Unlisted public companies: Financial reports

This program runs continually and follows up unlisted public companies (those not listed on the Stock Exchange) who have failed to lodge financial statements and reports within the prescribed time frame.

Under s319 of the Corporations Act 2001 (Cth) (the Corporations Act), companies must lodge financial statements and reports within 3 months after the end of the financial year for a disclosing entity or registered scheme; and within 4 months after the financial year for anyone else. (There are some exceptions to this requirement — see Corporations Act s319(2))

The benefits of this program are that unlisted public companies — many of which are not-for-profit companies — will be better educated about their financial reporting obligations and information about these companies will be open and transparent for the business community.

Managed investment schemes

This program follows up managed investment schemes that have not lodged documents. It is designed to improve regulatory compliance in the area of managed investment schemes where there are high levels of public investment and increase the integrity of scheme information held by us on the corporate register.

Financial statements and reports

Managed investment schemes must lodge financial statements and reports, under s319 of the Corporations Act, within 3 months after the end of the financial year.

Compliance plan audit report

Managed investment schemes must lodge an audit report of their compliance plan, under s601HG of the Corporations Act, within 3 months after the end of the financial year.

This program runs annually and usually commences in the later half of the year.

Identifying large proprietary companies

This program aims to identify proprietary companies that are defined as large and have not lodged financial reports. Some large proprietary companies may have either neglected to comply with law by not lodging reports, or been unaware of their obligation.

From financial years commencing on or after 1 July 2019, a proprietary company is defined as 'large' for a financial year if it satisfies at least two of the below criteria:

• the consolidated revenue for the financial year of the company and any entities it controls is $50 million or more
• the value of the consolidated gross assets at the end of the financial year of the company and any entities it controls is $25 million or more, and
• the company and any entities it controls have 100 or more employees at the end of the financial year.

All companies are required to keep financial records under s285(1), but not all companies are required to prepare audited financial reports to be lodged with us.

We rely upon companies to advise us of their classification as a large proprietary company. This self-classification by companies directly impacts whether the company is required to lodge financial reports.

Section 292 of the Corporations Act outlines who is required to lodge financial reports. This includes large proprietary companies and small proprietary companies that are controlled by a foreign company. These small proprietary companies are also followed up within this program.

The aim of the program is to encourage those companies that we suspect are large, to identify themselves as such and lodge the required reports.

For further information, see Lodgement of financial reports.

Minimum number of officeholders

This program is run twice a year to identify companies that do not have the minimum numbers of officeholders.

The Corporations Act states:

• Proprietary companies must have at least 1 director (201A(1)), and they are not required to have a secretary (204A(1)).
• Public companies must have at least 3 directors (201A(2)) and must have at least 1 secretary (204A(2)).

We want companies that are shown on our register as not having the required number of officeholders to take the active step of appointing new officeholders so that they meet legislative requirements.

Alternatively some companies may reconsider their existence as a corporate entity after being advised of their legal requirements. This may result in companies applying for deregistration.

Foreign companies: Financial statements (Form 405 or 406)

This compliance program follows up foreign companies that failed to lodge Form 405 Statement to verify financial statements of a foreign company or Form 406 Annual return of a foreign company in a particular financial year.

A registered foreign company must lodge with us:

• financial statements (Form 405) once each calendar year and at intervals of not more than 15 months (s601CK(1)), or
• for exempted registered foreign companies, an annual return (Form 406) within 1 month after the date to which it is made up, but also within each calendar year (s601CK(9), (10) and Class Order 98/97).

The objective of the program is to increase the integrity of data on the corporate register and to provide another avenue for advising companies of their statutory obligations.

This program usually commences mid-year.

Registered Australian bodies

This program will improve compliance by registered Australian bodies that have requirements to notify us of certain changes in organisation detail.

A registered Australian body is a body corporate, which is not a company, that has been formed or incorporated in Australia under legislation other than the Corporations Act. An association that is registered under a State law not recognised in other States will generally be a registered Australian body.

The driver of this program is to ensure data about registered Australian bodies on our register is accurate and complete so that the public performing searches can find information they require.

This program runs every 18 months.

For further information, see Registrable Australian bodies.

