The Treasury has recently implemented amendments to the Corporations Regulations 2001 (Cth) (under the Corporations Act 2001) regarding the reporting burdens on small to medium sized companies, increasing the thresholds for the first time since 2007. The reporting requirements include:
(i) annual directors’ reports;
(ii) financial reports;
(iii) auditors’ reports; and
(b) establishing a whistleblower policy.
Before the reforms, a company would be considered ‘large’ for ASIC reporting purposes if it meets at least two of three threshold tests within a single financial year. These are:
(a) earning $25 million or more in consolidated revenue;
(b) holding $12.5 million or more in consolidated gross assets; and/or
(c) having 50 or more employees.
All three of these thresholds are now ‘doubled’ to $50 million, $25 million and 100 employees respectively.
This is a significant increase. Under the new reforms, approximately 1/3 of companies that lodged audited financial reports with ASIC in the 2017/2018 would not be required to do so under the new thresholds.
Directors of medium size companies that straddle the line between medium and large will particularly be appreciative of the change. It will also be welcomed by medium to large sized businesses that now will no longer need to comply with tight regulations and will enjoy a reduction in the red tape and administrative burdens surrounding the running of a company.