Australian subsidiaries that apply Class Order 98/1418 no longer need to prepare another set of accounts for themselves (and any subsidiaries) for the purpose of their New Zealand reporting obligations
Companies Act (Overseas Incorporated Companies—Australian Wholly–owned Entities) Exemption Notice 2015
The exemption notice provided under the Companies Act by the New Zealand Registrar of Companies exempts specific Australian subsidiaries from reporting obligations. This exemption means respite from tight reporting obligations of some Australian companies with branches in New Zealand.
What has changed, and how?
- Until the implementation of the exemption notice, 'large’ overseas companies with branch operations in New Zealand are required to prepare and lodge audited financial statements in accordance New Zealand GAAP for the company and its subsidiaries.
- Following the introduction of the exemption notice, Australian wholly-owned subsidiaries who adhere to the Australian Securities and Investment Commission (ASIC) Class Order 98/1418 of Wholly-owned entities are exempt from preparing and filing audited financial statements in New Zealand.
- Australian wholly-owned subsidiaries who adhere to the Australian Securities and Investment Commission (ASIC) Class Order 98/1418 of Wholly-owned entities aren't required to prepare a set of accounts for themselves (and any subsidiaries) to meet New Zealand reporting obligations.
- These entities will file their parent companies audited and consolidated Australian GAAP financial statements with ASIC for Australian reporting purposes and to meet audit and reporting obligations. This ensures these entities adhere to New Zealand reporting obligations.
How can the exemption be obtained?
- the parent’s consolidated financial statements must comply with applicable Australian accounting standards
- the parent’s consolidated financial statements must be audited by a qualified auditor in accordance with applicable Australian auditing standards, and
- within 20 working days after the parent’s consolidated financial statements are required to be signed (in Australia), the following documents must be delivered to the New Zealand Registrar by the directors of the exempt Australian subsidiary:
- the parent’s consolidated financial statements, together with the auditor’s report on those statements
- a memorandum signed by the directors with the details specified in the Exemption Notice (item 7(c)), and
- a copy of Class Order 98/1418.
Differences to the rule
- The relief does not extend to the filing and audit requirements for the New Zealand branch – financial statements for the branch, if that is large (as defined in section 204 of the New Zealand Companies Act 1993), must still be prepared, audited and filed in accordance with the requirements of the Companies Act 1993.
- Relief has only been provided for entities applying Australian Securities and Investment Commission (ASIC) Class Order 98/1418 of Wholly-owned entities. Small Australian proprietary companies with New Zealand branch operations would still have reporting obligations in New Zealand if they meet the ‘large overseas company’ thresholds under New Zealand law, which are different from the size test under Australian law.
This exemption notice, issued with immediate effect on 18 June 2015 and will expire on 31 July 2020, the exemption applies also to accounting periods that commenced before the exemption was granted (e.g. 31 March 2015 year ends) provided that the financial statements were not required to be registered or completed before 18 June 2015.