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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

207K: Companies with fewer than 10 shareholders may opt in

You could also call this:

“Small companies can choose to follow special financial reporting rules”

If you own a company with less than 10 shareholders, and it’s not a large company, you can choose to follow some special rules. These rules are about making financial reports.

You or other shareholders who own at least 5% of the voting shares can ask the company to follow these rules. You need to tell the company in writing during a special time period. This period ends 5 working days before the company’s accounting period finishes.

You can ask the company to do one or more of these things:

  1. Make financial statements for the company or the group it’s part of.
  2. Have the financial statements checked by an expert (this is called an audit).
  3. Write a yearly report about how the company is doing.

If you ask the company to follow any of these rules, the company must do so for that accounting period.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM6041585.

Topics:
Business > Industry rules
Business > Fair trading
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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”

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207L: Registrar may grant exemptions to overseas companies, or

“Registrar can excuse overseas companies from some rules”

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

207KCompanies with fewer than 10 shareholders may opt in

  1. This section applies to a company (other than a large company) with fewer than 10 shareholders.

  2. A shareholder of the company who holds, or shareholders of the company who together hold, not less than 5% of the voting shares may, by written notice given to the company within the opting period but not later than 5 working days before the end of that period, require the company to comply with 1 or more of the following provisions in relation to the accounting period:

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

        1. If a notice is given under subsection (2) in relation to a provision and an accounting period, the provision applies to the company in relation to that period.

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