“financial year, in relation to a society, means a year ending on a balance date of the society (within the meaning of section 40 of the Financial Reporting Act 2012), and if, as a result of the date of the incorporation of the society or a change of the balance date of the society, the period ending on that date is longer or shorter than a year, that longer or shorter period is a financial year”.

“applicable auditing and assurance standard has the same meaning as in section 5 of the Financial Reporting Act 2012

“financial statements has the same meaning as in section 6 of the Financial Reporting Act 2012

“generally accepted accounting practice has the same meaning as in section 8 of the Financial Reporting Act 2012”.

“Accounting records and financial reporting

“90 Accounting records must be kept

• “(1) Every society must ensure that there are kept at all times accounting records that—

  • “(a) correctly record the transactions of the society; and

  • “(b) will enable the society to ensure that the financial statements of the society comply with generally accepted accounting practice; and

  • “(c) will enable the financial statements of the society to be readily and properly audited.

  “(2) Every society must establish and maintain a satisfactory system of control of its accounting records.

  “(3) The accounting records must be kept—

  • “(a) in written form in English; or

  • “(b) in a form or manner in which they are easily accessible and convertible into written form in English.

“91 Financial statements must be prepared

• “(1) Every society must ensure that, within 3 months after the end of the financial year, financial statements that comply with generally accepted accounting practice are—

  • “(a) completed in relation to the society and that financial year; and

  • “(b) dated and signed on behalf of the society by 2 directors of the society.

  “(2) The directors of every society must ensure that the financial statements of the society are laid before the society at the annual general meeting.

“92 Half-yearly financial statements must be prepared

• “(1) Every society must ensure that, within 3 months after the end of the first half of the financial year, financial statements that comply with generally accepted accounting practice are—

  • “(a) completed in relation to the society and that first half of the financial year; and

  • “(b) dated and signed on behalf of the society by 2 directors of the society.

  “(2) The financial statements referred to in subsection (1) must be—

  • “(a) published in the manner, or distributed to the persons, that are prescribed; and

  • “(b) audited by a qualified auditor.”

“95 Directors' report

• “(1) The directors must prepare for submission at the annual general meeting a report on the state of the affairs of the society.

  “(2) The directors' report must be attached to the financial statements laid before that meeting.

  “(3) The directors of every society must ensure that every copy of the financial statements of the society referred to in section 91 that is issued, circulated, or published has attached to it, or is accompanied by,—

  • “(a) a copy of the directors' report; and

  • “(b) a copy of the auditor's report on those statements.

“96 Distribution of copies of financial statements and reports

• “(1) The directors of every society must ensure that a copy of the financial statements to be laid before the society at the annual general meeting, a copy of the auditor's report on those statements, and a copy of the directors' report are, not less than 14 days before the date of the meeting,—

  • “(a) sent to each member of the society; or

  • “(b) published in major daily newspapers circulating generally in those parts of New Zealand where members reside.

  “(2) The directors of every society must ensure that a copy of the directors' report is sent to the Registrar for registration within the time frame referred to in subsection (1).

  “(3) Subsection (1)(b) is subject to the society's rules and to any conditions or requirements that may be prescribed.

“97 Depositors and members entitled to be supplied with copy of financial statements

• “(1) Every depositor in or member of a society is entitled, on demand and without charge, to be supplied with copies of the last financial statements and reports of the society that are required to be laid before that society at the annual general meeting.

  “(2) The directors of the society must ensure that the depositor or member is sent copies of the financial statements and reports within 7 days after the demand is made.

  “(3) However, this section does not apply if the depositor in or member of the society—

  • “(a) has previously been sent copies of the financial statements and reports; or

  • “(b) has already demanded and received copies of the financial statements and reports under this section.

“97A Offences relating to half-yearly financial statements, directors' report, and distribution of financial statements

• “(1) If any of sections 92, 95, 96, and 97 are not complied with, every director of the society commits an offence and is liable on summary conviction to a fine not exceeding $10,000.

  “(2) It is a defence to a director of a society charged with an offence under this section in respect of a requirement referred to in section 92, 95, 96, or 97 if the director proves that—

  • “(a) the society took all reasonable and proper steps to ensure that the requirement would be complied with; or

  • “(b) the director took all reasonable steps to ensure that the requirement would be complied with; or

  • “(c) in the circumstances, the director could not reasonably have been expected to take steps to ensure that the requirement would be complied with.”

“100 Qualifications of auditors and access to information

• “(1) No person is qualified for appointment as auditor of a society unless he or she is a qualified auditor (within the meaning of section 34 of the Financial Reporting Act 2012).

  “(2) See sections 36 to 38 of the Financial Reporting Act 2012 (which provide for the appointment of a partnership and access to information in relation to a society).”

• “(2) An auditor must, in carrying out an audit for the purposes of subsection (1) or section 92, comply with all applicable auditing and assurance standards.

• “(3) The auditor's report must comply with the requirements of all applicable auditing and assurance standards.”

