What are the changes?
The simplification of compliance obligations required by Corporations Act 2001 (Cth) took a step forward with the commencement of the Corporations Legislation Amendment (Deregulatory and Other Measures) Act 2015 on 19 March 2015.
Two key changes are:
- the removal of the ‘100 member’ meeting rule; and
- the removal of the requirement to appoint or retain an auditor for certain companies limited by guarantee.
Removal of the ‘100 member’ meeting rule
Prior to the amendment, directors were required to call a general meeting if requested to do so by at least 100 members or members with at least 5% of the votes entitled to be cast.
This change means that companies are only required to convene a general meeting in response to a request from members where the requesting members hold, in aggregate, at least 5% of the votes which may be cast at such a meeting.
The amendment recognises that, particularly in relation to listed entities, the wishes of 100 shareholders (regardless of the size of their holdings) do not necessarily justify the cost and expense for the company of convening a general meeting.
Auditor exemption for small companies limited by guarantee
While previously all companies limited by guarantee were required to appoint an auditor within one month of registration, this requirement no longer applies to small companies limited by guarantee (those with consolidated revenue of less than $250,000).
This amendment removes the previous anomaly where small companies limited by guarantee were required to appoint an auditor and retain an auditor, but not actually required to produce audited financial reports.
The amendment of this requirement removes unnecessary regulation of small companies limited by guarantee and simplifies the compliance requirements for this popular not-for-profit structure.