The Financial Markets Authority (FMA) is seeking feedback on the changes FMA proposes to make to both designations and exemptions in respect of the financial reporting obligations of FMC reporting entities under the Financial Markets Conduct Act 2013 (FMC Act).

FMA proposes to make immediate changes to public accountability designations for some entity classes, and introduce some class exemptions.

FMA's consultation paper is available here. The closing date for submissions is 28 February 2014.

Who does this consultation affect?

While the consultation paper relates to the financial reporting obligations of all FMC reporting entities1, those most affected by FMA's proposals include:

  • entities who currently rely on an exemption relating to financial reporting;
  • New Zealand incorporated companies who may wish to seek an exemption from the financial reporting requirements, for example an exemption to allow compliance with overseas law and accounting standards;
  • recipients of money from conduit issuers;
  • not-for-profit debt issuers; and
  • licensed derivative managers.


The FMC Act consolidates the financial reporting requirements for an FMC reporting entity. It covers the accounting record keeping requirements currently under the Companies Act 1993 and the Securities Act 1978, as well as the preparation, audit and registration requirements for issuers, which were previously set out in the Financial Reporting Act 1993 (the 1993 FRA).

FMA will be the primary financial reporting regulator for all FMC reporting entities, and will have regulatory powers to vary public accountability designations and to grant exemptions. These powers will come into effect when the first phase of the FMC Act comes into effect on 1 April 2014.

FMA's exemption proposals

The FMC Act gives FMA the power to grant exemptions to any FMC reporting entity (including New Zealand incorporated companies), if appropriate. Previously, only recipients of money from conduit issuers and overseas entities could be exempted.

The consultation paper sets out FMA's initial exemption proposals. It proposes to retain existing exemptions under the 1993 FRA, unless it is not appropriate or necessary under the FMC Act. In addition, where exemptions are limited by jurisdiction, FMA wants to include as many appropriate jurisdictions as possible. A brief summary of FMA's proposals is set out in the table below.

Click here to view table.

FMA's designation proposals

The FMC Act includes default public accountability designations, which relate to the accounting standards an entity must use when preparing its financial statements. FMA is proposing to use its power to vary the designations for the following classes of entities (with immediate effect on 1 April 2014):

  • recipients of money from a conduit issuer – to move these entities to higher accountability;
  • not-for-profit debt issuers – to move some simple not-for-profit entities to lower accountability; and
  • licensed derivative managers – to move these entities to higher accountability.

The consultation paper sets out the reasons behind FMA's proposal to redesignate the above classes of entities, and to retain the default designation for other classes of entities.


Click here to view table.

Future consultation

FMA will consult separately on any exemptions relating to offer documents before the new disclosure regime starts on 1 December 2014.