Australian financial services licensees: Financial reports (FS70 and 71)

This program will follow up Australian financial services licensees (AFS licensees) who have failed to lodge financial reports.

The lodgement of Forms FS70 Australian financial services licensee profit and loss statement and balance sheet and FS71 Australian financial services licensee audit report is a mandatory requirement under s989B(1), (2) and (3) of the Corporations Act. These sections outline the requirement for AFS licensees to prepare and lodge audited financial statements and an audit report. Lodgement of these forms is a licence condition for all Australian based AFS licensees.

The lodgement of financial accounts is very important for consumer protection as it enables ASIC to check that licensees are complying with the financial obligations under their licence.

For further information, see AFS licensees.

Annual review address integrity

This program will commence soon…

Every company has an annual review date, usually the anniversary of the company's registration date. Soon after the annual review date each year, the company will be issued an annual statement and an invoice statement for the company's annual review fee.

A number of Annual Statement Packages are returned to ASIC as Return to Sender mail. We will attempt to contact these companies via an alternative address to ensure companies are able to review their annual statement and pay the invoice within the required time frame.

Further information about:

• annual statements and solvency resolutions
• annual statements and late fees
• ASIC invoice statements

Non-payment of annual review fee

This program runs continuously to identify companies that have not paid their annual review fee. We will start the deregistration process for these identified companies. When we commence the deregistration process it may also affect any business names that the company holds.

Under s601AB(1A), we may deregister a company if the company’s review fee in respect of a review date has not been paid in full at least 12 months after the due date for payment.

We aim to help companies by advising them what steps can be taken to stop deregistration. The letter we send to notify of our intention to deregister the company also explains why the action is being taken.

For further information, see ASIC-initiated deregistration of company.

A phone call

By educating our clients on a one-on-one basis we hope to increase voluntary compliance levels.
We may contact clients who will soon receive a compliance notice to advise them of what steps they will need to take. For other programs we will contact companies or entities that have already received a compliance notice to ensure they are aware of their obligations and to prevent any further compliance action.

A letter explaining what needs to be done

Our educative letters aim to assist companies to comply with their obligations. By being proactive we aim to encourage higher levels of voluntary compliance.

We may contact clients to:

• advise of their requirements to lodge certain documents
• to confirm address details.

A Compliance notice (return of particulars)

A Compliance notice (return of particulars) is issued under s348A of the Corporations Act and contains:

• a letter describing why we are sending the notice to the company and what the company must do to meet their legal requirements
• a company statement setting out the details recorded for the company on our corporate register, and
• a Form 483 Company compliance statement (response to return of particulars).

What you need to do

If we send a Compliance notice (return of particulars), the company will need to:

• review the information in the company statement and make a declaration about its accuracy on the Form 483 Company compliance statement (response to return of particulars). If the information is not correct, it must be updated using the appropriate ASIC form (usually Form 484 Change to company details or Form 492 Request for correction, if the change had previously been notified to us, but not included on the company statement). If fees are outstanding they must be paid in full.
• provide a solvency resolution statement and pass solvency resolution if required, and
• lodge the completed Form 483 together with the Form 484 or Form 492 within 28 days of the issue date shown on the Compliance notice (return of particulars).

What happens if a company does not respond to a compliance notice?

We may take further compliance action against the company and/or its officeholders if the company fails to respond to a compliance notice. This may include court action and/or deregistration of the company.

A warning letter

We may issue a warning letter to a company in breach of the Corporations Act:

• requesting the company to correct the default (such as lodge outstanding financial reports) and
• specifying a time frame in which this must be done - usually 28 days.

What happens if a company does not meet the requirements of a warning letter?

We may issue a:

• Compliance notice (return of particulars), OR
• a notice under s1274(11) of the Corporations Act.

A notice under s1274(11)

We may issue a s1274(11) notice to a company in breach of its requirements under the Corporations Act:

• requesting the company to lodge a particular document that a company has failed to lodge
• requiring the company to comply within 14 days after the date of service of the notice.

What happens if a company does not meet the requirements of a s1274(11) notice?

We may take further action by commencing court proceedings. If so we will:

• apply to the Court asking it to make an order to direct the company to lodge the outstanding document and pay costs, and
• serve a copy of the application on the company.