Financial Markets Conduct (Overseas Registered Banks and Licensed Insurers) Exemption Notice 2021

This exemption provides relief for overseas banks that are registered banks in New Zealand, and overseas insurers that are licensed insurers in New Zealand, from certain financial reporting and audit obligations of the FMC Act.  It exempts them from having to prepare financial statements in NZ GAAP and having them audited by a New Zealand qualified auditor.  The Financial Markets Conduct (Overseas Registered Banks and Licensed Insurers) Exemption Notice 2021 will replace the Financial Markets Conduct (Overseas Registered Banks and Licensed Insurers) Exemption Notice 2020 when it expires on 3 November 2021 and will continue, for a further five years, relief on the same terms with some amendments, discussed further below.

The effects of the exemption are:

• overseas banks and insurers are allowed to use overseas GAAP permitted in their home jurisdiction and a qualified auditor in their home jurisdiction to prepare their group or entity financial statements;
• the group or entity financial statements do not have to be dated and signed by two directors if that is not a requirement in the home jurisdiction of the overseas bank or insurer;
• overseas banks and insurers must still prepare New Zealand business financial statements, and these must be prepared in accordance with NZ GAAP (rather than an overseas GAAP) and must be audited by a New Zealand or Australian auditor, or a qualified auditor in their home jurisdiction;
• financial statements must be in English or accompanied by an accurate English translation; and
• the regulatory body in the home jurisdiction must be an ordinary member of the International Organization of Securities Commissions (IOSCO) and a signatory to the IOSCO Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information. 

The key differences to the original exemption are as follows:

• requiring banks and insurers that use an overseas GAAP that is not considered to be an equivalent to IFRS or US GAAP to include a note in the cover letter to the Registrar provided with the financial statements, advising readers of the financial statements that the home jurisdiction financial reporting requirements are materially different to IFRS;
• requiring banks and insurers that use an overseas GAAP that is not considered to be an equivalent to IFRS to use a New Zealand or Australian auditor to audit their New Zealand business financial statements; and
• providing that an overseas auditor, when auditing the New Zealand business financial statements, is required to apply New Zealand auditing and assurance standards