This notice, which comes into force on 14 October 2021 and is revoked on 13 October 2026, relates to FMC reporting entities with overseas subsidiaries that have inflexible balance dates (because the balance dates cannot be changed at the discretion of the subsidiary or the FMC reporting entity).

The notice provides an exemption from section 461(3) of the Financial Markets Conduct Act 2013 (the Act) in respect of those subsidiaries. Section 461(3) requires the board of an FMC reporting entity to ensure that the balance date of the FMC reporting entity is the same as the balance date of its subsidiaries. The exemption applies whether or not a change to the overseas subsidiary’s balance date could be made through a regulatory approval process.

The notice replaces, on substantially the same terms, the Financial Markets Conduct (Overseas Subsidiary Balance Date Alignment) Exemption Notice 2016, which is revoked on 13 October 2021. However, a condition requiring an FMC reporting entity to notify the Registrar that the board is relying on the exemption has been removed.

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 exemption because—

• the exemption recognises the difficulties faced by FMC reporting entities that have overseas subsidiaries with inflexible balance dates in complying with the requirement to ensure that the balance date of the FMC reporting entity is the same as the balance date of its subsidiaries. Without an exemption, an FMC reporting entity in those circumstances would be unable to comply with the Act or would be required to change its balance date to align it with an overseas subsidiary or, if possible, would need to engage in a regulatory process to change the balance date of its subsidiaries:

• those outcomes would not provide any meaningful benefit to investors or financial market regulators using the financial statements and would be likely to add unnecessary compliance costs:

• investors will still have access to consolidated group financial statements, lodged in New Zealand, for the FMC reporting entity and its subsidiaries:

• New Zealand Equivalent to International Financial Reporting Standard 10 already adequately provides for the inclusion of a subsidiary’s financial information in consolidated financial statements when the subsidiary has a different balance date:

• for these reasons, the exemption is necessary or desirable to promote the purposes of the Act, specifically, avoiding unnecessary compliance costs and promoting flexibility in the financial markets:

• the exemption is not broader than is reasonably necessary to address the matters that gave rise to the exemption. This is because the exemption is limited to addressing only the particular difficulties experienced by an FMC reporting entity with overseas subsidiaries that operate in jurisdictions with inflexible balance dates and investors will still have access to consolidated group financial statements, lodged in New Zealand, for the FMC reporting entity and its subsidiaries.