From 1 July 2019, each of the thresholds under the Corporations Regulations for determining whether a private company is a large proprietary company will double.
This will mean that many private companies:
- will no longer be considered as large proprietary companies; and
- therefore, cease to be under an obligation to lodge an annual financial report, a director’s report and an auditor’s report with the Australian Securities and Investments Commission (ASIC).
From 1 July 2019 a private company will be considered a large proprietary company for a given financial year if it satisfies at least two of the following:
- its consolidated revenue for the financial year (including any entities it controls) is $50 million or more. (The previous threshold was $25 million or more);
- the value of its consolidated gross assets at the end of the financial year (including any entities it controls) is $25 million or more. (The previous threshold was $12.5 million or more); and
- the company and any entities it controls have 100 or more employees at the end of the financial year. (The previous threshold was 50 or more employees).
The Federal Government estimates that approximately one third of private companies that were reporting entities (as large proprietary companies) will no longer be required to lodge audited financial reports under the new regulations.
While there will be a reduced compliance cost for those companies falling out of the reporting net, there will also be less financial transparency for other parties who deal with them.