1. Compliance
  2. Exemptions
  3. Financial reporting exemptions

Financial reporting exemptions

Page last updated: 29 July 2022

Exemptions policies

We have regulatory powers to grant financial reporting exemptions and vary public accountability designations.

Our aim is to find a balance between ensuring businesses provide appropriate financial information for those who need it and minimising costs for those providing it.

The FMA grants 2 types of exemptions:

  • individual exemptions for a specific business and related parties
  • class exemptions that cover a broad type of businesses.

Below is an overview of our key policies.

We may grant you an exemption from the requirement to prepare financial statements under NZ generally accepted accounting practice and the requirement to use a NZ qualified auditor if:

  • you prepare financial statements using high-quality accounting standards 
  • you are subject to appropriate financial reporting and audit regulation. This is more likely if you are listed and have an independent regulator 
  • we can obtain co-operation from your regulator if we need it. This is more likely if your regulator is a signatory to the International Organisation of Securities Commissions’ Multilateral Memorandum of Understanding on Consultation and Cooperation.

We may also provide relief to those that have NZ operations and who are required to prepare NZ business financial statements. These are sometimes referred to as branch financial statements. These financial statements are used by Inland Revenue and the Reserve Bank for their monitoring purposes therefore, we are unlikely to provide exemptions from these requirements. However, in some cases, we may allow you to prepare financial statements under overseas GAAP or use an overseas auditor.

The Financial Markets Conduct (Overseas FMC reporting entities) Exemption Notice 2021 is is an example of this policy in practice.

The table below details the overseas GAAP we consider provide high-quality information to investors and the jurisdictions with appropriate financial reporting and audit regulation.

Specified GAAP Specified jurisdictions
  • Australian IFRS
  • Canadian IFRS
  • Hong Kong FRS
  • IFRS (unmodified international standards)
  • Singapore Financial Reporting Standards
  • Australia
  • Canada
  • France 
  • Germany
  • Republic of Ireland
  • Republic of South Africa
  • Switzerland
  • Singapore
  • The Netherlands
  • United Kingdom
  • United States of America

Other exemptions for New Zealand and overseas businesses

Recipients of funds from conduit issuers

Sometimes regulated offers are made through special purpose vehicles or finance subsidiaries known as ‘conduit issuers'. These issuers loan most of the funds to related-parties.

In these situations, the related-parties are considered ‘recipients of funds from a conduit issuer’ and become FMC reporting entities in their own right. The cost of complying with the reporting requirements for all the related-parties can be extensive and unnecessary, when more relevant information for investors can be provided or is already available.

For example, a finance subsidiary raises debt and on-lends the funds to its parent and other subsidiaries. All the companies provide unconditional unlimited cross-guarantees and the group financial statements are audited and publicly available.

In this case, the group financial statements are likely to be a good representation of the group’s ability to meet the interest and principal payments. Therefore we may exempt the other subsidiaries from having to each prepare, have audited and lodge financial statements. Applications for exemptions in this situation are usually considered on a case-by-case basis.

Lodgement exemptions

Full exemption

Generally, if you are required to prepare financial statements under the FMC Act, you will have to lodge them in NZ. However, we may grant overseas businesses an exemption from lodgement if they have made offers where NZers are not the primary audience. The Financial Markets Conduct (Incidental offers) Exemption Notice 2021 is an example of this policy in practice.

Exemptions to extending lodgement deadlines

We may extend the deadline for lodging financial statements. However, thresholds are high and exemptions are rare. You need to have a compelling reason why you can’t comply with the 4 month period, or specific circumstances that make it inappropriate. Overseas businesses may have longer timeframes to prepare financial statements under overseas law, however, we don’t consider this sufficient on its own to grant exemptions.

Partial and technical exemptions

We may consider exemptions from the requirements if there are:

  • technical difficulties complying, or
  • difficulties with specific aspects.

Applications usually arise from specific circumstances. 

Class FMC Act exemptions in place

Below is an overview of selected class exemptions already in place. Before relying on any exemption, you should carefully read the notice and ensure you can meet all the conditions.

If you wish to apply for an individual exemption you will need to include a draft exemption notice with your application. We recommend reviewing other financial reporting exemptions as a starting point. These exemptions reflect our approach and can be adapted to your individual circumstances.

We can grant exemptions for accounting periods already completed. This is provided that it is in force before the financial statements were due to be lodged. If you’ve missed the lodgement date it’s too late to apply for an exemption.

Exemptions for overseas FMC reporting entities

Financial Markets Conduct (Overseas FMC Reporting Entities) Exemption Notice 2021

Effective from: 4/11/2021 – 3/11/2026
This exemption allows businesses listed in certain jurisdictions to use their overseas GAAP financial statements that have been audited by an overseas auditor to meet their main financial reporting requirements in NZ.
It also allows you to prepare your NZ business financial statements using overseas GAAP and you can have them audited by one of the following:

      • a NZ qualified auditor 
      • an auditor allowed or permitted in the overseas jurisdiction 
      • an auditor qualified under the laws of Australia.

Financial Markets Conduct (Overseas Registered Banks and Licensed Insurers) Exemption Notice 2021

Effective from 4/11/2021 - 3/11/2026
It allows overseas banks registered in NZ, and overseas insurers licensed in NZ, to use their overseas financial statements to meet the main requirements of the FMC Act. The notice does not remove any requirement to prepare, and have audited, separate branch financial statements for their NZ business, and these must be in NZ GAAP.  The auditor for these branch financial statements may be a NZ auditor or certain overseas auditors. 

Financial Markets Conduct (Incidental Offers) Exemption Notice 2021

Effective from: 18/11/2021 – 17/11/2026
Where an overseas listed issuer makes an offer to existing holders of securities , eg, a rights offer, NZ investors may incidentally receive that offer. Without an exemption, the standard requirements of the FMC Act would apply. This exemption relieves issuers listed in certain jurisdictions from the disclosure, governance, and financial reporting of the FMC Act for that offer. 

Other exemptions for New Zealand and overseas FMC reporting entities

FMC Act public accountability designations

Public accountability at a glance

Higher public accountability
Based on XRB Accounting Standards Framework full accounting standards will apply

Full NZ IFRS for for-profit entities, or full PBE standards for public benefit entities

  • Equity issuers who make a regulated offer (and have more than 50 shareholders)
  • Debt issuers who make a regulated offer
  • Licensed derivative issuers*
  • Licensed MIS managers (for the financial statements of the MIS they manage)
  • Listed issuers
  • Recipients of money from a conduit issuer*
  • Registered banks
  • Licensed insurers
  • Credit unions
  • Building societies
  • Managers of restricted schemes (for financial statements in respect of the restricted scheme)

Lower public accountability
Based on XRB Accounting Standards Framework reduced accounting standards will apply

NZ IFRS RDR for for-profit entities, or PBE standards RDR for most public benefit entities

  • Licensed MIS managers (for the manager’s own financial statements)
  • Licensed providers of DIMS (under the FMC Act)
  • Licensed peer-to-peer lending service providers
  • Licensed crowd funding service providers
  • Licensed supervisors
  • Licensed market operators (domestic)
  • Equity issuers who make a regulated offer (and have fewer than 50 shareholders)

 *The FMA has issued a notice to re-designate recipients of funds from conduit issuers and licensed derivative issuers to having higher public accountability. 

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