Final CRD exemption for entities in liquidation or administration published

The final form of the exemption notice for climate-reporting entities (CREs) in liquidation, wind-up, or external administration came into effect on 30 November 2024.

The exemption cancels climate-reporting obligations that would otherwise apply under Part 7A of the Financial Markets Conduct Act 2013 (FMCA) where the CRE is in liquidation and in wind-up. For CREs in external administration, CRD obligations are deferred for up to three accounting periods.

The exemption follows the consultation issued in June 2023, which was followed by the Financial Markets Authority's (FMA) in-principle agreement to grant the exemption in November 2023.

Notably, the final exemption notice now includes a separate definition of "new investment" in the context of how the exemption would be disapplied if the scheme continues to accept new investment. "New investment" is defined as:

• an investment by a person who was not a scheme participant at the time of the wind-up decision date; or
• an increase or additional investment by a person who was a scheme participant as of the wind-up decision date (with certain exclusions).

The corresponding section in the consultation draft disapplies the exemption if the manager of a scheme in wind-up "makes an offer" of managed investment products "for issue" in that scheme. It was unclear what it meant to "make an offer for issue."

While the FMCA definition of "offer" is to invite applications for an issue of financial products, this wording may have inadvertently narrowed the scope of the exemption to the exclusion of schemes which, while the winding-up process has begun, might not have immediately stopped receiving direct debits from scheme participants.

We think that this is a good clarification of the scope of the exemption because it will provide some necessary certainty, especially for schemes that might have a longer winding-up period or are not immediately able to stop receiving regular contributions.

We are also pleased to see the exemption notice finalised, as this will no doubt provide much-needed relief and certainty for any CREs in liquidation, wind-up, or external administration. Until now, only tailored no-action relief was available.

Follow this link to see the final exemption notice: Financial Markets Conduct (Climate Reporting Entities in Liquidation, Wind-up, or External Administration) Exemption Notice 2024 (SL 2024/239) Contents – New Zealand Legislation

If you have any questions on the final exemption notice, please get in touch with Tom Barnes, Daniel Street, or your usual DLA Piper advisor.