MKT 10. MKT 10. ACCOUNTING PERIODS, FINANCIAL REPORTS AND AUDITING
Guidance1. Section 78 of the FSMR provides that a Reporting Entity shall prepare and file with the Regulator an annual financial report in accordance with the requirements prescribed in these Rules.2. Section 79 of the FSMR provides that a Reporting Entity shall prepare and file with the Regulator:a. a semi-annual financial report; andb. any other financial statements as are required by the Regulator, in the circumstances prescribed by Rules.
MKT 10.1 MKT 10.1 Application
MKT 10.1.1 MKT 10.1.1
This section applies to every Reporting Entity other than that of a Listed Fund except where a narrower application is provided in respect of any particular class of Security.
Chapter 3 contains the requirements relating to accounting periods and financial reporting in respect of Listed Funds.
Financial reporting standards
MKT 10.1.2(1) A Reporting Entity must prepare financial statements for each financial year of the Reporting Entity.(2) A Reporting Entity must prepare and maintain all financial statements in accordance with the International Financial Reporting Standards (IFRS) or other financial reporting standards acceptable to the Regulator.
MKT 10.1.3(1) A Reporting Entity must not change its accounting reference date as specified in its most recent Prospectus unless it has obtained the prior approval of the Regulator in accordance with the requirements in (2).(2) A Reporting Entity that proposes to change its accounting reference date must:(a) notify the Regulator of its proposal at least 28 Business Days prior to making such a change; and(b) obtain the Regulator's prior approval for the proposed change.
Annual financial report
MKT 10.1.4 MKT 10.1.4(1) The annual financial report which is required to be produced by a Reporting Entity pursuant to section 78 of the FSMR must include the information specified in (2).(2) In respect of the financial year to which the annual financial report relates, it must contain:(a) financial statements audited in accordance with Rule 10.1.5;(b) a review of the operations during the year and the results of those operations;(c) details of any significant changes in the Reporting Entity's state of affairs during the financial year;(d) details relating to the Reporting Entity's principal activities during the year and any significant changes in the nature of those activities during the year;(e) details of any matter or circumstance that has arisen since the end of the year that has significantly affected or may significantly affect:(i) the Reporting Entity's operations in future financial years and the results of those operations; or(ii) the Reporting Entity's state of affairs in future financial years; and(iii) likely developments in the Reporting Entity's operations in future financial years and the expected results of those operations;(f) a statement by Directors stating whether or not, in their opinion, the business of the Reporting Entity is a going concern, with supporting assumptions or qualifications as necessary; and(g) details relating to the identity and holdings of any Connected Person of the Reporting Entity.
Guidance1. With regard to the opinion required under the obligation in Rule 10.1.4(2)(f), the Regulator recognises that while the financial statements will be prepared by Persons other than the Directors, the Board has overall responsibilities to ensure the integrity and independence of the financial reporting process.2. Note that Reporting Entities are also required to comply with Rule 9.2.10 on annual reporting of their compliance with Corporate Governance Principles.
MKT 10.1.5 MKT 10.1.5
The annual financial report of a Reporting Entity that is not a Public Listed Company must be audited by an independent, competent and qualified auditor in accordance with the International Standards on Auditing as issued by the International Auditing and Assurance Standards Board ("IAASB") or other standards acceptable to the Regulator.
Guidance1. A Public Listed Company is required under section 82 of the FSMR to appoint an auditor. Under Rule 10.2.7 a Public Listed Company must require its auditor to conduct an audit of its financial statements in accordance with the requirements of the relevant standards published by the International Auditing and Assurance Standards Board (IAASB) in respect of its financial business or other standards acceptable to the Regulator and produce audit reports as specified in GEN.
The annual financial report must be signed by at least two Directors of the Reporting Entity.
Semi-annual financial report
MKT 10.1.7(1) Pursuant to section 79 of the FSMR, a Reporting Entity in respect of Shares, or Warrants or Certificates over Shares must, in addition to the annual financial report, prepare and file a semi-annual financial report which meets the requirements in (2) and (3).(2) A Reporting Entity must:(a) prepare such report:(i) for the first six months of each financial year or period, and if there is a change to the accounting reference date, prepare such report in respect of the period up to the old accounting reference date; and(ii) in accordance with the applicable IFRS standards or other standards acceptable to the Regulator;(b) if the financial statements have either been audited or reviewed by auditors, include in the report statements to that effect; and(c) ensure that the report includes:(i) an indication of important events that have occurred during the first six months of the financial year, and their impact on the financial statements;(ii) a description of the principal risks and uncertainties for the remaining six months of the financial year; and(iii) a condensed set of financial statements, an interim management report and associated responsibility statements.(3) A semi-annual financial report must be signed by at least two Directors of the Reporting Entity.