• “(2) The annual return of a charitable entity must—

  • “(a) be in the form, contain the particulars, and comply with the directions as to the preparation of those returns that are prescribed by the chief executive under section 42; and

  • “(b) be accompanied by a copy of the financial statements of the charitable entity (or, in the case of section 46(1A)(b), of each entity that forms part of the single entity) for the most recently completed accounting period.”

“42A Content of financial statements

• “(1) The financial statements referred to in section 41(2)(b) must be prepared in accordance with,—

  • “(a) in the case of financial statements of a specified non-profit not-for-profit entity, generally accepted accounting practice; or

  • “(b) in any other case, either generally accepted accounting practice or a non-GAAP standard that applies for the purposes of this section.

  “(2) In this section and sections 41 and 42B,—

  • “(a) specified non-profit not-for-profit entity has the meaning set out in section 45 of the Financial Reporting Act 2012:

  • “(b) accounting period, applicable financial reporting standard, financial statements, generally accepted accounting practice, and non-GAAP standard have the same meanings as in section 5 of the Financial Reporting Act 2012.

“42B Offence to knowingly fail to comply with standards

• A charitable entity and every officer of the charitable entity commits an offence and is liable on summary conviction to a fine not exceeding $50,000 if—

  • “(a) the financial statements of the charitable entity referred to in section 41(2)(b) fail to comply with an applicable financial reporting standard or a non-GAAP standard (as the case may be); and

  • “(b) the charitable entity or officer (as the case may be) knows, at the time that the financial statements accompany the annual return when it is sent or delivered under section 41, that the financial statements fail to so comply.”

• “(1A) If the duty under section 41 (duty to prepare annual return) is to be complied with by the parent entity in relation to the single entity, the terms and conditions under subsection (1) may provide that the financial statements that must accompany an annual return that is sent or delivered by the parent entity are prepared—

  • “(a) on a consolidated basis in respect of the single entity; or

  • “(b) separately in respect of each entity that forms part of the single entity.

• “(1B) The Board or the chief executive must, in deciding whether subsection (1A)(a) or (b) applies, take into account—

  • “(a) the needs of users of the financial statements; and

  • “(b) the purpose of this Act set out in section 3.”

“balance date, in relation to a company or an overseas company, has the same meaning as in section 40 of the Financial Reporting Act 2012”.

“financial statements has the same meaning as in section 6 of the Financial Reporting Act 2012”.

“group financial statements has the same meaning as in section 7 of the Financial Reporting Act 2012”.

“applicable auditing and assurance standard has the same meaning as in section 5 of the Financial Reporting Act 2012

“applicable financial reporting standard has the same meaning as in section 5 of the Financial Reporting Act 2012

“generally accepted accounting practice has the same meaning as in section 8 of the Financial Reporting Act 2012”.

• “(6) An example used in this Act is only illustrative of the provisions to which it relates. It does not limit those provisions.

• “(7) If an example and a provision to which it relates are inconsistent, the provision prevails.”

• “(i) the most recent financial statements of the company that are prepared under this Act or any other enactment (if any); and

• “(ia) the accounting records of the company; and”.

• “(i) the most recent financial statements of each amalgamating company that are prepared under this Act or any other enactment (if any); and

• “(ia) the accounting records of the amalgamating company; and”.

• “(1A) In subsection (1), relevant statements or records means—

  • “(a) financial statements of the company prepared for the most recently completed accounting period in accordance with generally accepted accounting practice; or

  • “(b) if those financial statements have not been prepared, the accounting records of the company.”

• “(1) The board of a company must call an annual meeting of shareholders to be held—

  • “(a) not later than 6 months after the balance date of the company; and

  • “(b) not later than 15 months after the previous annual meeting.

• “(2) However, a company does not have to hold its first annual meeting in the calendar year of its registration but must hold that meeting within 18 months after its registration.”

• “(a) in the case of a resolution under section 207H or 207I, the shareholders who together hold not less than 95% of the votes entitled to be cast on the resolution:”.

• “(h) copies of all financial statements and group financial statements required to be completed by this Act or any other enactment for the last 7 completed accounting periods of the company:”.

“Part 11
“Accounting records and financial reporting

“Subpart 1—Accounting records

“194 Accounting records must be kept

• “(1) The board of a company must ensure that there are kept at all times accounting records that—

  • “(a) correctly record the transactions of the company; and

  • “(b) will enable the company to ensure that the financial statements or group financial statements of the company comply with generally accepted accounting practice (if the company is required to prepare such statements under this Act or any other enactment); and

  • “(c) will enable the financial statements or group financial statements of the company to be readily and properly audited (if those statements are required to be audited).

  “(2) The board of a company must establish and maintain a satisfactory system of control of its accounting records.

  “(3) The accounting records must be kept—

  • “(a) in written form in English; or

  • “(b) in a form or manner in which they are easily accessible and convertible into written form in English.

  “(4) If the board of a company fails to comply with the requirements of this section, every director of the company commits an offence and is liable on conviction to the penalty set out in section 374(3).

