MR No. 2014 – 024
11 July 2014
Ross Anthony Collins, director, is to pay a fine of $30,000 for breaches of the Financial Reporting Act 1993 (FRA). Collins was sentenced yesterday in the Tauranga District Court, after pleading guilty in May 2014 to eight charges of failing to deliver financial statements to the Registrar of Companies.
Belinda Moffat, FMA Director of Enforcement and Investigations said, "this sentence sends an important signal to companies seeking to raise funds from the public, about the consequences of failing to file accurate information on time.”
Mr Collins is the sole director of the following companies, Prosper Hills (2004) Limited; Prosper Hills (2006) Limited; and NZFIL3. The charges relate to failing to file financial statements and auditor’s reports with the Registrar of Companies for the following years:
Between these companies, there are 600 investors with over $3 million in shareholders’ capital.
“It’s not just a basic requirement to provide this financial information - this is the way investors can assess the financial health of a company they’ve invested in. This information also helps in making decisions about the balance of assets in their entire investment portfolio. It’s also critical information enabling the regulator to oversee and monitor firms that issue securities to the public,” said Ms Moffat.
No conviction has been entered in relation to these charges; these offences are “infringement offences”, as defined by section 2 of the FRA 1993.
Since commencing this proceeding, some of the outstanding financial statements have been filed. “The FMA would prefer that compliance is achieved without the need to commence enforcement action,” Ms Moffat said.
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As at April 2013:
The maximum penalty for each charge is a $100,000 fine.
Collins also failed to file financial statements for Prosper Hills (2004) and (2006) for the year ending 31 March 2010. Financial statements for 2010 have now been filed (in June 2014). Because of a three year limitation period, FMA was unable to file charges in respect of the year ending 31 March 2010.
Generally, a company’s accounting period is between 1 April and 31 March. Under the FRA, the directors have five months from the end of the accounting period (e.g. 31 March) to complete and sign the financial statements. The directors then have a further 20 working days to deliver the financial statements and the auditor’s report to the Companies Office.
Therefore, the directors of an issuer have approximately six months to prepare and sign the financial statements, have them audited, and delivered to the Companies Office.