Dated at Wellington this 25th day of May 2015.
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):
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.
Date of notification in Gazette: 28 May 2015.
This notice is administered by the Financial Markets Authority.