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

2021/323

Coat of Arms of New Zealand

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

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 (Overseas FMC Reporting Entities) Exemption Notice 2021.

2 Commencement

This notice comes into force on 4 November 2021.

3 Revocation

This notice is revoked on the close of 3 November 2026.

4 Application

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

(a)

an accounting period of the entity 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 entity, means an accountant who is qualified or permitted under the law of a 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

Australian auditor means an accountant who is qualified under the law of Australia to give an opinion as to whether financial statements or group financial statements comply with Australian equivalents to International Financial Reporting Standards

exempt entity 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 issued, endorsed, or 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

New Zealand business, in relation to an exempt entity, means,—

(a)

if the exempt entity has 1 or more subsidiaries, the New Zealand business of the exempt entity’s group (as defined in section 6(1) of the Act):

(b)

if the exempt entity has no subsidiaries, the exempt entity’s New Zealand business

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

overseas market means a financial product market that is authorised to operate in a jurisdiction specified in Schedule 2

relevant jurisdiction, in relation to an exempt entity, means a jurisdiction specified in Schedule 2 in which the overseas market referred to in subclause (2) is authorised to operate.

(2)

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

(a)

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

(b)

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

(c)

the entity is an FMC reporting entity only because it is 1 or more of the following:

(i)

an issuer of a regulated product:

(ii)

a listed issuer:

(iii)

a recipient of money from a conduit issuer.

(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 entity 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 entity to ensure that its financial statements, or group financial statements,—

(i)

comply with generally accepted accounting practice; and

(ii)

are dated and signed in accordance with section 460(1)(b) or 461(1)(b).

7 Conditions

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

(a)

the exempt entity, in relation to the financial statements or group financial statements prepared under section 460 or 461 of the Act, must comply with the law and regulatory requirements of, or permitted by, a relevant jurisdiction that relate to the preparation, content, audit, and public filing of those statements and, in particular, the exempt entity 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 entity must ensure that there are kept at all times accounting records that will enable the entity to ensure that—

(i)

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

(ii)

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

(c)

the financial statements or group financial statements delivered for lodgement under section 461H of the Act must be accompanied by financial statements for the New Zealand business (if any), and the exempt entity must ensure that—

(i)

those statements are prepared in accordance with overseas GAAP or generally accepted accounting practice; and

(ii)

those statements are audited by an approved auditor, an Australian auditor, or a qualified auditor; and

(iii)

an audit report is prepared by the approved auditor, Australian auditor, or qualified auditor in respect of that audit; and

(iv)

if those statements are prepared in accordance with generally accepted accounting practice, the approved auditor, Australian auditor, or qualified auditor complies with all applicable auditing and assurance standards when carrying out the audit and preparing the audit report; and

(d)

if an auditor’s report referred to in paragraph (a)(iii) or (c)(iii) indicates that the requirements referred to in paragraph (a) or (c) have not been complied with in any respect, the exempt entity must, within 7 working days after the report is signed, provide a copy of the report, and a copy of the financial statements or group financial statements to which it relates, to—

(i)

the FMA; and

(ii)

the External Reporting Board; and

(e)

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

(i)

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

(ii)

be in English or accompanied by an accurate English translation.

Schedule 1 Overseas GAAPs

cl 5(1)

Australian equivalents to International Financial Reporting Standards

Canadian 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

United Kingdom equivalents to International Financial Reporting Standards

Generally accepted accounting principles in the United States of America

Schedule 2 Relevant jurisdictions

cl 5(1)

Canada

Commonwealth of Australia

Federal Republic of Germany

France

The Netherlands

Republic of Ireland

Republic of South Africa

Singapore

Switzerland

United Kingdom

United States of America

Dated at Wellington this 19th day of October 2021.

Liam Mason,
General Counsel,
Financial Markets Authority.

Statement of reasons

This notice comes into force on 4 November 2021 and is revoked on the close of 3 November 2026. This notice continues, with minor changes, the exemptions granted under the Financial Markets Conduct (Overseas FMC Reporting Entities) Exemption Notice 2016, which is revoked on the close of 3 November 2021

This notice applies to certain overseas FMC reporting entities. It exempts these entities from certain financial reporting obligations in Part 7 of the Financial Markets Conduct Act 2013 (the Act), including—

  • sections 460 and 461 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) and to be dated and signed by 2 directors (or, if the entity has only 1 director, by that director):

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

The exemptions are subject to conditions that require these entities to prepare financial statements that comply with the overseas legislation of a relevant overseas jurisdiction. The main effects of the exemptions for entities relying on them are as follows:

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

  • those financial statements will be audited by an auditor who is qualified or permitted under the laws of the relevant overseas jurisdiction to perform the audit (an overseas approved auditor):

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

  • those New Zealand business financial statements will be audited by a qualified auditor (as that term is defined in the Act), an overseas approved auditor, or an auditor who is qualified under the laws of Australia, and, if those statements are prepared in accordance with NZ GAAP, that audit must be carried out in accordance with New Zealand auditing and assurance standards.

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—

  • the exemptions are only available to FMC reporting entities with a primary listing on a financial product market regulated by the laws of a jurisdiction where the FMA is satisfied that the financial reporting required or permitted in that jurisdiction, and the nature and extent of regulatory oversight, for those entities and their auditors are of high quality and broadly equivalent to those that apply in New Zealand. As such, investors in those entities will have access to broadly similar, and equivalent, information to the information they would otherwise receive:

  • the costs associated with an entity having to prepare and audit financial statements in accordance with the requirements of an overseas jurisdiction, in addition to the costs associated with preparing NZ GAAP-compliant financial statements audited by a New Zealand qualified auditor, would outweigh the benefits to investors in receiving financial statements prepared according to NZ GAAP rather than overseas GAAP:

  • the securities regulators in the jurisdictions listed in Schedule 2 are signatories to the International Organization of Securities Commissions Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information. The audit regulators in those jurisdictions are signatories to the International Forum of Independent Audit Regulators Multilateral Memorandum of Understanding Concerning Co-operation in the Exchange of Information for Audit Oversight. The FMA will therefore be able to seek assistance from relevant regulators if compliance concerns arise:

  • for these reasons, the FMA is satisfied that the exemptions are desirable in order to promote the purposes of the Act. Specifically, the exemptions should avoid unnecessary compliance costs and promote flexibility in the financial markets:

  • given that the exemptions will be limited to entities listed on overseas markets that are preparing financial statements and subject to audit oversight of high quality and broadly equivalent to New Zealand, and that the exemptions only allow the use of overseas GAAP in place of NZ GAAP with respect to the preparation of financial statements and allow those financial statements to be audited by an overseas approved auditor rather than a New Zealand qualified auditor, the FMA is satisfied that 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: 22 October 2021.

This notice is administered by the Financial Markets Authority.