Changes To Financial Reporting for SMEs
Currently all companies are required to prepare annual financial reports which can be both expensive and time consuming. For the majority of Small and Medium Enterprises (“SMEs”) the cost involved in preparing such reports often outweigh any benefit obtained from the information gathered as that information is often known to the directors and shareholders (who are often one and the same).
A number of changes have been proposed by the Ministry of Economic Development in an attempt to find a balance between the cost of reporting and the benefits that are obtained from financial reports which can assist both the directors and shareholders to make economic decisions, to promote accountability and transparency or both. It is proposed that from around mid 2013 small and medium sized companies will no longer be required to prepare General Purpose Financial Reports (“GPFRs). Instead they will be able to prepare special purpose financial reports (“SPFRs”) which may be required to comply with the tax obligations. The New Zealand Institute of Chartered Accountants are currently developing revised requirements in regards to those special purpose financial reports.
These changes will affect SMEs and will result in a reduced reporting burden for those companies. While the default position for small or medium sized companies with 10 or more shareholders will be to prepare general purpose financial reports, those companies will be able to opt out of those reporting obligations if 95% of voting shares support the motion. Companies of less than 10 shareholders will only have to prepare GPFRs if shareholders representing the 5% or more of voting shares require it. The reduced reporting obligations will reduce compliance costs for both small and medium sized companies as 1) there will be a reduction in the number of disclosures they all need to make and 2) there will be a move from reasonably complex reporting requirements to a simple type of reporting which is specifically for tax purposes.
While it is hard to quantify exactly what the cost and benefits of the amended reporting requirements will be, it has been estimated that savings of at least $100.00 per year for small companies to $5,000.00 for a medium sized company could be made.
While indications are that these changes are going to be accepted and into force in mid 2013, there remains an ongoing obligation of directors to keep accurate records and to provide those reports to shareholders.
Graham Healey, Langley Twigg
New Zealand Employment Law Update
In May the National Government followed up on its pre-election manifesto by passing the following changes to employment law through Cabinet.
Removing the requirement to conclude a collective agreement unless there are genuine reasons not to, while retaining the requirement to bargain in good faith.
Allowing employers to opt out of multi-employer collective bargaining before negotiations for a multi-employer collective agreement begins.
Allowing for partial pay reductions in cases of partial strike action, and
Removing the 30 day rule where workers are covered by their applicable collective agreement before deciding whether to join the union.
Three new changes were also announced by Cabinet.
The first enables employers to initiate collective bargaining at the same time as Unions. Currently Unions are entitled to a 20 day “head start” when initiating collective bargaining under the Employment Relations Act 2000. Unions could initiate bargaining no earlier than 60 days before a collective employment agreement expired while the employer only had 40 days. Unions saw this as a fundamental right as it allowed them to define the scope of the bargaining. The Government was concerned that this head start created an imbalance in the bargaining position of both parties. This change however could create timing issues if both parties initiate that collective bargaining at the same time. It is yet to be determined what the period will now be for both employers and Unions.
Secondly, Cabinet has approved the changes whereby Unions and employers will be required to provide notice of a strike or lockout. Currently notice of a strike or lockout is only required where “essential services” are involved. This will be extended to all industries. The length of the notice is yet to be determined but is likely to result in Unions being unable to conduct some industrial action, such as “lightening strikes”.
Finally, the Cabinet has approved an extension of the rights of employees to request flexible working arrangements. Currently only certain employees are able to request a variation of their working arrangement. To be eligible to make that request, an employee must have the care of a person, and must have been employed by their employer for at least six months. The amendments proposed will extend the right to request flexible working hours to all employees from day one of employment and without any requirement for caring responsibilities. The right will remain a right to request, and not a substantive right to flexible working arrangements. It is unclear whether the statutory grounds available to employers for refusing a request will remain however. These changes are expected to come into effect later this year.
For all your employment law enquiries please contact us.
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