Apple Fields' directors fined $30,000 over filing omissions

Monday 25th May 2015

Justin Prain and Mark Schroeder, directors of the formerly NZX listed Apple Fields, have been fined $30,000 each for failing to file financial statements for three years.

The Christchurch District Court found the two directors failed under the Financial Reporting Act to report Apple Fields' accounts, according to Judge Emma Smith's February judgement. The Financial Markets Authority brought the charges against the two directors after they failed to report the annual accounts for the financial years between 2011 and 2013. The FMA can seek fines of up to $100,000 for failure to report.

Christchurch based Apple Fields, which listed on the NZX in 1986, was once New Zealand's largest corporate orchardist and clashed with the Apple and Pear Marketing Board for the right to export fruit independently. The company moved into property development in the early 2000s, with Prain appointed a director in 2002 and Schroeder in 2003.

Apple Fields entered into a property development arrangement with Noble Investments in Christchurch, which was planning to subdivide land on Yaldhurst Road into 254 residential sections as well as develop a village centre. After changes in the joint venture, Noble Investments could be considered a subsidiary and its accounts needed to be included in Apple Fields' group accounts, according to the judgement. The Yaldhurst development stalled when Apple Fields ended up in a protracted legal battle with neighbouring landowners.

Prain and Schroeder defended the charges brought by the FMA, arguing the difficulties in obtaining auditors for the annual accounts and complications over obtaining Noble Investments' accounts was the reason behind the non-filing of Apple Fields' accounts.

Judge Smith accepted there can be "extenuating, unusual intervening circumstances that might mean a company is quite unable for a period of time to complete accounts" but the circumstances presented by Prain and Schroeder didn't prevent them from signing accounts "complete as far as they can be complete" and qualifying there should be more information.

The directors "failed to take all reasonable and proper steps to ensure the applicable requirements of the Act were complied with, in failing to submit the accounts to the auditors," Judge Smith wrote in the judgement, and Apple Fields cannot be "a non-compliant issuer on an indefinite, ongoing basis."

The FMA's director of enforcement and investigations, Belinda Moffat, said the fines reinforced the expectation that issuers of securities will file timely and accurate financial statements.

"If they are unable to comply with the regulatory requirements then they need to consider whether they can continue to be issuers," Moffat said in a statement.

The case was taken following the financial markets watchdog's 2013 review of compliance with the financial reporting law, which has seen seven directors fined.

Apple Fields delisted from the NZX in 2010, after its shares were halted for failing to report its annual accounts for the year ended Sept. 30, 2009.

BusinessDesk.co.nz

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