by Susan Edmunds
The FMA is consulting on its regulatory policy for financial reporting designations and exemptions to the requirements.
From April, it will have powers to vary the obligations of Financial Markets Conduct reporting entities by altering public accountability designations and granting exemptions.
Entities under the FMCA are groups such as issuers of financial products under regulated services, market services licensees, licensed supervisors, listed issuers, operators of licensed markets, banks, insurers and credit unions.
They will become reporting entities at different times as the FMC comes into effect in stages.
But the FMA is proposing immediate changes for some entity classes and some class exemptions. There will be higher public accountability for a range of entities, such as equity issuers who make a regulated offer and have more than 50 shareholders, licensed MIS managers and derivative issuers. Full accounting standards apply to these entities.
Some simple not-for-profit entities may be re-designated as lower accountability where they only make a small one-off offer. This would provide relief for smaller entities where the burden of preparing full financial statements might be significant.
The FMA says it generally won’t grant total exemptions from accounting record keeping requirements of the FMC for overseas entities but may for certain aspects that could cause difficulties.
Greg Fraser, of Mint Asset Management, said it was not a huge change for most entities. “What they’re looking at is an alignment of New Zealand reporting law and guidelines in use with international best practice. It’s a good thing we’re keeping up with best practice.”
He said it would prompt confidence from international investors about entities operating in New Zealand. Fraser said there would be a lot of feedback required from the industry. The logistics for the cost and effort that was required to keep up with the new rules would be increasingly onerous in some cases, he said. The FMA needed to make sure that it did not impose excessive requirements where it was not necessary to have the highest level, with the attendant cost and complexity. “It requires input from just about everyone who has an interest [in the changes].”
New Zealand was already fairly well regarded in the way it reported, he said. “But things do change and we need to be seen to do the right thing in terms of financial reporting, and to be rigorous and remain as close as we can to reporting to a standard that is accepted internationally.”
Australia would not be far behind, he said.
The FMA asked those who will be reporting entities under the FMC to review the proposals and offer feedback. There will be consultation workshops in February and feedback has to be submitted by the end of the month.
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