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New Zealand Financial Markets Authority: Temporary Extension For Certain Reporting Deadlines

Date 11/06/2021

The FMA is providing temporary relief to give some businesses additional time to comply with certain regulatory reporting requirements, in response to a shortage of auditors in New Zealand. 


Relief is being provided through a ‘no-action’ approach that gives eligible entities affected by the auditor shortage a one-month extension to file their audited financial statements and comply with certain related reporting deadlines and other audits or assurance engagements. The relief is available for eligible entities with balance dates between 31 March 2021 and 31 December 2021, and some conditions apply.  Entities will still need to prepare financial statements within the usual 4-month timeframe.

We understand the New Zealand audit industry usually depends on sourcing experienced audit staff from overseas. Due to the COVID-19 border restrictions, overseas recruitment has ceased since March 2020. Accordingly, this relief is needed because of a shortage of skilled and experienced senior audit staff in New Zealand. 

In view of possible adverse impacts of the auditor shortage, we are providing temporary and limited regulatory relief by way of a no-action approach.  We think this is consistent with one of the main purposes of the FMC Act being to promote confident and informed participation of businesses, investors, and consumers in the financial markets.  

Important note: This no action approach only relates to specified requirements under the FMC Act and Regulations (see table below).  Businesses may need to engage with other regulators (e.g., the Reserve Bank of New Zealand or NZX) if they need an extension in relation to other obligations.

What is a ‘no-action’ approach?

A ‘no-action’ approach means we will not take any action against a person for breach of a statutory or regulatory obligation. It is an expression of regulatory intention about how to exercise the FMA’s functions. An FMA ‘no-action’ approach does not necessarily prevent others from taking legal action in relation to the same or similar conduct. 

No-action approach

We are taking a no-action approach for FMC reporting entities (and certain other businesses listed in the table below) with balance dates (or relevant dates) from 31 March 2021 to 31 December 2021 (inclusive). The no-action response gives a one-month extension for complying with the requirements referred to in the table below.

The no-action approach will apply if:

  • the entity is unable to comply with the relevant requirement within the original timeframe as a direct or indirect consequence of the auditor shortage; and
  • the conditions below are met.

Conditions

To rely on the no-action relief you must comply with the following conditions:

  1. Notify us in writing on or before the original due date for compliance that you are relying on the no-action approach – see the notice requirements below.
  2. Lodge a copy of the notice to the FMA with the Registrar.
  3. Comply with the requirement within one month of the original compliance date.

How to notify us that you are relying on the no-action approach

The notice to the FMA should clearly state the following:

  • the date notice is given
  • the full name of the entity (and the name of the registered scheme, if relevant)
  • the entity’s FSP number and the scheme’s number, if relevant
  • the applicable balance date or relevant date the obligation relates to
  • each requirement you need a one-month extension for – these must be requirements referred to in the table below
  • confirmation that you are unable to comply with the requirements for which you are seeking an extension as a direct or indirect consequence of the auditor shortage.

If you are giving us two or more notices at one time, those notices can be combined. The combined notice can also be lodged with the Registrar.

Please email your notice to compliance@fma.govt.nz before the original compliance date.

Please also separately provide to us (i.e., not in the notice itself):

  • the name and contact details for your auditor
  • the name and contact details for an individual in your organisation who we can contact in relation to the notice.

Our process

We will acknowledge receipt of your notice and may contact you or your auditor to discuss or seek further information. We will not provide any confirmation that you can rely on the no-action approach. It is a class no-action approach, and you can rely on it if you meet the criteria and the conditions specified.

Please note that the decision by us to grant ‘no-action’ relief is discretionary. If additional factors come to light that call into question the bona fides of any information provided we may revisit our stance.

If you have any questions on the above, please email questions@fma.govt.nz.

No-action approach

For the requirements listed below, no action will be taken by the FMA in respect of a failure to comply with this requirement within the original timeframe where the delay is a direct or indirect consequence of the auditor shortage linked to the Covid-19 border restrictions and the conditions specified above are met.

Summary of requirements eligible for one-month extension

Who is affected

Requirement to lodge audited financial statements for FMC reporting entity or registered scheme

FMC Act: s 461H (1) and s461H(1A)

FMC reporting entities and managers of registered schemes

Requirement to update certain information on the offers register  

FMC Regulations: Reg 51 and cl 67(1)(b) and (2)(b) of Sch 2 and reg 51 and cl 55(2)(c) and (3)(b) of Sch 3

Continuous equity and debt issuers

Requirement to prepare an annual report for a registered scheme

FMC Regulations: reg 62

Managers of registered schemes

Requirement to make an annual fund update available and supply confirmation information to members

FMC Regulations: regs 56(2) and 71

 

Managers of restricted schemes if the final annual earnings (which could be negative) that are distributed to the scheme participants are determined by reference to the scheme’s audited financial statements

Requirement to call and hold an annual meeting

FMC Regulations: Reg 92

Managers of closed-ended schemes

Requirement to have financial product registers audited

FMC Regulations: Regs 108 and 109

Issuers of regulated products

Requirement to obtain assurance engagement in relation to:

(i)          scheme property

(ii)        client money or client property

(iii)       compliance with the requirements in Sch 21C and reg 229ZA(2)(b)(iii) to (v) of the FMC Regulations; or

(iv)       derivatives investor money or derivatives investor property.

FMC Regulations: regs 87, 229U, 248, and cl 5(1)(f) of Sch 21C

 

Custodians of registered schemes, custodians of financial products, non-NZX providers and derivatives issuers