As from 1 July 2019 the Federal Government doubled the thresholds that define large proprietary companies. The basis was to adjust for nominal economic growth since the prior thresholds were last adjusted in 2007.
Large proprietary companies have higher financial reporting and compliance obligations than small proprietary companies. The new regulations aim to ensure that financial reporting obligations are targeted at economically significant companies, while reducing costs for smaller sized companies. The changed thresholds are set to give audit and reporting relief to a large number of companies that prior to 1 July 2019 fell within the large proprietary company obligations.
How does this apply to me?
Approximately one-third of proprietary companies that lodged audited financial reports with ASIC from 2017-2018 will no longer be required to do so under the increased thresholds. If a company fits within the previous definition of a large company, but not the new thresholds, it will still need to lodge the relevant returns for the 18/19 financial year. However, in the new 19/20 financial year the company will revert to be a small proprietary company and may report accordingly.
For those still captured, increased reporting requirements may apply. For example, public and large proprietary companies must ensure that they have compliant whistleblowing policies in place as soon as possible but no later than 1 January 2020 to avoid penalties. Companies that fail to have compliant whistle-blower policies may be subject to a civil penalty – currently $12,600. The whistle-blowing protections have also been broadened by the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2019 (Cth) which you can see in our previous insights titled "New Whistle Blowing Protections".
Cowell Clarke is well able to advise clients on the new large proprietary company thresholds and their reporting obligations and to assist clients with preparing whistle-blower policies or updating current policies to comply with the new regime.
If you would like to discuss this topic, please contact Susan Robertson, Brett Cowell or Megan Jongebloed or a member of our Corporate team by clicking on the following link - Contact Us.
Corporations Amendment (Proprietary Company Thresholds) Regulations 2019
This publication has been prepared for general guidance on matters of interest only and does not constitute professional legal advice. You should not act upon the information contained in this publication without obtaining specific professional legal advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication and to the extent permitted by law, Cowell Clarke does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting or refraining to act in relation on the information contained in this publication or for any decision based on it.