Changes to “large” proprietary company thresholds
Corporate News - 07 May 2019
For financial years beginning on or after 1 July 2019, the threshold criteria for what constitutes a “large” proprietary company will double. This will mean that a number of companies will no longer be considered a “large” proprietary company and will not need to lodge audited financial reports with the Australian Securities Commission (ASIC). This will be a welcome change for smaller sized companies.
Under the Corporations Amendment (Proprietary Company Thresholds) Regulations 2019 (Regulations) which come into effect on 1 July 2019, a proprietary company will be considered “large” for a given financial year if it satisfies at least two of the following:
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 the 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.
Under the Corporations Act 2001 (Act), large proprietary companies are required to:
lodge an annual financial report, a director’s report and an auditor’s report with ASIC; and
adopt a whistleblower policy.
Small proprietary companies are generally required to keep sufficient financial records and are only required to lodge or audit financial reports if directed by ASIC or 5% or more of their shareholders and do not require a whistleblower policy.
All existing large proprietary companies should consider whether they will remain within the criteria under the Regulations to avoid incurring unnecessary compliance costs.