Under the Corporations Act 2001 (Cth) (Corporations Act) proprietary companies (often referred to as “pty ltd” companies) fall into two classes: “small proprietary companies” and “large proprietary companies”.

Currently under section 45A(3) of the Corporations Act, to be a large proprietary company means that the company meets or passes two of three following thresholds:

  1. $25 million or more in consolidated revenue;
  2. $12.5 million or more in consolidated gross assets;
  3. 50 or more employees.

By identifying two classes of proprietary companies, Parliament is recognising that, by default, small proprietary companies are not subject to the same reporting requirements as large proprietary companies (which are required to lodge an annual financial report, a director’s report and an auditor’s report with ASIC) – the obvious intention being to reduce the compliance and cost burdens.

Changes to thresholds

From 1 July 2019, via new regulations at 1.0.02B of the Corporations Regulations 2001 (Cth) which will inform the thresholds for small (section 45A(2)) and large (section 45A(3)), a proprietary company will be ‘large’ if it meets or passes at least two of the following thresholds:

  1. $50 million or more in consolidated revenue;
  2. $25 million or more in consolidated gross assets; and
  3. 100 or more employees.

The existing, lower thresholds will still apply for the financial year ending 30 June 2019.