“195 Place accounting records to be kept

• “(1) A company need not keep its accounting records in New Zealand.

  “(2) If the records are not kept in New Zealand,—

  • “(a) the company must ensure that accounts and returns for the operations of the company that satisfy the following requirements are sent to, and kept at, a place in New Zealand:

    • “(i) the accounts and returns must enable the preparation of the company's financial statements or group financial statements required by this Act or any other enactment; and

    • “(ii) the accounts and returns must enable the preparation of any other document required by this Act; and

  • “(b) notice of the place where the accounting records and the accounts and returns required under paragraph (a) are kept must be given to the Registrar.

  “(3) If a company fails to comply with subsection (2),—

  • “(a) the company commits an offence and is liable on conviction to the penalty set out in section 373(2):

  • “(b) every director of the company commits an offence and is liable on conviction to the penalty set out in section 374(2).

“Subpart 2—Financial reporting

“196 Overview

• “(1) This subpart imposes financial reporting requirements on—

  • “(a) every large company; and

  • “(b) every large overseas company that carries on business in New Zealand; and

  • “(c) every other company with 10 or more shareholders (unless the shareholders of the company opt out of compliance); and

  • “(d) every other company with fewer than 10 shareholders if shareholders of the company holding at least 5% of the voting shares require the company to comply.

  “(2) This section is only a guide to the general scheme and effect of this subpart.

“197 Non-application of subpart if alternative financial reporting duties under financial markets legislation

• This subpart does not apply to a company or an overseas company in relation to an accounting period if financial statements of the company or overseas company, or group financial statements of the group that comprises the company or overseas company and its subsidiaries, are required to be prepared for that period under any other Act that provides for the company or overseas company to prepare financial statements in accordance with generally accepted accounting practice.

“198 Interpretation

• In this subpart,—

  “large company means a company that is large under section 44 of the Financial Reporting Act 2012

  “large overseas company means a body corporate incorporated outside New Zealand that—

  • “(a) carries on business in New Zealand within the meaning of section 332; and

  • “(b) is large under section 44 of the Financial Reporting Act 2012

  “qualified auditor has the same meaning as in section 34 of the Financial Reporting Act 2012

  “subsidiary—

  • “(a) means a subsidiary within the meaning of sections 5 to 8; and

  • “(b) includes, except in section 207D, any entity that is classified as a subsidiary in any applicable financial reporting standard

  “voting share, in relation to a company, means a share in the company that confers a currently exercisable right to cast a vote at meetings of shareholders of the company, not being a right to vote that is exercisable only in 1 or more of the following circumstances:

  • “(a) during a period in which a payment or distribution (or part of a payment or distribution) in respect of the share is in arrears or some other default exists:

  • “(b) on a proposal that affects rights attached to the share:

  • “(c) during the liquidation of the company:

  • “(d) in respect of a special, immaterial, or remote matter that is inconsequential to control of the company.

“199 Determining number of shareholders

• “(1) For the purposes of this subpart and section 208, the number of shareholders that a company has, in relation to an accounting period, is the number of shareholders that hold voting shares as at the close of the first day of the period.

  “(2) Joint holders of a parcel of shares must be counted as a single shareholder.

  Example

  ABC Limited has an accounting period of 1 April 2014 to 31 March 2015. ABC Limited is not large (see section 44 of the Financial Reporting Act 2012).

  At the close of 1 April 2014, 16 shareholders hold ordinary voting shares. (The company also has 12 shareholders who hold non-voting preference shares, but non-voting shares are not relevant to the calculation under this section).

  Two of those shareholders hold their parcel of ordinary voting shares jointly. These shareholders are counted as a single shareholder.

  For the purposes of this subpart and section 208, ABC Limited has 15 shareholders in relation to the 1 April 2014 to 31 March 2015 period. This means that it must prepare financial statements, have those statements audited, and prepare an annual report unless it opts out of compliance under section 207H.

“Preparation of financial statements

“200 Application of preparation provisions

• “(1) Sections 201 and 202 apply to—

  • “(a) every large company; and

  • “(b) every large overseas company; and

  • “(c) every other company with 10 or more shareholders unless the company has opted out of compliance with the provision in accordance with section 207H; and

  • “(d) every other company with fewer than 10 shareholders if the company has opted into compliance with the provision in accordance with section 207J.

  “(2) However, section 201 does not apply to a company or an overseas company in relation to a balance date if the company or overseas company has, on that date, 1 or more subsidiaries and is required to prepare group financial statements under section 202.

“201 Financial statements must be prepared

• Every company or overseas company to which this section applies (A) must ensure that, within 3 5 months after the balance date of A, financial statements that comply with generally accepted accounting practice are—

  • “(a) completed in relation to A and that balance date; and

  • “(b) dated and signed on behalf of A by 2 directors of A, or, if A has only 1 director, by that director.

