FMA cracks down on late reporting

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Company director fined $30,000 as watchdog targets firms that miss deadline for filing financial statements.

New Zealand's market watchdog says a spate of prosecutions shows the consequences for firms which don't file financial statements on time and warns that those which are late again this year will come back under its scrutiny.

One company director, Ross Collins, was fined $30,000 last week for breaching the Financial Reporting Act after he pleaded guilty to eight charges of failing to deliver financial statements to the Registrar of Companies.

He is the director of three companies which between them have 600 investors with more than $3 million in shareholders' capital.

After Collins' sentencing in the Tauranga District Court, the Financial Markets Authority said the fine sent "an important signal to companies seeking to raise funds from the public about the consequences of failing to file accurate information on time".

Collins was one of seven directors the Financial Markets Authority has targeted for alleged breaches of the Financial Reporting Act. The firms associated with these directors had allegedly persistently failed to file financial statements on time or at all, which the FMA said was a basic requirement for companies that issue securities to the public.

A $100,000 penalty is the maximum that can be imposed for each breach of the Financial Reporting Act, which requires that directors of securities issuers file audited financial statements within five months and 20 days of their balance date.

While the FMA's prosecutions relate to only a handful of firms, a recently released review of 416 companies that raise funds from the public found 25 per cent of them had not filed financial statements on time last year.

The review also said that about 10 per cent of the firms still had outstanding accounts at November 2013, despite reminder notices being sent.

The FMA said these companies would again come under scrutiny if they failed to file on time this year.

"If the same companies have failed to file their March 2014 financial statements by the due date then we will continue to monitor them," a spokesman said. "The FMA prefers that companies comply willingly without the need for enforcement, but where it's necessary we will enforce compliance."