Redundant reporting requirement to be removed

Listed companies will no longer have to advise shareholders in writing each year that the annual report is available online, or in hard copy by request.  The requirement to send a section 209 Notice is considered "redundant in the digital age".

The change was provided for in the Statutes Amendment Bill, which went through its third reading in the House just before Christmas.  It will come into effect once substantive regulations have been finalised.
The Ministry of Business, Innovation and Employment is expected to undertake a targeted consultation on these in the New Year, meaning that they are unlikely to be in place until the March reporting season at the earliest.

The mechanism

A new section 209C has been incorporated into the Companies Act to:

  • exempt "FMC reporting entities" from complying with sections 209 and 209B of the Act (setting out their current obligations to provide an annual report to shareholders, essentially the s 209 Notice requirements), and

  • provide that they (and non-FMC companies) may instead opt to be governed by new provisions to be added to the Financial Markets Conduct Regulations (FMC Regulations).

How does this differ from what was initially proposed?

The Bill had included a complete rewrite of the regime for giving notice of annual reports, drawing on an earlier Private Members Bill.  Unfortunately the drafting was unclear, and inadvertently could have required privately owned companies to publish their annual reports on a website. 

However, a late Supplementary Order Paper (SOP) on 13 December replaced this rewrite with the new mechanism for the detail to be specified in the FMC Regulations, pushing out any substantive change until the new regulations are enacted.

The intent behind the new regime was supported by all parties in Parliament, and strongly supported by the Listed Companies Association and Chapman Tripp. 

Practical implications

Until the draft FMC Regulations are introduced, it is not known precisely what they will require of participating companies but we expect they will reduce compliance costs in relation to the way in which annual reports must be made available (including by electronic means).

For NZX-listed issuers, the listing rules currently draw on the existing s 209 regime for notification of availability of half year reports.  Some consequential rule changes or class waivers will likely be required for simplified notification of half year reports.

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Related topics: Financial Markets Conduct legislation

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