Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 (103 of 2004)
Schedule 2 Financial reporting
Part 3 Financial Reporting Panel
Corporations Act 2001
14 At the end of Part 2M.3
Add:
Division 9 - Reference of financial report to the Financial Reporting Panel
Subdivision A - Preliminary
323EA Financial reports to which Division applies
(1) This Division applies to a financial report of a company, disclosing entity or registered scheme if the financial report has been lodged with ASIC.
(2) The company, the disclosing entity or the responsible entity of the registered scheme is the lodging entity for the financial report for the purposes of this Act.
323EB Referral of financial report to Financial Reporting Panel
(1) ASIC may refer the financial report to the Financial Reporting Panel under Subdivision B.
(2) The lodging entity may refer the financial report to the Financial Reporting Panel under Subdivision C.
Note: The lodging entity may refer the report to the Financial Reporting Panel only with ASIC's consent.
(3) If the financial report is referred to the Financial Reporting Panel under Subdivision B or C, the Panel must deal with the referral under Subdivision D.
(4) To avoid doubt, the referral of the financial report to the Financial Reporting Panel does not prevent ASIC from initiating, or taking any further steps in relation to, proceedings against the lodging entity, or the lodging entity's directors, in relation to the financial report.
Subdivision B - Referral by ASIC
323EC ASIC may refer financial report to the Financial Reporting Panel
(1) ASIC may refer the financial report to the Financial Reporting Panel if ASIC is of the opinion that the financial report does not comply with one or more of the financial reporting requirements.
(2) In referring the financial report to the Financial Reporting Panel, ASIC must follow the procedures set out in sections 323ED and 323EF.
323ED ASIC to notify lodging entity of proposed referral
(1) If ASIC proposes to refer the financial report to the Financial Reporting Panel, ASIC must give the lodging entity written notice of the proposed referral.
(2) The notice must:
(a) identify the financial reporting requirement or requirements that, in ASIC's opinion, the financial report does not comply with; and
(b) set out, in relation to each of those financial reporting requirements:
(i) the reasons for ASIC's opinion that the financial report does not comply with that requirement; and
(ii) the changes that, in ASIC's opinion, would need to be made to the financial report to ensure that it does comply with that requirement; and
(c) include a statement setting out the effect of section 323EE; and
(d) be in the prescribed form.
(3) For the purposes of this Act, the requirements referred to in paragraph (2)(a) are the relevant financial reporting requirements in relation to the financial report.
323EE Lodging entity to respond to ASIC notice
(1) The lodging entity must, within 14 days after receiving the notice, give ASIC a written response that, in relation to each relevant financial reporting requirement identified under paragraph 323ED(2)(a), either:
(a) states that the lodging entity proposes to amend the financial report to incorporate the changes referred to in subparagraph 323ED(2)(b)(ii) (the ASIC proposed changes ); or
(b) states that the lodging entity:
(i) does not agree that the ASIC proposed changes should be made; and
(ii) proposes instead to amend the financial report to incorporate the changes set out in the response (the alternative changes );
and sets out the lodging entity's reasons for its opinion that the financial report would comply with the relevant financial reporting requirement if the alternative changes were made; or
(c) states that the lodging entity does not agree that the ASIC proposed changes should be made and sets out the lodging entity's reasons for its opinion that the financial report as originally lodged complies with the relevant financial reporting requirement.
(2) An offence based on subsection (1) is an offence of strict liability.
Note: For strict liability see section 6.1 of the Criminal Code.
(3) Evidence or information included in a response under subsection (1) is not admissible in evidence against:
(a) the lodging entity; or
(b) a director of the lodging entity; or
(c) any other representative of the lodging entity;
in any proceedings (other than proceedings for an offence based on the evidence or information given being false or misleading).
323EF Referral to Financial Reporting Panel
(1) The referral of the financial report to the Financial Reporting Panel must:
(a) identify the relevant financial reporting requirement or requirements that, in ASIC's opinion, the financial report does not comply with; and
(b) set out:
(i) the reasons for ASIC's opinion that the financial report does not comply with that requirement or those requirements; and
(ii) the changes that, in ASIC's opinion, would need to be made to the financial report to ensure that it does comply with that requirement or those requirements; and
(c) be accompanied by a copy of:
(i) the notice that ASIC gave the lodging entity under section 323ED; and
(ii) any response that the lodging entity gave ASIC under section 323EE; and
(d) be made within 14 days after:
(i) the lodging entity gives ASIC the response under section 323EE; or
(ii) the time for the lodging entity to give ASIC that response ends without the lodging entity having given that response.
(2) The referral must be made in the prescribed form.
(3) ASIC must give the lodging entity a copy of the referral on the day on which the referral is made.
(4) For the purposes of this Act, the requirements referred to in paragraph (1)(a) are the disputed financial reporting requirements in relation to the financial report.