  “Compare: 1993 No 106 ss 10(1), 11(1)

“202 Group financial statements must be prepared

• “(1) Every company or overseas company to which this section applies (A) that has, on the balance date of A, 1 or more subsidiaries must ensure that, within 3 5 months after that balance date, group financial statements that comply with generally accepted accounting practice are—

  • “(a) completed in relation to that group and that balance date; and

  • “(b) dated and signed on behalf of A by 2 directors of A, or, if A has only 1 director, by that director.

  “(2) Group financial statements are not required under subsection (1) in relation to a balance date if,—

  • “(a) on the balance date, A is a subsidiary of a body corporate that is incorporated in New Zealand (B); and

  • “(b) group financial statements in relation to a group comprising B, A, and all other subsidiaries of B that comply with generally accepted accounting practice are completed in relation to that balance date under this Act or any other enactment.

  “Compare: 1993 No 106 ss 13(1), 14(1)

“203 Recognition of financial reporting requirements of overseas countries

• “(1) Subsection (2) applies if the Registrar notifies a large overseas company (A) that the Registrar is satisfied that—

  • “(a) the financial statements of A comply with the requirements of the law in force in the country where A is incorporated or constituted; and

  • “(b) those requirements are—

    • “(i) substantially the same as those of this Act; or

    • “(ii) sufficiently equivalent, in relation to the quality of financial reporting they achieve, to the requirements of this Act.

  “(2) The financial statements must be treated as complying with generally accepted accounting practice.

  “(3) Subsection (4) applies if the Registrar notifies a large overseas company (A) that the Registrar is satisfied that—

  • “(a) the group financial statements of the group that comprises A and its subsidiaries comply with the law in force in the country where A is incorporated or constituted; and

  • “(b) those requirements are—

    • “(i) substantially the same as those of this Act; or

    • “(ii) sufficiently equivalent, in relation to the quality of financial reporting they achieve, to the requirements of this Act.

  “(4) The group financial statements must be treated as complying with generally accepted accounting practice.

  “Compare: 1993 No 106 ss 11(3), 14(5)

“204 Financial statements for overseas company must include financial statements for large New Zealand business

• “(1) If an overseas company is required to prepare financial statements under section 201 and its New Zealand business is large, the financial statements that are prepared must include, in addition to the financial statements of the overseas company, financial statements for its New Zealand business prepared as if that business were conducted by a company formed and registered in New Zealand.

  “(2) If an overseas company is required to prepare group financial statements under section 202 and the group's New Zealand business is large, the group financial statements that are prepared must include, in addition to the financial statements of the group, financial statements for the group's New Zealand business prepared as if the members of the group were companies formed and registered in New Zealand.

  “(3) In this section, the New Zealand business or the group's New Zealand business is large in respect of an accounting period if at least 1 of the following paragraphs applies (calculated as if that business were an entity):

  • “(a) as at the balance date of each of the 2 preceding accounting periods, the total assets of the business exceed $60 million:

  • “(b) in each of the 2 preceding accounting periods, the total revenue of the business exceeds $30 million.

  “(4) A financial reporting standard (or a part of a standard) issued by the External Reporting Board that is expressed as applying for the purposes of subsection (3) must be applied in determining whether that provision applies.

  “Compare: 1993 No 106 ss 8(2), 9(2)

“205 Balance date of subsidiaries

• “(1) The board of a company or an overseas company that is required to comply with section 202 must ensure that, unless in the board's opinion there are good reasons against it, the balance date of each subsidiary of the company is the same as the balance date of the company.

  “(2) If the balance date of a subsidiary of a company or an overseas company referred to in subsection (1) is not the same as that of the company, the balance date of the subsidiary for the purposes of any particular group financial statements must be a date that precedes the balance date of the company.

  “Compare: 1993 No 106 s 7(7), (11)

“Audit of financial statements

“206 Application of audit requirement

• “(1) Section 207 applies to—

  • “(a) every large company unless the company has opted out of compliance with that section in accordance with section 207I subsection (2) applies; and

  • “(b) every large overseas company; and

  • “(c) every company with 10 or more shareholders unless the company has opted out of compliance with that section in accordance with section 207H; and

  • “(d) every company with fewer than 10 shareholders if the company has opted into compliance with the section in accordance with section 207J.

  “(2) Subsection (1)(a) does not apply to a large company (A) if—

  • “(a) A has opted out of compliance with section 207 in accordance with section 207I; or

  • “(b) the following requirements are satisfied:

    • “(i) A is a wholly-owned subsidiary of another company or of a large overseas company (B):

    • “(ii) group financial statements in relation to a group comprising B, A, and all other subsidiaries of B that comply with generally accepted accounting practice are completed and signed within the time specified in section 202; and

    • “(iii) a copy of the group financial statements referred to in subparagraph (ii) and a copy of the auditor's report on those statements are delivered for registration under this Act or for lodgement under another Act.

“207 Financial statements must be audited

• “(1) Every company or overseas company to which this section applies (A) must ensure that the financial statements or group financial statements prepared in respect of A under section 201, 202, or 204 (if any) are audited by a qualified auditor.

