The Financial Markets Authority’s COVID-19 response
Last updated Tuesday 7 April 2020
On 19 March, the Financial Markets Authority (FMA) provided both:
- an update on the COVID-19 situation and its impact on entities the FMA licenses.
- (with NZX) extended the deadline for financial reporting by two months (giving market participants six months to file their audited financial statements).
It also advised there may be delays to planned thematic reviews and the introduction of new regulations.
At the same time, NZX and FMA announced an increase on the maximum amount that can be raised by listed companies via private placements.
Who needs to read it? Why?
All entities and schemes affected by COVID-19 should read the FMA’s COVID-19 update. The FMA’s announcement about financial reporting deadlines will be of interest to all entities and schemes required to file audited financial statements and their auditors.
What does it cover?
Citing extreme circumstances, the FMA is seeking to support the financial services industry. The FMA has stated it is in close contact with industry participants and investors about the effects COVID-19 has had on the industry.
The FMA noted many KiwiSaver members and other investors have seen a significant drop in their balances. It has also reported a sharp rise in KiwiSaver members switching from growth to conservative funds. The FMA expects KiwiSaver providers to provide class advice to members on the COVID-19 situation.
The FMA has delayed its thematic review on liquidity for managed investment schemes and is considering deferring audit quality reviews of audit firms and its NZX Obligations Review.
The FMA has also invited the industry to suggest how the FMA can support them during this time.
Financial reporting extension
Along with the NZX, the FMA has granted a class exemption which allows all entities and schemes affected by COVID-19 another two months to file their audited financial statements. The FMA has also allowed an additional two months for restricted schemes to provide confirmation notices to members.
Continuous disclosure requirements and continuous offer information is still required of listed issuers. The FMA has stated that they are working to put the class exemption in place as quickly as possible.
The FMA felt the class exemption was necessary due to delays in the financial reporting and auditing processes as a result of the travel restrictions, social distancing and remote working arrangements.
The class exemption will apply to entities and schemes with balance dates from 31 December 2019 to 31 May 2020.
Update: On 3 April, the FMA confirmed that all entities and schemes with a balance date up to and including 31 July would have a further 2 months to provide audited financial statements. This extends the current relief from balance dates up to 31 May. The FMA will further consider regulatory relief for entities and schemes with later balance dates as the COVID-19 situation develops.
Entities and schemes experiencing difficulties meeting regulatory obligations due to COVID-19 should contact the FMA. We are currently aware of industry concerns about how challenging FSLAA preparations will be due to people working from home. As the COVID-19 situation develops, we expect more support from the FMA to ensure entities and schemes can meet regulatory obligations.
The class exemption is a welcome piece of good news in uncertain times. The extension will help ease the regulatory burden on entities and schemes who are experiencing operational and financial pressures as a result of COVID-19. The extension will also ensure investors are provided with considered and accurate financial statements.
If you have any questions in relation to how COVID-19 may affect your business or financial reporting, please contact one of our experts.