Relief for wholly-owned entities under ASIC Corporations (Wholly-owned Companies) Instrument 2016/785
- Relief under ASIC Corporations (Wholly-owned Companies) Instrument 2016/785
- Small proprietary companies which are controlled by a foreign company but which are not part of a large group and ASIC Corporations (Wholly-owned Companies) Instrument 2016/785
- Getting relief under ASIC Corporations (Wholly-owned Companies) Instrument 2016/785
- Answers to your questions about lodging deeds
- Download a copy of the instrument, pro formas and checklists
- How ASIC will check compliance
- More financial reporting relief by topic
Relief under ASIC Corporations (Wholly-owned Companies) Instrument 2016/785
Under ASIC Corporations (Wholly-owned Companies) Instrument 2016/785, certain wholly-owned companies may be relieved from the requirement to prepare and lodge audited financial statements under Chapter 2M of the Corporations Act 2001, where they enter into deeds of cross guarantee with their parent entity and meet certain other conditions.
Relief under this instrument is based on similar relief available to corporate groups since the 1980s. The deed of cross guarantee makes the group of companies that are parties to that deed akin to a single legal entity in many respects. Creditors and potential creditors can then focus on the consolidated position for those entities rather than the individual financial statements of the wholly-owned subsidiaries that are parties to the deed.
Getting relief under ASIC Corporations (Wholly-owned Companies) Instrument 2016/785
You must lodge deeds of cross guarantee with ASIC, as well as meet the following requirements.
You must ensure that:
- the wording of all deeds exactly duplicates the ASIC pro formas (except for specific information such as company names and dates), and
- you lodge with the deed certification that the deed wording is exactly the same as that in the relevant ASIC proforma (Pro Forma 24 for deeds of cross guarantee or Pro Forma 27 for assumption deeds), and certain statements concerning the execution of the deed by the parties to it.
This certification must be provided by a legal practitioner holding a current practising certificate. This will allow most in-house counsel to do this for companies. No other certification is now required.
Small proprietary companies which are controlled by a foreign company but which are not part of a large group and ASIC Corporations (Wholly-owned Companies) Instrument 2016/785
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.
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 ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 relief, there is no scope for a further extension to the period to lodge the notice.
Entities which fail to lodge a Form 389 on time, and therefore cannot rely on ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 for 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 ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 for the next financial year, provided the conditions of the instrument are met.
Lodgement arrangements for opt-out notice Form 399 have not changed.
Getting relief under ASIC Corporations (Wholly-owned Companies) Instrument 2016/785
Before you apply for relief, you should carefully read ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 and the relevant pro forma to ensure you meet all of the eligibility requirements for relief.
We recommend you use our form CF06 and read the accompanying guide when lodging material under ASIC Corporations (Wholly-owned Companies) Instrument 2016/785. It is not essential to use this form, but it will help you make sure you meet all our requirements.
Mail the required material to:
Australian Securities and Investments Commission
PO BOX 4000
Gippsland Mail Centre
Victoria 3841
There is no lodgement fee for a deed of cross guarantee. There is no fee payable for lodgement of revocation deeds or notices of disposal.
Provided you have complied with all of the conditions of the instrument, you will be eligible for the relief as soon as the material is lodged with ASIC.
Use our checklists
Use our checklists to help you ensure your wholly-owned subsidiary clients meet the certain relief requirements. Download a copy of our checklists for:
- Deeds of cross guarantee and assumption deeds (PDF file, 190KB)
- Revocation deeds (PDF file, 133KB)
- Notices of disposal (PDF file, 139KB)
Keep in mind that these checklists are not exhaustive and are not a substitute for the company and its directors ensuring that all requirements for relief are met.
Answers to your questions about lodging deeds
Read our information sheet on Deeds of Cross Guarantee for answers to frequently asked questions and some of the more common problems we see with deeds lodged with us. This information is also appended to Pro Forma 24 as an editorial note.
Download a copy of the instrument, pro formas and checklists
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Downloads |
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ASIC Corporations (Wholly-owned Companies) Instrument 2016/785
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Pro Forma 24 Deed of cross guarantee |
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Pro Forma 25 Notice of disposal |
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Pro Forma 26 Revocation deed |
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Pro Forma 27 Assumption deed |
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Checklist: Deeds of cross guarantee and assumption deeds |
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Checklist: Revocation deeds |
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Checklist: Notices of disposal |
How ASIC will check compliance
ASIC will, from time to time, check compliance with certain requirements for relief through surveillance of a random selection of companies. These checks may not occur around the time deeds are lodged and companies and their directors should be aware the consequences of non-compliance can be serious.
Consequences of not complying
The consequences of non-compliance with these requirements can be serious. If your client fails to meet all the instrument's conditions, relief won’t be available. This means each affected wholly-owned company must comply with the normal financial reporting requirements of Chapter 2M of the Act for that financial year and perhaps one or more prior years.
ASIC does not have the power to relieve a company retrospectively of those breaches.