Yesterday the Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko issued an infringement notice to Alliant Perpetual (Alliant) requiring Alliant to pay an infringement offence fee of $7,500 for failing to file audited financial statements by their due date.
Link to the media release is available here.
Who needs to read it? Why?
All “FMC reporting entities” under the Financial Markets Conduct Act 2013 (FMC Act) should notice the FMA’s approach towards the reporting entity which failed to comply with the financial statement filing obligation under the FMC Act.
What does it cover?
Alliant, as a registered building society is a reporting entity under the FMC Act and is required to file audited financial statements. However, Alliant hasn’t filed its financial statements by the due date and the FMA issued an infringement notice following engagement with Alliant.
When the FMA raised concerns with Alliant, Alliant provided various reasons to the FMA to explain why its financial statements have not been filed on time:
- Its auditor resigned on 3 March 2022 and it did not appoint a licensed auditor by the filing due date.
- It has committed to relocating senior management and decision making back to New Zealand but the process has been impacted by the Omicron outbreak.
- Some of its investors’ investments have reached maturity but it is currently unable to repay those investors its funds being illiquid.
- As at balance date, its investments are likely to be impaired which would cause it to have negative equity.
- It has sought additional capital to address the negative equity and the costs associated with relocating the society.
- Any capital received would be recorded in the financial statements as a subsequent event.
The FMA did not consider that those reasons are a satisfactory explanation. Rather, the FMA considered that it is important that those reasons are brought to the to the attention of Alliant’s investors and members. Consequently, Alliant was asked to publish the FMA’s statement on its website and communicate the same directly to investors and members.
All FMC Reporting entities should take note of the FMA’s approach with respect to engagement on and enforcement of financial reporting obligations. Given the significance of financial statement disclosure to an FMC reporting entity’s stakeholders it will continue to be an area that gets increasing regulator attention.
If you have any questions on the reporting entities’ obligation to file audited financial statements, please contact one of our experts.
This article was co-authored by Stella Gu, a Solicitor in our Corporate and Commercial team.
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