ASIC has announced changes to form-lodging arrangements for companies wishing to take advantage of relief under Class Order [CO 98/98] Small proprietary companies which are controlled by a foreign company but which are not part of a large group and Class Order [CO 98/1418] Wholly-owned entities.
These changes respond directly to concerns raised by stakeholders and support ASIC’s ongoing efforts to reduce regulatory red-tape and enhance regulatory compliance. They follow various changes last year which were aimed at enabling more companies to rely on the relief and reduce the administrative work for group companies.
The changes introduced by ASIC mean that companies relying on relief in [CO 98/98] will be able to lodge opt-in and opt-out forms at any time during a 19-month period commencing three months before the start of the relevant financial year and ending four months after the end of the financial year.
The changes are not expected to affect the quality of information currently contained in ASIC’s public records.
Changes to [CO 98/98] arrangements
Previously, companies were required to lodge a Form 384 opt-in notice with ASIC within the three-month period immediately before the start of the first financial year of any period they intended to take advantage of relief under [CO 98/98]. A Form 394 opt-out notice was required to be lodged, when necessary, within a period of four months after the end of the first financial year companies ceased to rely on relief in the order.
In many cases, companies did not lodge the forms in time and were unable to rely on the relief and therefore obliged to lodge the relevant financial reports.
As a result of the changes, companies will now be able to lodge both Forms 384 and 394 at any time during a 19-month period commencing three months before the start of the financial year in question and ending four months after the end of the financial year.
As the last date for lodging Form 384 under the new arrangements coincides with the deadline for lodging a financial report for the first financial year a company intended to rely on [CO 98/98] relief, there is no scope for a further extension to the period to lodge the notice. Accordingly, ASIC’s discretion to extend the period for lodging Form 384 has been removed from the class order.
Companies which fail to lodge a Form 384 on time, and therefore cannot rely on [CO 98/98], will have a continuing obligation to prepare and lodge a financial report for the first financial year they intended to rely on the relief. Although ASIC may not take action to require such companies to lodge the outstanding financial report, we will be very unlikely to grant individual relief to remove the continuing obligation to lodge the report. We will also be unlikely to grant a formal no-action letter where the report has not been lodged.
Where a company lodges a financial report after the due date, normal late lodgement fees will apply. However, late lodgement of the financial report will not prevent a company taking advantage of relief in [CO 98/98] for the next financial year, provided the conditions of the class order are met.
For detailed information about the form-lodging arrangements, please refer to paragraphs 16 to 27 of ASIC Regulatory Guide 58 Reporting requirements – registered foreign companies and Australian companies with foreign shareholders (RG 58).
Changes to [CO 98/1418] arrangements
As the last date for lodging a Form 389 opt-in notice coincides with the deadline for lodging a financial report for the first year an entity intended to rely on [CO 98/1418] relief, there is no scope for a further extension to the period to lodge the notice. Accordingly, ASIC’s discretion to extend the period for lodging Form 389 has been removed from the class order.
Entities which fail to lodge a Form 389 on time, and therefore cannot rely on [CO 98/1418] relief, will have a continuing obligation to prepare and lodge a financial report for the first financial year they intended to rely on the relief. Although ASIC may not take action to require such companies to lodge the outstanding financial report, we will be very unlikely to grant individual relief to remove the continuing obligation to lodge the report. We will also be unlikely to grant a formal no-action letter where the report has not been lodged.
Where a company lodges a financial report after the due date, normal late lodgement fees will apply. However, late lodgement of the financial report will not prevent a company taking advantage of relief in [CO 98/1418] for the next financial year, provided the conditions of the class order are met.
Lodgement arrangements for opt-out notice Form 399 have not changed.
For detailed information about the form-lodging arrangements, please refer to paragraphs 36 to 38G of the Editorial Note to [CO 98/1418].
No changes to [CO 98/1417] requirements
The current arrangements for taking advantage of relief under Class Order 98/1417 Audit relief for proprietary companies [CO 98/1417], which require annual lodgement of Form 382, have not changed.
ASIC intends to review the current form-lodging arrangements for [CO 98/1417] in the light of operational experience with the new arrangements for CO 98/98 and 98/1418 and announce any further changes separately.
For detailed information about the form-lodging arrangements for [CO 98/1417], please refer to paragraphs 38 to 39G of Regulatory Guide 115 Audit relief for proprietary companies.
Download the amending Class Order [CO 09/626]
Download Class Order [CO 98/98]