On 3 December 2013 the new Financial Reporting Act 2013 and
Financial Reporting (Amendments to Other Enactments) Act 2013
received their royal assents. These Acts repeal and replace the
Financial Reporting Act 1993.
The new enactments are likely to come into force on 1 April 2014,
which will coincide with phase 1 of the Financial Markets Conduct
These new laws make significant changes to the Companies Act
1993, including amending the solvency test and replacing Part 11 of
the Companies Act 1993 entirely. These changes will simplify the
financial reporting obligations for small to medium sized
companies, which are not issuers.
An issuer is anyone who has offered securities to the public,
such as equity securities (shares in a company) or debt securities
(e.g. deposits or bonds).
Under the new enactments, New Zealand companies will only be
required to prepare general-purpose financial statements if they
- An "FMC reporting entity" e.g. an issuer under the new
Financial Markets Conduct Act 2013;
- A "large" company; or
- A large overseas company that carries on business in New
- A company with 10 or more shareholders (unless the shareholders
of the company opt out of compliance); or
- A company with fewer than 10 shareholders, if shareholders of
the company holding at least 5% of the voting shares require the
company to comply.
Further, fewer companies will be required to register financial
statements, with the registration requirement only applying to FMC
reporting entities, large New Zealand companies with 25% or more
overseas ownership and large overseas companies.
A New Zealand company will be considered "large" if at least 1
of the following applies:
- As at the balance date of each of the two preceding accounting
periods, the total assets of the company and its subsidiaries (if
any) exceeds NZ$60 million (the asset threshold); or
The timeframe for most companies preparing financial statements
will remain within 5 months after balance date. For FMC reporting
entities the timeframe will be reduced to 4 months.
We encourage businesses to consult their accounting adviser as to
how these law changes will affect them.