Financial reporting

NOTE: We cannot exempt businesses from being an FMC reporting entity, but we can vary their reporting obligations using our exemption and public accountability designation power. See our exemptions section for more details.

As an FMC reporting entity, you must do all of the following:

• keep proper accounting records to help you prepare compliant financial statements — records must be kept in English and a copy must be kept in NZ
• prepare financial statements for your group's operations — those financial statements must comply with generally accepted accounting practice in NZ
• have your financial statements audited by a licensed auditor or registered audit firm
• lodge your financial statements and the auditor’s report on them with the Companies Office within 4 months after your balance date.

If you are an FMC reporting entity at any point during an accounting period, you are required to comply with these requirements for the full accounting period. Many of the requirements for FMC reporting entities are similar to those for issuers under the Financial Reporting Act 1993. Some of those key changes are:

If you are a manager of one or more registered schemes, you will also need to prepare, have audited and lodge financial statements:

• for each scheme and
• for each separate funds within each scheme.

If you are a company incorporated outside New Zealand, you will also need to prepare, have audited and lodge financial statements for your New Zealand business (if any) that complies with generally accepted accounting practice in New Zealand. 

We can vary the reporting obligations of FMC reporting entities using exemption notices and our public accountability variation power.  For example, we have put in place exemptions that provide for:

• certain overseas FMC reporting entities to use their overseas financial statements in place of NZ GAAP
• small co-operatives to comply with the requirements of the Companies Act 1993 
• reduced reporting requirements for small to medium discretionary investment management services (DIMS) providers

For more details or to see if you qualify, see our financial reporting exemptions section.

If an issuer makes a regulated offer of equity securities that are voting products, they are not an FMC reporting entity if they have:

• 50 or fewer shareholders; or
• fewer than 50 parcels of shares.

Instead the obligations in the Companies Act 1993 apply.

Note: 'voting products' is a defined term and includes ordinary shares and certain products that are convertible to ordinary shares.

This means issuers of non-voting equity products won’t be able to take advantage of the statutory exemption under the FMC Act, even if they were able to use it under the Financial Reporting Act 1993.

The 50-shareholder or parcels-of-shares rules are consistent with the Takeovers Code. The Takeovers Panel’s Guidance Note on Small Code Companies is useful to help how to count shareholders for this purpose.

There are exclusions under Schedule 1 of the FMC Act that allow some offers to be made without having to provide all the usual documentation required, ie product disclosure statements.

One of those exclusions is for small personal offers of debt and equity - see clause 12 of Schedule 1. It allows you to make small offers over a 12-month period that can, in total, involve up to 20 investors and raise up to $2 million without having to produce full documentation. Any offer that would result in you exceeding either or both those limits requires full documentation under part 3 of the FMC Act.

If, over several 12-month periods, you gain more than 50 shareholders from small offers, you'll become a FMC reporting entity.

Companies that raise capital through a licensed crowdfunding platform, relying on clause 6 of Schedule 1, are not considered FMC reporting entities. This is because the offer is not considered a ‘regulated offer’ under the FMC Act. Therefore, these companies will be subject to the financial reporting requirements under the Companies Act 1993.

Under Schedule 3 of the FMC Act we are allowed to approve single-person self-managed superannuation schemes that meet certain criteria (Schedule 3 Schemes). 

These schemes are not FMC reporting entities therefore Part 7 does not apply. However, regulation 113 of the FMC Regulations requires these schemes to prepare financial statements that comply with generally accepted accounting practice and send a copy of these to the FMA.

To comply with this, we believe that NZ IAS 26 still applies including paragraph 1.5. Accordingly, we accept special purpose financial statements. The exact content of these is not prescribed and therefore is at the discretion of the trustees. We suggest special purpose financial statements include a profit and loss, balance sheet and cash flow statement, as well as appropriate accounting policies and notes that reflect the investments of the scheme.

Retirement village operators are not FMC reporting entities. The financial reporting obligations for retirement villages can be found in the Retirement Villages Act 2003.