Financial reporting relief
The passing of 30 June marks the end of the financial year for many entities. For those which are required to prepare and lodge financial reports, it also represents the beginning of the countdown to the due date for lodgement with ASIC under the Corporations Act 2001 (Cth) (Corporations Act). As such, it is now an opportune time for entities to review their financial reporting obligations and consider their eligibility for any relief from the requirements of the Corporations Act.
Requirement to prepare financial reports
Broadly speaking, an entity will be required to prepare and lodge financial reports with ASIC within four months of the end of its financial year (or within three months where it is a disclosing entity) unless a relevant exemption applies. This requirement includes listed companies, registered management investment schemes, public unlisted companies and large proprietary companies.
Small proprietary companies are not subject to financial reporting requirements, unless they are controlled by a foreign entity.
Wholly-owned entity reporting relief
In order to reduce the administrative burden and costs of complying with the financial reporting obligations for large corporate groups, relief is available under ASIC Instrument 2016/785 (Instrument 2016/785). The relief is available to wholly-owned companies (which would otherwise be required to comply with the financial reporting obligations) provided that the company enters into a deed of cross guarantee with its holding company and other relevant members of its corporate group, and meets certain other conditions within the required time periods (such as the lodgement of an ‘opt-in’ notice with ASIC).
It should also be noted that companies already relying on relief under the former ASIC class order (which has been replaced by Instrument 2016/785) may continue to rely upon that relief, but where a company is to be added or removed as a party to the deed of cross guarantee, the existing deed of cross guarantee will require amendment in order to comply with the terms of Instrument 2016/785.
Foreign-controlled entity reporting relief
For small proprietary companies which are controlled by a foreign entity (and which are ineligible for relief under Instrument 2016/785), ASIC relief may be available under ASIC Instrument 2017/204. In order to rely on the relief, the small proprietary company controlled by a foreign entity must not be part of a large group (being a corporate group, any member of which is a large proprietary Australian company), and must resolve to rely on the relief and lodge notice of that resolution with ASIC. This must occur no earlier than three months prior to and no later than four months following the end of the relevant financial year.
How we can assist
If you believe an entity you are involved with may be required to prepare financial reports, or may be eligible to rely on ASIC relief from the reporting requirements of the Corporations Act, please contact us.
We have the experience to assist at each stage of the process, from providing advice as to an entity’s financial reporting obligations and eligibility to rely on ASIC relief, to preparing the documentation required in order to rely on such relief.
This publication covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. It is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.