Financial Markets Conduct (Dual-listed FMC Reporting Entities) Exemption Notice 2015

2015/121

Coat of Arms of New Zealand

Financial Markets Conduct (Dual-listed FMC Reporting Entities) Exemption Notice 2015

Pursuant to section 556 of the Financial Markets Conduct Act 2013, the Financial Markets Authority, being satisfied of the matters set out in section 557 of that Act, gives the following notice.

Notice

1 Title

This notice is the Financial Markets Conduct (Dual-listed FMC Reporting Entities) Exemption Notice 2015.

2 Commencement

This notice comes into force on 29 May 2015.

3 Revocation

This notice is revoked on the close of 28 May 2020.

4 Application

An exemption granted by this notice applies to the following accounting periods of an exempt issuer:

(a)

an accounting period of the issuer that commenced before the exemption is granted (including an accounting period that ended before the exemption is granted) if the exemption is granted before the financial statements or group financial statements for that period would be required to be delivered to the Registrar for lodgement under section 461H of the Act; and

(b)

subsequent accounting periods.

5 Interpretation

(1)

In this notice, unless the context otherwise requires,—

approved auditor, in relation to an exempt issuer, means an accountant who is qualified under the law of the relevant jurisdiction to give an opinion as to whether financial statements or group financial statements comply with an overseas GAAP required or permitted in that jurisdiction

exempt issuer has the meaning set out in subclause (2)

International Financial Reporting Standards means—

(a)

International Financial Reporting Standards, International Accounting Standards, and Standing Interpretations Committee interpretations that have been adopted by the International Accounting Standards Board in accordance with the constitution of the International Financial Reporting Standards Foundation; and

(b)

final interpretations by the International Financial Reporting Standards Interpretations Committee approved by the International Accounting Standards Board in accordance with that constitution

overseas GAAP, in relation to an exempt issuer, means generally accepted accounting practice or principles specified in Schedule 1 that is or are required or permitted in the relevant jurisdiction

overseas market means a financial product market that—

(a)

is authorised to operate in a jurisdiction specified in Schedule 2; and

(b)

has its principal place of business in that jurisdiction

relevant jurisdiction, in relation to an exempt issuer, means the jurisdiction specified in Schedule 2 in which the overseas market referred to in subclause (2)(d) has its principal place of business.

(2)

In this notice, an entity is an exempt issuer if—

(a)

it is a listed issuer; and

(b)

it is incorporated outside New Zealand; and

(c)

financial products of the entity are approved for trading on an overseas market; and

(d)

the overseas market has primary jurisdiction for the listing requirements for the entity and the quotation of its financial products; and

(e)

it is not a registered bank or a licensed insurer.

(3)

Any term or expression that is defined in the Act or the Regulations and used, but not defined, in this notice has the same meaning as in the Act or the Regulations.

6 Exemptions

Every exempt issuer is exempted from—

(a)

sections 455(1)(c), 461B, 461D, and 461G of the Act; and

(b)

sections 460 and 461 of the Act to the extent that those sections require the exempt issuer to ensure that its financial statements, or group financial statements, comply with generally accepted accounting practice; and

(c)

in the case of an exempt issuer that is a manager of a registered scheme, section 461A of the Act to the extent that that section requires the exempt issuer to ensure that the financial statements prepared under that section comply with generally accepted accounting practice.

7 Conditions

The exemptions in clause 6 are subject to the conditions that—

(a)

the exempt issuer, in relation to the financial statements or group financial statements prepared under sections 460 to 461A of the Act, must comply with the law and regulatory requirements of the relevant jurisdiction that relate to the preparation, content, and audit of those statements and, in particular, the exempt issuer must ensure that—

(i)

those statements comply with overseas GAAP; and

(ii)

those statements are audited by an approved auditor; and

(iii)

an audit report is prepared by the approved auditor in respect of that audit; and

(b)

the exempt issuer must ensure that there are kept at all times accounting records that will enable the issuer to ensure that—

(i)

the financial statements or group financial statements prepared under sections 460 to 461A of the Act comply with paragraph (a)(i); and

(ii)

the New Zealand business financial statements under paragraph (c) or (d) (if any) comply with paragraph (c)(i) or (ii) or (d)(i) or (ii); and

(c)

if the exempt issuer has 1 or more subsidiaries, the group financial statements of the exempt issuer must, when those statements are delivered for lodgement under section 461H of the Act, be accompanied by financial statements for the group’s New Zealand business (if any) prepared in accordance with—

(i)

generally accepted accounting practice; or

(ii)

overseas GAAP; and

(d)

if the exempt issuer has no subsidiaries, the financial statements of the exempt issuer must, when those statements are delivered for lodgement under section 461H of the Act, be accompanied by financial statements for the exempt issuer’s New Zealand business (if any) prepared in accordance with—

(i)

generally accepted accounting practice; or

(ii)

overseas GAAP; and

(e)

the financial statements of the New Zealand business (if any) must be audited by a qualified auditor or an approved auditor; and

(f)

a copy of the auditor’s report on the financial statements of the New Zealand business (if any) must accompany the financial statements or group financial statements of the exempt issuer when those statements are delivered for lodgement under section 461H of the Act; and

(g)

the financial statements or group financial statements that are delivered to the Registrar for lodgement under section 461H of the Act are—

(i)

accompanied by written notification to the Registrar that the exempt issuer is relying on this notice in respect of the accounting period to which the statements relate; and

(ii)

in English or accompanied by an accurate English translation.

