From 1 July 2019, changes to the regime governing reporting obligations of Australian proprietary companies will come into effect with the thresholds that determine when a company is a “large” proprietary company to be doubled.
For Australian proprietary companies, the Corporations Act 2001 (Cth) (Corporations Act) generally imposes less onerous financial reporting obligations than those of public companies. A proprietary company that is considered “large” for the purposes of the Corporations Act however must annually lodge a financial report, director’s report and an auditor’s report with the Australian Securities & Investments Commission (ASIC).
Under the current regime a company is considered a “large” proprietary company if it meets at least two of the following thresholds in any financial year:
In accordance with the Corporations Amendment (Proprietary Company Thresholds) Regulations 2019 (Cth) passed in April 2019, the new thresholds will double to a company meeting at least two of the following thresholds in any financial year:
The increased thresholds will relieve many proprietary companies from their financial reporting obligations to ASIC commencing from the 2019-2020 financial year. As the regime has not been reviewed since 2007, the Government’s aim via these amendments are to keep pace with economic growth as to target ‘economically significant’ companies in regards to financial reporting obligations whilst relieving the reporting costs of small-medium companies.
The new thresholds may also reduce the number of companies required to adopt a whistleblower policy under the Treasury Laws Amendment (Enhancing Whistleblower Protections) Act 2019 (Cth) which also comes into operation from 1 July 2019. More information on these changes are discussed in our previous article.
We would be pleased to assist you with the above changes and opportunities. Please do not hesitate to get in touch with Jeremy Smith, Chairman or Clare Miller, Partner in our Corporate Advisory & Tax team.