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Ann: GENERAL: FMA: Action against non-filing of financial statements pays off

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    • Release Date: 13/02/15 11:04
    • Summary: GENERAL: FMA: Action against non-filing of financial statements pays off
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    13/02/2015 11:04
    REL: 1104 HRS Financial Markets Authority
    GENERAL: FMA: Action against non-filing of financial statements pays off
    Media Release
    MR No. 2015 - 03
    13 February 2015
    Action against non-filing of financial statements pays off
    A new report released today by the Financial Markets Authority (FMA) shows
    the proportion of companies filing their financial statements on time has
    improved significantly since the FMA's initial review in 2014.
    Eighty-two per cent of the companies reviewed had filed their statements by
    the due date, up from 73 per cent in the FMA's 2014 report.
    Additionally, the proportion of statements that remained outstanding after
    receiving a reminder notice decreased, from 10 per cent to six per cent.
    The FMA's 2015 report reviewed a similar sample of companies as the last
    report. These are companies who raise money from the public by issuing debt
    or equity securities to investors.
    "These results demonstrate the success of the FMA's approach to improving
    regulatory outcomes and ensuring investors have good access to financial
    information.  The combined effort of both the compliance and enforcement
    teams is raising standards of compliance among companies that issue
    securities to the public.
    "We've taken a range of actions to improve compliance, including judicial
    action where we see the greatest harm to investors and the markets, and this
    has improved results overall," said the FMA's Director of Compliance, Elaine
    "Audited financial statements are an important reporting and communication
    tool and provide the public with an up-to-date picture of a company's
    financial position and future prospects, allowing them to make informed
    financial decisions about their investments. Failure to meet filing
    obligations limits the availability of information to investors, the markets
    and the regulator," she said.
    The report also noted that no new companies were pinpointed for enforcement
    action for non-filing in 2014.
    In addition to the significant amount of engagement carried out with
    companies, which has led to higher filing rates, the FMA has brought four
    cases to court against seven directors of eight companies. One director
    pleaded guilty to eight charges of non-filing under sections 18(1) and 38(b)
    of the Financial Reporting Act (FRA) and was fined $30,000. Another two
    directors pleaded guilty to four charges each of non-filing under sections
    18(1) and 38(b) of the FRA and were fined $35,000 each. Two cases remain
    before the court and will be heard this year.
    "We're pleased with the results we've achieved from focussing our attention
    in this area. Not only does our work help to improve the availability of
    financial information for investors, the market and the FMA, it encourages
    better compliance and conduct and helps to increase confidence in New
    Zealand's markets," said Ms Campbell.
    The full report is available here -
    Shae Skellern
    09 300 0?465
    021 847 192
    [email protected]
    The sample of companies reviewed was the same as those reviewed in our last
    report.  The sample size has reduced as some companies have either had a
    change in their reporting balance date or are no longer issuers. The
    companies reviewed for this report have a 31 March balance date and were
    required to have their 2014 financial statements audited and filed with the
    Registrar of Companies by 26 September 2014.
    Balance date 31 March 2013 31 March 2014
    Sample of companies reviewed 416 368
    Financial statements filed by the due date 305 (73%) 300 (82%)
    Financial statements not filed by the due date 111 (27%) 68 (18%)
    Financial statements filed before the deadline in the reminder notice 68
    (16%)      44 (12%)
    Financial statements outstanding after the deadline in the reminder notice
      43 (10%)   24 (6%)
    New financial reporting requirements came into effect on 1 April 2014, as
    part of the Financial Markets Conduct Act 2013 (FMC Act).The new regime
    retains the importance of filing financial statements but has new
    requirements and introduces a new penalty regime.
    Under the FMC Act, if an FMC reporting entity fails to lodge financial
    statements, it may face a maximum fine of $50,000 (under the FRA the director
    faces a maximum fine of $100,000). Under the FMC Act, in addition to a fine
    on the entity, a director of an FMC reporting entity may be liable for a
    civil pecuniary penalty of up to $1 million in the event of a failure to
    lodge financial statements with the Registrar.
    Under the FRA, issuers have five months for preparation and audit and an
    additional 20 working days for filing. Under the FMC Act, they will have four
    months to prepare, audit and file their financial statements. More
    information can be found here.
    The five companies that have been before the courts as a result of the FMA's
    review of March 2013 balance date include: Prosper Hills (2004) Limited,
    Prosper Hills (2006) Limited, NZFIL3 Limited, Heritage Park Taupo Limited and
    Prudential Real Estate Investments Limited.
    End CA:00260619 For:FMA    Type:GENERAL    Time:2015-02-13 11:04:13
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