Schedule 1 Overseas GAAPs

cl 5(1)

Australian equivalents to International Financial Reporting Standards

European Union International Financial Reporting Standards

Hong Kong Financial Reporting Standards

International Financial Reporting Standards

Singapore Financial Reporting Standards

Generally accepted accounting principles in the United States of America

Schedule 2 Specified jurisdictions

cl 5(1)

Australia

Ontario, Canada

Singapore

United Kingdom

United States of America

Dated at Wellington this 25th day of May 2015.

Liam Mason,
General Counsel.

Statement of reasons

This notice comes into force on 29 May 2015 and is revoked on 28 May 2020.

This notice applies to overseas incorporated, dual-listed issuers that are listed on a licensed market in New Zealand and also have a primary listing on a financial product market regulated by the laws of a jurisdiction specified in Schedule 2 of the notice. Those jurisdictions are Australia, Ontario (Canada), Singapore, the United Kingdom, and the United States of America.

This notice exempts those dual-listed issuers from the following provisions of the Financial Markets Conduct Act 2013 (the Act):

  • section 455(1)(c) (which requires an FMC reporting entity to keep accounting records that will enable it to ensure that its financial statements comply with generally accepted accounting practice):

  • sections 460 to 461A of the Act to the extent that those sections require the financial statements that are prepared to comply with New Zealand generally accepted accounting practice (NZ GAAP):

  • section 461B of the Act (which relates to financial statements for the New Zealand business):

  • sections 461D and 461G (which relate to auditing).

The exemptions are subject to conditions that require those entities to prepare financial statements that comply with the financial reporting requirements of the jurisdiction of the overseas financial product market (the relevant jurisdiction). The main effects of the exemptions for entities relying on them are as follows:

  • the financial statements that are prepared will comply with the overseas generally accepted accounting practice or principles (overseas GAAP) that is or are required or permitted in the relevant jurisdiction rather than NZ GAAP:

  • those financial statements will be audited by an overseas approved auditor who is qualified under the laws of the relevant jurisdiction to give an opinion as to whether the financial statements comply with the relevant overseas GAAP:

  • if the entity has a New Zealand business, those financial statements will be accompanied by separate New Zealand branch financial statements that comply with NZ GAAP or overseas GAAP:

  • those New Zealand business financial statements must be audited by a qualified auditor (as that term is defined in the Act) or an overseas approved auditor.

This exemption notice, in substance, continues similar exemptions contained in the Financial Reporting Act (Dual-listed Issuers) Exemption Notice 2013. Changes to those exemptions include—

  • providing flexibility to accommodate the fact that jurisdictions around the world are now permitting issuers to use one of a number of acceptable GAAPs:

  • removing Hong Kong as a specified jurisdiction because the Financial Markets Authority is not satisfied that the auditor regulatory system of that jurisdiction is consistent with international best practice:

  • providing flexibility to reflect that the relevant jurisdiction has been assessed as having high-quality audit regulation by allowing either New Zealand qualified or overseas approved auditors to audit the New Zealand business financial statements.

The Financial Markets Authority (the FMA), after satisfying itself as to the matters set out in section 557 of the Act, considers it appropriate to grant the exemptions because—

  • there will not be any significant detriment to investors, because the exemptions are available only to issuers listed on financial product markets regulated by the laws of a relevant jurisdiction and with a secondary listing on a market operated by NZX Limited (or any other licensed market in New Zealand). The FMA is satisfied that the financial reporting requirements, and the nature and extent of regulatory oversight, for those entities and their auditors are of high quality and at least equivalent to those that exist for entities listed on a licensed market in New Zealand. As such, investors in those entities will have access to broadly similar, and equivalent, information to the information that they would otherwise receive:

  • the costs associated with the circumstances in which an entity has already prepared and had audited similar financial statements in accordance with the financial reporting requirements of a relevant jurisdiction, and the costs associated with a requirement for the entity to prepare NZ GAAP-compliant financial statements and have those statements audited by a New Zealand licensed auditor, would outweigh the benefits to investors in receiving NZ GAAP financial statements rather than financial statements prepared in accordance with the laws of the relevant jurisdiction:

  • the FMA has had regard to the financial reporting and audit requirements that must be complied with by entities relying on this notice and considers that those requirements provide New Zealand investors with adequate financial information about the companies in which they invest and that the relevant jurisdictions have adequate regulatory and enforcement mechanisms:

  • the granting of the exemptions is desirable in order to promote the purposes of the Act, specifically by avoiding unnecessary compliance costs and by promoting flexibility in financial markets:

  • the exemptions only address the particular difficulties experienced by entities that have financial products that are listed both in New Zealand and on a financial product market regulated under the laws of a jurisdiction specified in Schedule 2. Given the limited application of the exemptions and that financial statements are still required to be lodged in New Zealand, the exemptions are not broader than is reasonably necessary to address the matters to which they relate.

Issued under the authority of the Legislation Act 2012.

Date of notification in Gazette: 28 May 2015.

This notice is administered by the Financial Markets Authority.