  “(2) See sections 36 to 38 of the Financial Reporting Act 2012 (which provide for the appointment of a partnership and access to information in relation to a company or an overseas company).

“207A Audit must be carried out in accordance with auditing and assurance standards

• “(1) An auditor must, in carrying out an audit for the purposes of section 207, comply with all applicable auditing and assurance standards.

  “(2) Subsection (3) applies if the Registrar notifies a large overseas company (A) that the Registrar is satisfied that standards relating to auditing or assurance that are in force in the country where A is incorporated or constituted (the overseas standards) are—

  • “(a) substantially the same as the applicable auditing and assurance standards referred to in subsection (1); or

  • “(b) sufficiently equivalent, in relation to the quality of auditing they achieve, to the applicable auditing and assurance standards referred to in subsection (1).

  “(3) The auditor of A's financial statements or group financial statements may, in carrying out the audit of those statements and in preparing the auditor's report, comply with the overseas standards instead of the applicable auditing and assurance standards.

“207B Auditor must report to shareholders

• “(1) The auditor of a company must make a report to the shareholders on the financial statements or group financial statements audited by the auditor.

  “(2) The auditor's report must comply with the requirements of all applicable auditing and assurance standards.

  “(3) Subsection (2) is subject to section 207A(3).

“207C Auditor's report must be sent to Registrar and External Reporting Board if requirements have not been complied with

• If the auditor's report indicates that the requirements of this Act have not been complied with, the auditor must, within 7 working days after signing the report, send a copy of the report and a copy of the financial statements or group financial statements to which it relates to the Registrar and the External Reporting Board.

  “Compare: 1993 No 106 s 16(2)

“Registration of financial statements of overseas companies and other companies with significant overseas ownership

“207D Application of registration provisions

• “(1) Section 207E applies to each of the following:

  • “(a) every large overseas company:

  • “(b) every large company in which shares that in aggregate carry the right to exercise or control the exercise of 25% or more of the voting power at a meeting of the company are held by—

    • “(i) a subsidiary of a body corporate incorporated outside New Zealand; or

    • “(ii) a body corporate incorporated outside New Zealand; or

    • “(iii) a person not ordinarily resident in New Zealand.

  • “(c) every company that—

    • “(i) is a subsidiary of a body corporate incorporated outside New Zealand; and

    • “(ii) is required to prepare financial statements or group financial statements under this Act.

  “(2) However, section 207E does not apply to a company or an overseas company (A) if the following requirements are satisfied:

  • “(a) A is a subsidiary of a company that is incorporated in New Zealand (B); and

  • “(b) group financial statements in relation to a group comprising B, A, and all other subsidiaries of B that comply with generally accepted accounting practice are completed and signed within the time specified in section 202; and

  • “(c) a copy of the group financial statements referred to in paragraph (b) and a copy of the auditor's report on those statements are delivered for registration under this Act or for lodgement under another Act.

  “(3) For the purposes of subsection (1), a person is ordinarily resident in New Zealand if that person—

  • “(a) is domiciled in New Zealand; or

  • “(b) is living in New Zealand and the place where that person usually lives, and has been living for the immediately preceding 12 months, is in New Zealand, whether or not that person has on occasions been away from New Zealand during that 12-month period.

  “Compare: 1993 No 106 s 19(1), (2)

“207E Financial statements must be registered

• “(1) A company or an overseas company to which this section applies must ensure that, within 20 working days after its financial statements or group financial statements under section 201, 202, or 204 are required to be signed 5 months after the balance date of the company or overseas company, copies of those statements its financial statements or group financial statements completed in relation to that balance date under section 201, 202, or 204 together with a copy of the auditor's report on those statements (if any) are delivered to the Registrar for registration.

  “(2) The company or overseas company must, when the financial statements or group financial statements are registered, pay to the Registrar the prescribed registration fee (if any).

  “(3) Any person may, on payment of the prescribed fee (if any), inspect the copies of the financial statements, group financial statements, and auditor's report on those statements delivered to the Registrar under this section.

  “Compare: 1993 No 106 s 19(3)

“Shareholders may request copy of financial statements prepared for tax purposes

“207EA Shareholders may request copy of financial statements prepared for tax purposes

• “(1) This section applies if—

  • “(a) neither financial statements in relation to a company, nor group financial statements in relation to a company's group, are prepared under this Act or an enactment referred to in section 197; but

  • “(b) financial statements in relation to the company, or group financial statements in relation to its group, are prepared under, or for the purposes of, any of the Inland Revenue Acts (as defined in section 3(1) of the Tax Administration Act 1994).

  “(2) A shareholder of the company may at any time make a written request to the company for a copy of the financial statements or group financial statements (or both) referred to in subsection (1)(b).

  “(3) The company must, within 10 working days of receiving a request under subsection (2), provide, free of charge, a copy of the financial statements or group financial statements (or both) to the shareholder together with a copy of the auditor's report on those statements (if any).

