FMA has released its review of non-filing of financial statements by companies who issued securities to investors. The review is based on the financial reporting of 416 limited liability companies with a 31 March 2013 balance date. It shows that 305 companies, or 73%, had filed their financial statements on time. However, 10% of the total entities still had outstanding accounts at November 2013.

FMA has started court prosecutions against the directors of seven entities that had persistently failed to file. Proceedings were also initiated for the directors of one other entity with a September 2013 balance date that had repeatedly not filed financial statements.

Under the Financial Markets Conduct Act (FMCA) failure to file financial statements continues to be an infringement offence. FMA will have the authority to issue infringement notices against offenders that will require the offender to pay a $7,000 fee.

FMA will also have the option of initiating a prosecution against offending directors. The maximum penalty that may be applied on conviction of a director of an issuer for failing to file financial statements is reduced from $100,000 to $50,000. However, in their report, FMA have drawn attention to the fact that the FMCA also provides provisions for taking civil action against a reporting entity and its directors, if it fails to file or files defective financial statements.  If civil action is initiated, pecuniary penalties may be ordered up to a maximum of $1 million for a director and $5 million for the entity.

To read the full report click here.