The ASIC Corporations (Foreign-Controlled Company Reports) Instrument 2017/204 aims to put small foreign-controlled proprietary companies on par with other Australian small proprietary companies and also relieve a registered foreign company with characteristics similar to a small Australian proprietary company from the requirements of section 601CK of the Corporations Act 2001 (Cth ) (Act) in certain circumstances where they are not part of a “large group”.
A “large group” is a group which, for a financial year, exceeds at least 2 of the consolidated revenue, consolidated gross assets and number of employee limits for a small proprietary company under section 45A(2) of the Act.
A small proprietary company controlled by a foreign company does not have to comply with Part 2M.3 in relation to a financial year provided certain conditions are met, including that:
- the company is not part of a group controlled by a foreign company which is a large group ;
- the directors of the company have resolved, no earlier than 3 months before the start of the relevant financial year, that the relief will be relied on that in respect of the relevant financial year;
- either the company relied on the relief in the previous financial year or notice of the resolution of directors referred to above is lodged with ASIC using Form 384 during the period commencing 3 months before the start, and ending 4 months after the end, of the relevant financial year; and
- if the company did not rely on the relief in the previous financial year, it was not able to rely on the relief in respect of each financial year since the last reliance year.
The requirement to lodge financial reports under section 601CK(1) to (6) of the Act do not apply in relation to a calendar year commencing on or after 1 January 2017 in respect of a registered foreign company provided certain conditions are met, including that:
- the foreign company is subject to restrictions under the law of its place of origin that are no less than those applying to proprietary companies under section 113 of the Act;
- the foreign company is not required under the laws of its place of origin to prepare financial reports for its last financial year;
- the foreign company has not been a disclosing entity, borrower in relation to a debenture of a guarantor of such borrower at any time during the calendar year;
- the foreign company satisfies at least 2 of the paragraphs in section 45A(2) of the Act in relation to its last financial year; and
- either the foreign company is not part of a large group in relation to its most recent financial year, or the foreign company was consolidated in statements which cover the whole of that financial year and were lodged with ASIC by a company, registered foreign company, registered scheme or disclosing entity which controlled the foreign company for the whole of that financial year.
Note: Senator Whish-Wilson has given notice that he will move to disallow the Instrument on 11 May 2017, at which point the motion will be debated and if agreed to, the Instrument will be disallowed (and will cease to have effect).