MKT 10.1.8(1) A Reporting Entity where it is required by the FSMR and these Rules to prepare the following financial reports must disclose to the market, in accordance with Rule 7.7.1:(a) its annual financial report;(b) its semi-annual financial report; and(c) its preliminary financial results.(2) A Reporting Entity must make the market disclosure required in (1) within the following time periods:(a) in relation to its annual financial report, as soon as possible after the financial statements have been approved, but no later than four months after the end of the financial period;(b) in relation to its semi-annual financial report, as soon as possible and in any event no later than two months after the end of the period to which the report relates; and(c) in relation to its preliminary financial results, as soon as possible but no later than 30 minutes before the market opens on the day after the approval of the Board.(3) A Reporting Entity must, where there is a change to its accounting reference date, disclose to the market in accordance with Rule 7.7.1:(a) the change to its accounting reference date as soon as possible; and(b) a second interim report within six months of the old accounting reference date if the change of the accounting reference date extends the annual accounting period to more than 14 months.
MKT 10.2 MKT 10.2 Application in respect of a Public Listed Company
MKT 10.2.1 MKT 10.2.1
This section applies to every Public Listed Company.
Guidance1. A Public Listed Company is defined in GLO to mean a person incorporated or formed in the ADGM and who is admitted to an Official List of Securities in the ADGM or to an equivalent list of Securities in another jurisdiction.2. A Public Listed Company is required under section 82 of the FSMR to appoint an auditor.
Appointment and termination of auditors
A Public Listed Company must:(1) notify the Regulator of the appointment of an auditor by completing and submitting such form as the Regulator shall prescribe;(2) prior to the appointment of the auditor, take reasonable steps to ensure that the auditor has the required skills, resources and experience to audit the business of the Public Listed Company for which the auditor has been appointed; and(3) ensure that the auditor, at the time of appointment and for the duration of the engagement is registered with the Regulator as an auditor.
A Public Listed Company must notify the Regulator immediately if the appointment of its auditor is or is about to be terminated, or on the resignation of its auditor, by completing and submitting such form as the Regulator shall prescribe.
A Public Listed Company must appoint an auditor to fill any vacancy in the office of auditor and ensure that the replacement auditor can take up office at the time the vacancy arises or as soon as reasonably practicable.
MKT 10.2.5 MKT 10.2.5(1) A Public Listed Company must take reasonable steps to ensure that the auditor and the relevant audit staff of the auditor are independent of and not subject to any conflict of interest with respect to the Public Listed Company.(2) A Public Listed Company must notify the Regulator if it becomes aware, or has reason to believe, that the auditor or the relevant audit staff of the auditor are no longer independent of the Public Listed Company, or have a conflict of interest which may affect their judgement in respect of the Public Listed Company.
A Public Listed Company should consider whether there is any financial or personal relationship between it or any of its relevant Employees and the auditor or any of the relevant Employees of the auditor that may affect the judgement of the auditor when conducting an audit of the Public Listed Company or complying with all its legal obligations, including the FSMR, GEN, AML and other relevant modules of the ADGM Rulebook.
Co-operation with auditors
A Public Listed Company must take reasonable steps to ensure that it and its Employees:(1) provide any information to its auditor that its auditor reasonably requires, or is entitled to receive as auditor;(2) give the auditor right of access at all reasonable times to relevant records and information within its possession;(3) allow the auditor to make copies of any records or information referred to in paragraph (2);(4) do not interfere with the auditor's ability to discharge its duties;(5) report to the auditor any matter which may significantly affect the financial position of the Public Listed Company; and(6) provide such other assistance as the auditor may reasonably request it to provide.
Function of the auditor
A Public Listed Company, must in writing require its auditor to:(1) conduct an audit of the Public Listed Company's financial statements in accordance with the International Standards on Auditing as issued by the International Auditing and Assurance Standards Board (IAASB) in respect of its financial business or other standards acceptable to the Regulator; and(2) produce a Public Listed Company auditor's Report on the audited financial statements in accordance with the FSMR and GEN.
A Public Listed Company must submit any auditor's reports and financial statements required by this chapter to the Regulator within four months of the Public Listed Company's financial year end.