“Financial reporting offences

“207F Financial reporting offences

• “(1) This section applies if—

  • “(a) a company or an overseas company is required to comply with section 201 and financial statements of the company or overseas company—

    • “(i) are not completed and signed within the time specified in that section; or

    • “(ii) fail to comply with an applicable financial reporting standard; or

  • “(b) a company or an overseas company is required to comply with section 202 and group financial statements of a group comprising the company or overseas company and its subsidiaries—

    • “(i) are not completed and signed within the time specified in that section; or

    • “(ii) fail to comply with an applicable financial reporting standard; or

  • “(c) an overseas company is required to comply with section 204 and the financial statements or group financial statements referred to in that section—

    • “(i) are not completed and signed within 3 5 months after the balance date of the overseas company; or

    • “(ii) fail to comply with an applicable financial reporting standard; or

  • “(d) a company or an overseas company fails to comply with section 207 (which relates to auditing); or

  • “(e) a company or an overseas company fails to comply with section 207E (which relates to registration of financial statements); or

  • “(f) a company fails to comply with section 207EA (which relates to the supply of copies of financial statements prepared for tax purposes).

  “(2) The company or overseas company commits an offence and is liable on summary conviction to a fine not exceeding $50,000.

  “(3) Every director of the company or overseas company commits an offence and is liable on conviction to the penalty set out in section 374(3).

  “(4) See section 376(2) (which provides defences to directors in respect of an offence under this section).

  “Compare: 1993 No 106 ss 36, 38, 39

“Provisions relating to opting out and opting in

“207G Period during which company may opt in or opt out

• In sections 207H to 207J, the opting period, in relation to the accounting period referred to in section 207H(3), 207I(3), or 207J(2), is the period from the start of the accounting period until the close of the earlier of the following dates:

  • “(a) the date that is 6 months after the start of the accounting period:

  • “(b) the date of the annual meeting to be held in the accounting period:

  • “(c) in the case of an accounting period that is shorter than 6 months (as a result of the date of the registration of the company or a change of the balance date of the company), the balance date of the period.

“207H Companies with 10 or more shareholders may opt out

• “(1) This section applies to a company with 10 or more shareholders.

  “(2) However, this section does not apply—

  • “(a) if the constitution of the company expressly provides that this section does not apply; or

  • “(b) to a large company.

  “(3) The shareholders of the company may, at a meeting of shareholders held within the opting period, opt out of compliance with 1 or more of the following provisions in relation to the accounting period by way of a resolution approved by a majority of not less than 95% of the votes of those shareholders entitled to vote and voting on the question:

  • “(a) sections 201 and 202 (preparation of financial statements and group financial statements):

  • “(b) section 207 (audit requirement):

  • “(c) section 208 (obligation to prepare annual report).

  “(4) If the shareholders opt out of compliance with a provision in relation to an accounting period under this section, the provision does not apply to the company in relation to that period.

  Example

  ABC Limited has an accounting period of 1 April 2014 to 31 March 2015.

  ABC Limited is not a large company in relation to that period (see section 44 of the Financial Reporting Act 2012).

  Under section 199, it has 15 shareholders.

  The opting period ends no later than the close of the date of the annual meeting to be held in that period. At the annual meeting, a resolution to opt out of the preparation provisions (sections 201 and 202) is passed by a 95% majority. Accordingly, ABC Limited does not have to prepare financial statements for that period (section 207, which relates to auditing, also does not apply because financial statements are not required to be prepared).

“207I Large companies may opt out of audit requirement

• “(1) This section applies to a large company.

  “(2) However, this section does not apply if—

  • “(a) the constitution of the company expressly provides that this section does not apply; or

  • “(b) the company is required to register financial statements under section 207E.

  “(3) The shareholders of the company may, at a meeting of shareholders held within the opting period, opt out of compliance with section 207 in relation to the accounting period by way of a resolution approved by a majority of not less than 95% of the votes of those shareholders entitled to vote and voting on the question.

  “(4) If the shareholders opt out of compliance with section 207 in relation to an accounting period under this section, that section does not apply to the company in relation to that period.

“207J Companies with fewer than 10 shareholders may opt in

• “(1) This section applies to a company (other than a large company) with fewer than 10 shareholders.

  “(2) Shareholders of the company who together hold not less than 5% of the voting shares may, by written notice given to the company within the opting period but not later than 5 working days before the end of that period, require the company to comply with 1 or more of the following provisions in relation to the accounting period:

  • “(a) section 201 or 202 (preparation of financial statements or group financial statements):

  • “(b) section 207 (audit requirement):

  • “(c) section 208 (obligation to prepare annual report).

  “(3) If a notice is given under subsection (2) in relation to a provision and an accounting period, the provision applies to the company in relation to that period.

“Registrar may grant exemptions to overseas companies

“207JA Registrar may grant exemptions to overseas companies

• “(1) The Registrar may, by notice in the Gazette, exempt any large overseas company, or any class of large overseas companies, from compliance with any provision of sections 201, 202, 204, 207, and 207E.

