A company that is a “large proprietary company” under the Corporations Act 2001 (Cth) (Corporations Act) is subject to particular obligations, chiefly to prepare and lodge with ASIC audited accounts for each financial year. The Federal Government recently made the Corporations Amendment (Proprietary Company Thresholds) Regulations 2019 (the Regulations), which will commence on 1 July 2019. The Regulations amend the definition of ‘large proprietary company’ by doubling the revenue, assets and employee thresholds. Before the Regulations commence, existing large proprietary companies should assess whether they will still be classified as large, to avoid incurring unnecessary compliance costs.
Criteria for being a large proprietary company
A proprietary company will be classified as large if it satisfies at least two of the following criteria, noting the adjusted thresholds:
Under the Corporations Act, a large proprietary company is obliged to:
- Prepare audited accounts
- The company must lodge a director’s report, financial report and auditor’s report with ASIC each year.
- Implement a whistleblower policy
- As noted in our previous article, large proprietary companies are required to prepare a compliant whistleblower policy under changes to the whistleblower regime within the Corporations Act, which will also take effect from 1 July.
Companies that are no longer large proprietary companies will not be subject to these obligations but are required to:
- keep sufficient financial records; and
- lodge or audit financial reports if directed by ASIC or shareholders with at least 5% of the votes.
The doubling of the thresholds will relieve a significant number of companies from the financial reporting and whistleblower obligations under the Corporations Act. Check your company’s status in advance of 1 July to ensure you are aware of your obligations.