, you gain more than 50 shareholders from small offers, you'll become a FMC reporting entity.
Companies that raise capital through a licensed crowdfunding platform, relying on clause 6 of Schedule 1, are not considered FMC reporting entities. This is because the offer is not considered a ‘regulated offer’ under the FMC Act. Therefore, these companies will be subject to the financial reporting requirements under the Companies Act 1993.
Under Schedule 3 of the FMC Act we are allowed to approve single-person self-managed superannuation schemes that meet certain criteria (Schedule 3 Schemes).
These schemes are not FMC reporting entities therefore Part 7 does not apply. However, regulation 113 of the FMC Regulations requires these schemes to prepare financial statements that comply with generally accepted accounting practice and send a copy of these to the FMA.
To comply with this, we believe that NZ IAS 26 still applies including paragraph 1.5. Accordingly, we accept special purpose financial statements. The exact content of these is not prescribed and therefore is at the discretion of the trustees. We suggest special purpose financial statements include a profit and loss, balance sheet and cash flow statement, as well as appropriate accounting policies and notes that reflect the investments of the scheme.
Retirement village operators are not FMC reporting entities. The financial reporting obligations for retirement villages can be found in the Retirement Villages Act 2003.