  “(2) The Registrar must not grant an exemption under this section unless he or she is satisfied that—

  • “(a) compliance with the relevant provision would require the overseas company to comply with requirements that are unduly onerous or burdensome; and

  • “(b) the extent of the exemption is not broader than what is reasonably necessary to address the matters that gave rise to the exemption.

  “(3) The exemption may be granted on any terms and conditions that the Registrar thinks fit.

  “(4) The Registrar may vary or revoke an exemption in the same way as an exemption may be granted under this section.

  “Compare: 1993 No 106 s 35B(1)–(3), (5)

“207JB Publication and status of exemptions

• “(1) The Registrar may give notice of the exemption in any publications he or she thinks fit (in addition to notifying the exemption in the Gazette).

  “(2) Each notice published in the Gazette under this section is a disallowable instrument, but not a legislative instrument, for the purposes of the Legislation Act 2012 and must be presented to the House of Representatives under section 41 of that Act.

  “(3) The Registrar's reasons for granting an exemption (including why the exemption is appropriate) must be notified in the Gazette together with the exemption.

  “Compare: 1993 No 106 s 35B(4), (6), (7)

“207JC Consultation

• In deciding whether or not to grant, amend, or revoke an exemption under section 207JA, the Registrar—

  • “(a) may consult with any persons or organisations that the Registrar thinks fit; but

  • “(b) must consult with the Commissioner of Inland Revenue if the exemption involves any provision of section 201, 202, or 204.

  “Compare: 1993 No 106 s 35C

“207JD Exemption may apply to accounting period before exemption is granted

• An exemption under section 207JA may, if the Registrar thinks fit, apply to an accounting period that commenced before the exemption is granted (including an accounting period that ended before the exemption is granted) if the exemption is granted before financial statements or group financial statements for that period are required to be delivered for registration under section 207E.

  “Compare: 1993 No 106 s 35D

“Subpart 3—Miscellaneous auditing provisions

“207K Auditor must be appointed if financial statements must be audited

• “(1) This section applies to a company in relation to an accounting period if financial statements or group financial statements of the company for that period are required to be audited under this Act or any other enactment.

  “(2) A company must, at the annual meeting held in the accounting period referred to in subsection (1), appoint a qualified auditor to—

  • “(a) hold office from the conclusion of the meeting until the conclusion of the next annual meeting; and

  • “(b) audit the financial statements or group financial statements referred to in subsection (1).

  “(3) However, if a company is a public entity as defined in section 5 of the Public Audit Act 2001, the Auditor-General is its auditor in accordance with that Act and subsection (2) does not apply.

  “(4) The first auditor of a company may be appointed by the directors of the company before the first annual meeting, and, if so appointed, holds office until the conclusion of that meeting.

“207L Registrar may appoint auditor

• “(1) The Registrar may appoint an auditor if,—

  • “(a) at an annual meeting of a company, no auditor is appointed or reappointed as required by section 207K; or

  • “(b) a casual vacancy in the office of auditor is not filled within 1 month of the vacancy occurring and the company is required to comply with section 207K.

  “(2) A company must, within 5 working days of the power becoming exercisable, give written notice to the Registrar of the fact that the Registrar is entitled to appoint an auditor under this section.

  “(3) If a company fails to comply with subsection (2),—

  • “(a) the company commits an offence and is liable on conviction to the penalty set out in section 373(2); and

  • “(b) every director of the company commits an offence and is liable on conviction to the penalty set out in section 374(2).

“207M Resignation and casual vacancy

• “(1) An auditor may resign at any time by giving written notice to the board of the company, and the company must, as soon as practicable, notify its shareholders of the auditor's resignation.

  “(2) If a company fails to comply with subsection (1), every director of the company commits an offence and is liable on conviction to the penalty set out in section 374(2).

  “(3) The board of a company may fill any casual vacancy in the office of auditor, but while the vacancy remains the surviving or continuing auditor, if any, may continue to act as auditor.

“207N Auditors' fees and expenses

• The fees and expenses of an auditor of a company must be fixed,—

  • “(a) if the auditor is appointed at a meeting of the company, by the company at the meeting or in the manner that the company determines at the meeting:

  • “(b) if the auditor is appointed by the directors, by the directors:

  • “(c) if the auditor is appointed by the Registrar, by the Registrar:

  • “(d) if the auditor is the Auditor-General, in accordance with the Public Audit Act 2001.

“207O Automatic reappointment

• “(1) An auditor of a company, other than an auditor appointed under section 207K(4), is automatically reappointed at an annual meeting of the company unless—

  • “(a) the auditor is not a qualified auditor; or

  • “(b) the company passes a resolution at the meeting appointing another person to replace him or her as auditor; or

  • “(c) the company is not required to appoint an auditor at the meeting (see section 207K); or

  • “(d) the auditor has given notice to the company that he or she does not wish to be reappointed.

