The definition of a large proprietary company will change on 1 July 2019 meaning up to a third of companies will no longer need to lodge financial statements to the Australian Securities and Investments Commission (ASIC).
From July 1, 2019, the thresholds will be doubled for the three criteria used to determine whether a company is classified as large for reporting purposes. A proprietary company is only deemed large if it satisfies 2 of the 3 tests above.
ASIC can still direct small companies to lodge audited financial statements, as can a group of more than five per cent of company shareholders.
The latest overhaul of reporting thresholds, which have been in place since 2007, provides a significant boost for small to medium-sized companies.
It removes a major compliance burden from the shoulders of management, providing these companies with greater capacity to divert their resources to business growth.
Even though the changes exclude a raft of companies previously deemed large, there is a note of caution for ‘grandfathered’ large proprietary corporations that may now be classified as small companies under the new thresholds.
These grandfathered corporations should still conduct annual audits in order to protect their grandfathered status.
For further information, contact an MWM Advisory team member at mwmadvisory.com.au/contact.