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FMA To Extend Deadline For Financial Reporting

The Financial Markets Authority (FMA) is providing regulatory relief to market participants to give them an additional two months to provide their audited financial statements. Due to the disruption caused by COVID-19, the FMA is taking appropriate steps to support the industry. Firms that need to provide these financial statements include listed issuers on the NZX.

The Financial Markets Conduct (FMC) Act 2013 prescribes timeframes within which FMC reporting entities (which includes issuers, banks, licensed insurers, and non-bank deposit takers) and managed investment schemes are required to produce audited financial statements. The developing COVID-19 situation is posing issues for many entities and audit firms to comply within that prescribed timeframe. In particular because:

· entities require time to assess the impact of COVID-19 on their businesses, and how that information should be reflected in their financial statements; and

· the increase in travel restrictions, working from home arrangements, and social distancing will cause delays in financial reporting processes, access to information, and cause significant issues in completing audit processes.

In light of these extreme circumstances, the FMA has determined to provide regulatory relief, by way of a class exemption, which will allow entities and schemes who are impacted by COVID-19 an additional two months to produce their audited financial statements. This means affected entities and schemes will have six months, rather than four months, to complete this work. The FMA will work with the Parliamentary Counsel Office to put the class exemption in place as quickly as possible.

This relief is intended to apply for entities and schemes with balance dates from 31 December 2019 to 31 May 2020. Regulatory relief for later balance dates may be considered as the COVID-19 situation develops.

In addition, the FMA has determined to provide consequential relief for affected restricted schemes, by providing them with an additional two months to provide confirmation notices to members (which must be done within three months of their balance date).

The FMA and NZX have been in continued dialogue about the impacts of COVID-19, and NZX has today announced similar relief for Listed Issuers.

The FMA considers this extension will help ensure information provided to investors is appropriately prepared and audited. Listed Issuers will continue to be subject to their continuous disclosure requirements and Continuous Issuers will still need to maintain up to date continuous offer information.

The FMA is mindful of the operational and financial pressures businesses are currently facing. It will continue to assess circumstances where the provision of regulatory relief may be appropriate.

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