  “(2) An auditor is not automatically reappointed if the person who it is proposed will replace him or her dies, or is or becomes incapable of, or disqualified from, appointment.

“207P Replacement of auditor

• “(1) A company must not appoint a new auditor in the place of an auditor who is a qualified auditor, unless—

  • “(a) at least 20 working days' written notice of a proposal to do so has been given to the auditor; and

  • “(b) the auditor has been given a reasonable opportunity to make representations to the shareholders on the appointment of another person either in writing or by the auditor or his or her representative speaking at a shareholders' meeting (whichever the auditor may choose).

  “(2) The auditor is entitled to be paid by the company reasonable fees and expenses for making the representations to shareholders.

“207Q Auditor not seeking reappointment or resigning

• “(1) If an auditor gives the board of a company written notice that he or she does not wish to be reappointed or of his or her resignation, the board must, if requested to do so by that auditor,—

  • “(a) distribute, as soon as practicable, to all shareholders, at the expense of the company, a written statement of the auditor's reasons for his or her wish not to be reappointed or for his or her resignation; or

  • “(b) permit the auditor or his or her representative to explain at a shareholders' meeting the reasons for wishing not to be reappointed or for resigning.

  “(2) An auditor is entitled to be paid by the company reasonable fees and expenses for making the representations to shareholders.

“207R Auditor's attendance at shareholders' meeting

• “(1) The board of a company must ensure that an auditor of the company—

  • “(a) is permitted to attend a meeting of shareholders of the company; and

  • “(b) receives the notices and communications that a shareholder is entitled to receive that relate to a meeting of shareholders; and

  • “(c) may be heard at a meeting of shareholders that he or she attends on any part of the business of the meeting that concerns him or her as auditor.

  “(2) If the board of a company fails to comply with subsection (1), every director of the company commits an offence and is liable on conviction to the penalty set out in section 374(2).

“Subpart 4—Infringement offence for failing to register financial statements

“207S Interpretation in this subpart

• In this subpart,—

  “infringement fee, in relation to an infringement offence, means $7,000

  “infringement notice means a notice issued under section 207U

  “infringement offence means an offence against under section 207F(1)(e) (which relates to failing to register financial statements).

“207T Infringement offences

• “(1) If a person is alleged to have committed an infringement offence, that person may either—

  • “(a) be proceeded against summarily for the alleged offence under the Summary Proceedings Act 1957; or

  • “(a) be proceeded against by filing a charging document under section 14 of the Criminal Procedure Act 2011; or

  • “(b) be served with an infringement notice as provided in section 207U.

  “(2) Despite section 21 of the Summary Proceedings Act 1957, leave of a District Court Judge or Registrar to lay an information is not necessary if the Registrar proceeds with an infringement offence summarily.

  “(2) Proceedings commenced in the way described in subsection (1)(a) do not require leave of a District Court Judge or Registrar under section 21(1)(a) of the Summary Proceedings Act 1957.

“207U Infringement notices

• “(1) The Registrar may issue an infringement notice to a person if the Registrar believes on reasonable grounds that the person is committing, or has committed, an infringement offence.

  “(2) The Registrar may revoke an infringement notice before the infringement fee is paid, or before an order for payment of a fine is made or deemed to be made by a court under section 21 of the Summary Proceedings Act 1957.

  “(3) An infringement notice is revoked by giving written notice to the person to whom it was issued that the notice is revoked.

“207V Procedural requirements for infringement notices

• “(1) An infringement notice may be served on a person—

  • “(a) by delivering it, or a copy of it, personally to the person who appears to have committed the infringement offence; or

  • “(b) by sending it, or a copy of it, by post, addressed to the person at the person's last known place of residence or business.

  “(2) An infringement notice sent under subsection (1)(b) must be treated as having been served on the person on the date it was posted.

  “(3) An infringement notice must be in the prescribed form and must contain—

  • “(a) details of the alleged infringement offence that are sufficient to fairly inform a person of the time, place, and nature of the alleged infringement offence; and

  • “(b) the amount of the infringement fee; and

  • “(c) an address at which the infringement fee may be paid; and

  • “(d) the time within which the infringement fee must be paid; and

  • “(e) a summary of the provisions of section 21(10) of the Summary Proceedings Act 1957; and

  • “(f) a statement that the person served with the notice has a right to request a hearing; and

  • “(g) a statement of what will happen if the person served with the notice does not pay the fee and does not request a hearing; and

  • “(h) any other prescribed matters.

  “(4) If an infringement notice has been issued, proceedings in respect of the infringement offence to which the notice relates may be commenced in accordance with section 21 of the Summary Proceedings Act 1957 and, in that case,—

  • “(a) reminder notices may be prescribed under regulations made under this Act; and

  • “(b) in all other respects, section 21 of the Summary Proceedings Act 1957 applies with all necessary modifications.

  “(5) Reminder notices must contain the prescribed information.

“207W Payment of infringement fee

• The Registrar must pay all infringement fees received into a Crown Bank Account.”