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New Zealand law explained for everyone

Companies Act 1993

Accounting records and financial reporting - Financial reporting - Provisions relating to opting out and opting in

207I: Companies with 10 or more shareholders may opt out

You could also call this:

“Companies with 10 or more shareholders can choose to skip some financial rules”

If your company has 10 or more shareholders, you can choose not to follow some rules. This is called “opting out”. You can’t do this if your company’s constitution says you can’t, or if your company is very big or a public entity.

To opt out, you need to have a meeting with your shareholders. This meeting must happen during a special time called the “opting period”. At the meeting, you can vote to opt out of some rules. These rules are about making financial statements, having your finances checked by an expert (called an audit), and writing a yearly report.

To opt out, you need a lot of people to agree. At least 95% of the shareholders who can vote must say yes. If you do opt out, you don’t have to follow those rules for that year’s finances.

Remember, opting out is a choice. You don’t have to do it if you don’t want to. It’s just an option for some companies to make things simpler.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM6041583.

Topics:
Business > Industry rules
Business > Fair trading
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207H: Period during which company may opt in or opt out, or

“When companies can choose to follow or not follow certain rules”

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207J: Large companies may opt out of audit requirement, or

“Large companies can choose to skip financial audits if shareholders agree”

Part 11 Accounting records and financial reporting
Financial reporting: Provisions relating to opting out and opting in

207ICompanies with 10 or more shareholders may opt out

  1. This section applies to a company with 10 or more shareholders.

  2. However, this section does not apply—

  3. if the constitution of the company expressly provides that this section does not apply; or
    1. if the company is a large company or a public entity.

      1. The shareholders of the company may, at a meeting of shareholders held within the opting period, opt out of compliance with 1 or more of the following provisions in relation to the accounting period by way of a resolution approved by not less than 95% of the votes of those shareholders entitled to vote and voting on the question:

      2. sections 201 and 202 (preparation of financial statements and group financial statements):
        1. section 207 (audit requirement):
          1. section 208 (obligation to prepare annual report).

            1. If the shareholders opt out of compliance with a provision in relation to an accounting period under this section, the provision does not apply to the company in relation to that period.

            Notes
            • Section 207I: inserted, on , by section 30 of the Financial Reporting (Amendments to Other Enactments) Act 2013 (2013 No 102).