02 9683 5999JENNIFER MURRAY, GOODING PERVAN – DFK MEMBER FIRM
The Corporations Act 2001 (Cwth) sets down deadlines which companies must meet during the process of reporting which ensures that there is timely and current information available for investors and the general public.
Most Australian companies have financial years that end on 30 June and this article deals the reporting requirements for those companies. If your company has a financial year end which differs from 30 June you should contact this office to determine your reporting requirements.
PUBLIC COMPANIES
Section 319 of the Corporations Act 2001 requires disclosing entities and registered schemes to lodge financial statements, notes to the financial statements, disclosures and reports with the Australian Securities & Investments Commission (ASIC) within 90 days of the end of the financial year. Section 111AC of the Corporations Act 2001 defines a disclosing entity as one that has issued ED Securities (Enhanced Disclosure Securities).
Listed public companies are required to lodge preliminary financial information with the Australian Stock Exchange (ASX) within two months of the end of the financial year and the full statutory financial information with ASX at the same time it lodges with ASIC.
Pubic companies that are not disclosing entities must lodge financial statements, and reports with ASIC within four months of the end of the financial year and provide the information to shareholders.
Public companies must also hold an annual general meeting of its members once in each calendar year and within five months after the end of its financial year. This requirement does not apply to a public company that has only one member.
PRIVATE COMPANIES
Private (proprietary) companies are broken into two broad categories – large proprietary companies and small proprietary companies. The reporting obligations of these groups of companies differ significantly.
LARGE PROPRIETARY COMPANIES
Section 45A(3) of the Corporations Act 2001 determines that a proprietary company is a large proprietary company where it satisfies at least 2 of the following criteria:
- The consolidated revenue for the financial year of the company and the entities it controls (if any) is $25 million or more.
- The value of the consolidated gross assets at the end of the financial year of the company and the entities it controls (if any) is $12.5 million or more.
- The company and the entities it controls (if any) have 50 or more employees.
Consolidated revenue and the value of consolidated gross assets are to be calculated for the purposes of this section in accordance with accounting standards in force at the relevant time.
In counting employees, part time employees are to be taken into account as an appropriate fraction of a full-time equivalent.
If a proprietary company falls into the category of a large proprietary company the financial statements and notes, must be prepared in accordance with the Australian Equivalents to International Financial Reporting Standards (AIFRS). The level of compliance with AIFRS may depend on the directors’ decision as to whether the company is a reporting entity. In addition, the directors must have these financial statements audited in accordance with Australian Auditing Standards.
Large proprietary companies must lodge the audited financial statements and reports with ASIC within four months of the end of the financial year.
SMALL PROPRIETARY COMPANIES
Small proprietary companies are proprietary companies which are not large proprietary companies.
Small proprietary companies are normally not required to lodge financial information with ASIC. They must, however, maintain adequate financial records that will enable financial statements to be prepared if necessary.
The Corporations Act 2001 requires all companies to keep records that correctly record and explain the entity’s transactions, financial position and performance, and enable the preparation and audit of true and fair financial statements.
Shareholders with at least 5% of the voting rights in a company may request a small proprietary company to prepare financial statements and have them audited. A similar power also rests with ASIC. If a company receives such a direction the company must report to the members or to ASIC (as detailed in the direction received) within the later of two months after the date of the direction or four months after the end of the financial year.
Small proprietary companies which are controlled by a foreign company for all or part of the financial year are required to prepare and lodge financial information with ASIC within four months of the end of the financial year. This includes having its financial statements audited in accordance with Australian Auditing Standards. There are exemptions available in limited circumstances relieving foreign controlled small proprietary companies from having their financial statements audited. Once a small proprietary company ceases to be controlled by a foreign company it must notify ASIC of this fact so that it can stop lodging financials.
ANNUAL DECLARATIONS OF SOLVENCY
The directors of all proprietary companies (which do not lodge financial statements) must make a declaration of solvency within two months of the annual review date. If the directors make a negative solvency statement then ASIC must be notified within seven days after the resolution is passed. If the directors do not make a solvency statement then the ASIC must be notified within seven days after the two month period following the review date of the company.
