FMA consultation on proposed reporting, audit and assurance exemptions for schemes in wind-up

The Financial Markets Authority – Te Mana Tātai Hokohoko (FMA) is consulting on a class exemption that would provide relief for registered schemes in wind-up from certain reporting, audit and assurance obligations under the Financial Markets Conduct Act 2013 (FMCA).

A scheme's primary objective during wind-up is to sell-off and realise assets and so the FMA considers the cost of compliance with those reporting, audit and assurance requirements may outweigh their benefits.

Submissions close at 17:00 on Monday, 12 May 2025.

What are the FMA's proposals?

The FMA is considering a class exemption for registered schemes in wind-up from the following obligations:

• Financial reporting: No relief is proposed from the s213 final financial statements obligations. However, four options have been proposed for "business as usual" financial statements obligations under Part 7. One: relief from the obligation to prepare Part 7 financial statements if the wind-up effective date is within four months of balance date and the scheme has not yet made the final distribution. Two: relief from the obligation to have Part 7 financial statements audited if balance date occurs after the wind-up effective date and before the final distribution. Three: relief from Part 7 financial reporting and audit obligation provided the s 213 financial statements are prepared and audited. Four: maintain the status quo whereby individual relief may be granted on a case-by-case basis.
• Annual report: Relief from annual reporting obligation. However, the FMA is considering whether certain information (such as updates on the financial condition and performance of the scheme, fees, and scheme property) should still be published.
• Fund updates and related register entry updates: Relief from fund updates and related register entry obligations. However, the FMA is considering whether there is any information (such as fees) that should still be reported on during the wind-up.
• Limit break reporting: Relief from limit break reporting from the wind-up effective date.
• Related party transaction reporting: Relief from the quarterly "wash up" related party reports but only if the report would have otherwise been a nil report.
• Audit of financial product register: Relief from the obligation to have their financial product register (i.e., investor register / member register) audited.
• Annual custodian assurance engagement: Relief from the requirement to obtain a custodial assurance report for periods after wind-up effective date subject to certain conditions (e.g., the last two assurance reports were not qualified).
• Full portfolio holdings reporting: Relief from the biannual full portfolio holdings reporting requirement.

The FMA proposes several requirements to ensure stakeholders are notified of the intention to rely on the exemption. These are:

• The scheme must have a clearly defined wind-up effective date.
• The scheme must comply with the normal winding up requirements set out in FMCA ss 212 and 213 as well as any requirements set out in the scheme's governing documents.
• The Manager or Supervisor must provide written notice to the Registrar, the FMA, and scheme participants that they intend to rely on the exemption.
• Scheme investment products are no longer offered or issued.
• If the scheme ceases to be in wind-up, the exemption no longer applies, and any compliance relief is terminated.

Our views

We support the proposed exemption. It would reduce compliance burden placed on schemes that are in wind-up and the associated costs which are typically borne by investors. Many of the FMCA's ongoing disclosure and reporting requirements do not have obvious value during the wind-up phase of a scheme's life. This allows participants to focus on the primary objective – the efficient and effective selling and realising of scheme assets.

Read the FMA's consultation document for the full details.

If you would like to discuss the submissions process further, or FMCA compliance more generally, please get in touch with an expert from our Funds Management team.