Notice Type
Departmental
Notice Title

Financial Reporting Act (Overseas Incorporated Companies - United States of America) Exemption Notice 2007

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Pursuant to section 35B of the Financial Reporting Act 1993, the Registrar of Companies gives the following notice (to which is appended a statement of reasons of the Registrar).
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Notice
1 Title
This notice is the Financial Reporting Act (Overseas Incorporated Companies - United States of America) Exemption Notice 2007.
2 Commencement
This notice comes into force on its notification in the New Zealand Gazette.
3 Expiry
This notice expires on the close of 31 July 2012.
4 Application
An exemption granted by this notice applies to the following accounting periods of an exempt overseas company:
(a) an accounting period of the exempt overseas company that commenced before the exemption is granted (including an accounting period that ended before the exemption is granted) if,-
(i) in the case of copies of financial statements or group financial statements for that period that are required to be delivered for registration under section 19 of the Act, the exemption is granted before those documents are required to be delivered for registration under that section; or
(ii) in any other case, the exemption is granted before the financial statements or group financial statements for that period are required to be completed; and
(b) subsequent accounting periods.
5 Interpretation
In this notice, unless the context otherwise requires,-
Act means the Financial Reporting Act 1993
approved auditor means an accountant who is qualified under Part 210 of the Code of Federal Regulations (US)
exempt overseas company means a company that -
(a) is incorporated in the United States of America; and
(b) is a company to which section 19 of the Act applies; and
(c) has specified financial statements prepared in respect of it
specified financial statements, in relation to an exempt overseas company, means the group financial statements that are required to be prepared in respect of the exempt overseas company in accordance with the laws of the United States of America (including the Securities Exchange Act of 1934 (US) and the Code of Federal Regulations (US))
US GAAP means generally accepted accounting principles in the United States of America.
6 Exemptions for directors of exempt overseas companies
(1) Every director of an exempt overseas company is exempted from the following provisions in respect of the exempt overseas company:
(a) sections 10(1), 11, and 14 of the Act; and
(b) section 13 of the Act to the extent that it requires group financial statements to be prepared in relation to the exempt overseas company to comply with section 14 of the Act; and
(c) section 19(3) of the Act to the extent that it requires copies of the financial statements of the exempt overseas company, together with a copy of the auditor's report on those statements, to be delivered to the Registrar for registration.
(2) Subclauses (1)(a) and (c) do not apply in relation to the New Zealand branch accounts that are required to be prepared in relation to the group's New Zealand business prepared in accordance with New Zealand generally accepted accounting practice as if the members of the group were companies formed and registered in New Zealand.
(3) Subclause (1)(c) does not apply in relation to the group financial statements that are required to be prepared in relation to the exempt overseas company under section 13 of the Act.
7 Conditions
The exemptions in clause 6 are subject to the conditions that -
(a) the specified financial statements of the exempt overseas company comply with US GAAP; and
(b) if, in complying with US GAAP, the specified financial statements do not give a true and fair view of the matters to which they relate, the directors of the exempt overseas issuer add information and explanations that will give a true and fair view of those matters; and
(c) the specified financial statements are accompanied by a report by an approved auditor that complies with the requirements of Part 210 of the Code of Federal Regulations (US).
Dated at Wellington this 28th day of November 2007.
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Statement of reasons
This notice, which comes into force on its notification in the New Zealand Gazette and expires on 31 July 2012, exempts the directors of certain overseas companies incorporated in the United States of America (the United States) from various provisions of the Financial Reporting Act 1993 (the Act).
The effect of the exemptions is to allow overseas companies incorporated in the United States to provide the group financial statements that they are required to prepare under financial reporting requirements in the United States. The principal differences in financial statements provided by overseas companies relying on the exemptions are-
· the directors of the overseas company will prepare and register financial statements for the New Zealand business and consolidated financial statements only (not stand-alone parent company financial statements):
· the consolidated financial statements will comply with generally accepted accounting principles in the United States (rather than generally accepted accounting practice in New Zealand):
· the consolidated financial statements will be audited in accordance with the requirements set out in United States legislation and the auditor's report will provide the information required by United States legislation instead of the Act.
The Registrar considers that it is appropriate to grant the exemptions because-
· the Registrar has had regard to the financial reporting and audit requirements that must be complied with by United States incorporated companies who rely on the exemptions. The exemptions are limited to overseas companies that must comply with the financial reporting and audit requirements set out in the Securities Exchange Act of 1934 (US) and the Code of Federal Regulations (US); and
· an overseas group relying on the exemptions will still be required to file financial statements for the group's New Zealand business prepared in accordance with New Zealand generally accepted accounting practice as if the members of the group were companies formed and registered in New Zealand; and
· the Registrar is satisfied that the consolidated financial statements required to be prepared under United States financial reporting laws provide sufficient information to avoid any detriment to members of the public who have dealings with companies incorporated in the United States; and
· the exemptions address the particular difficulties experienced by United States incorporated companies that carry on business in New Zealand. The exemptions are not broader than what is reasonably necessary to address these difficulties and still require that group financial statements be filed in New Zealand.
Date of notification in New Zealand Gazette: 30 November 2007.
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This notice is administered by the Registrar of Companies.