The change to ‘Large Proprietary Company’ thresholds brings widespread reporting relief for FY 2019–20. A ‘proprietary company’ may either be classified as ‘small’ or ‘large’ under section 45A of the Corporations Act 2001 (Cth) (Act).
Large proprietary companies must prepare and lodge with ASIC a financial report and a director’s report for each financial year under Part 2M.3 of the Act, and implement a Whistleblower Policy under Part 9.4AAA of the Act.
The Corporations Amendment (Proprietary Company Thresholds) Regulations 2019 has updated the definition of a ‘large proprietary company’ for the purposes of section 45A of the Act.
The Regulations commenced on 1 July 2019.
The relevant thresholds are as follows:
A proprietary company is classified as ‘large’ if it satisfies at least two of the above three tests.
Introduced to “keep pace” with economic growth and inflation, the changes will reduce the cost of compliance for those smaller entities, no longer classified as ‘large’.
The Treasury estimates that approximately one third of those proprietary companies that lodged audited financial reports with ASIC for the 2017–18 Financial Year, will no longer be required to lodge reports for the forthcoming 2019–20 Financial Year, under the new definitional thresholds.
The financial compliance and record-keeping requirements for small proprietary companies are otherwise unchanged (including that they may be required to prepare audited financial reports if directed by ASIC or 5% of their shareholders). With this in mind, and despite the changes to the thresholds, directors should ensure they remain appraised of record-keeping and compliance requirements.
