The concept of an 'FMC reporting entity' is broader than the definition of an 'issuer'. It includes most businesses who were 'issuers' previously, as well as most market service licence holders under the Financial Markets Supervisors Act and FMC Act. It does not include - brokers, QFEs, financial advisers, licensed auditors and audit firms, licensed independent trustees, retirement village operators or certain closely-held equity issuers.
Check if your business is an FMC reporting entity.
FMC reporting entity types
Issuers of financial products under-regulated offers
Those who make regulated offers under the FMC Act - except closely-held companies that are only FMC reporting entities as equity issuers
Market services licensees (except independent trustees of restricted schemes)
MIS managers, DIMS providers, derivatives issuers, providers of peer-to-peer lending and crowdfunding service providers
Under the Financial Markets Supervisors Act 2011
Those listed on a market licensed under the FMC Act
Operators of licensed markets
Except overseas-regulated markets
Recipients of money from conduit issuers
Recipients of funds from regulated offers under the FMC Act
Under the Reserve Bank of New Zealand Act 1989
Under the Insurance (Prudential Supervision) Act 2010
Under the Friendly Societies and Credit Unions Act 1982
People that have gained more than 50 shareholders through small offers under Schedule 1 of the FMC Act
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.
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.
Small personal offers
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.
One-person superannuation schemes
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.