Subdivision C - Referral by lodging entity
323EG Lodging entity may refer financial report to the Financial Reporting Panel with ASIC's consent
(1) The lodging entity may refer the financial report to the Financial Reporting Panel if:
(a) ASIC has informed the lodging entity that, in ASIC's opinion, the financial report does not comply with one or more financial reporting requirements (the relevant financial reporting requirements ); and
(b) the lodging entity is of the opinion that the financial report does comply with one or more of the relevant financial reporting requirements; and
(c) ASIC consents to the referral of the financial report to the Financial Reporting Panel.
(2) In referring the financial report to the Financial Reporting Panel, the lodging entity must follow the procedure set out in sections 323EH and 323EI.
(3) For the purposes of this Act, the requirements referred to in paragraph (1)(b) are the disputed financial reporting requirements in relation to the financial report.
323EH Lodging entity to apply to ASIC for consent to proposed referral
(1) The lodging entity must apply to ASIC in writing for ASIC's consent to the referral.
(2) The application must:
(a) identify the disputed financial reporting requirements; and
(b) set out, in relation to each of the disputed financial reporting requirements, the reasons for the lodging entity's opinion that the financial report does comply with that requirement.
(3) If ASIC consents to the referral, ASIC must:
(a) prepare a statement that sets out, in relation to each of the disputed financial reporting requirements, the reasons for ASIC's opinion that the financial report does not comply with that requirement; and
(b) give the statement to the lodging entity.
(4) Evidence or information that the lodging entity includes in the application under paragraph (2)(b) is not admissible in evidence against:
(a) the lodging entity; or
(b) a director of the lodging entity; or
(c) any other representative of the lodging entity;
in any proceedings (other than proceedings for an offence based on the evidence or information given being false or misleading).
323EI Referral to Financial Reporting Panel
(1) The referral of the financial report to the Financial Reporting Panel must:
(a) identify the disputed financial reporting requirement or requirements; and
(b) set out the reasons for the lodging entity's opinion that the financial report complies with that requirement or those requirements; and
(c) be accompanied by a copy of the statement that ASIC gives the lodging entity under subsection 323EH(3).
(2) The referral must be made in the prescribed form.
(3) The lodging entity must give ASIC a copy of the referral on the day on which the referral is made.
(4) Evidence or information that the lodging entity includes in the referral under paragraph (1)(b) is not admissible in evidence against:
(a) the lodging entity; or
(b) a director of the lodging entity; or
(c) any other representative of the lodging entity;
in any proceedings (other than proceedings for an offence based on the evidence or information given being false or misleading).
Subdivision D - Financial Reporting Panel dealing with reference
323EJ Financial Reporting Panel to obtain submissions from ASIC and lodging entity
(1) The Financial Reporting Panel must, within 7 days after the financial report is referred to the Panel under section 323EC or 323EG, give both the lodging entity and ASIC a written notice of the day by which they may make written submissions to the Panel on whether the financial report complies with the disputed financial reporting requirement or requirements specified in the referral under paragraph 323EF(1)(a) or 323EI(1)(a).
(2) The day specified in the notice must be not less than 14 days after the day on which the notice is given.
323EK Financial Reporting Panel to consider and report on financial report referred to it under section 323EC or 323EG
(1) The Financial Reporting Panel must:
(a) consider the financial report; and
(b) prepare a report that states, in relation to each of the referred financial reporting requirements, whether, in the Panel's opinion, the financial report complies with that requirement.
(2) If:
(a) the referral was made under section 323EC; and
(b) the Panel determines that the financial report does not, in the Panel's opinion, comply with a referred financial reporting requirement;
the Financial Reporting Panel's report must also set out the changes that, in the Panel's opinion, would need to be made to the financial report to ensure that it does comply with that requirement.
(3) If:
(a) the referral was made under section 323EG; and
(b) the Panel determines that the financial report does not, in the Panel's opinion, comply with a referred financial reporting requirement;
the Financial Reporting Panel's report may also set out the changes that, in the Panel's opinion, would need to be made to the financial report to ensure that it does comply with that requirement.
(4) The Financial Reporting Panel's report must not disclose any confidential commercial information obtained by the Panel in the course of its consideration of the financial report.
(5) The Financial Reporting Panel must give a copy of its report to:
(a) the lodging entity; and
(b) ASIC; and
(c) the relevant market operator if the financial report referred to the Panel was one of a listed company or listed registered scheme.
Subject to subsection (6), the copies must be given within 60 days after the day on which the financial statement is referred to the Panel (the referral day ).
(6) The copies may be given more than 60 days after the referral day, but not more than 90 days after the referral day, if the Financial Reporting Panel gives notice to the lodging entity and ASIC of the extension within 60 days after the referral day.
(7) ASIC must take such steps as it considers reasonable and appropriate to publicise:
(a) the Financial Reporting Panel's report; and
(b) if the Financial Reporting Panel's report sets out changes that, in the Panel's opinion, would need to be made to the financial report to ensure that it complies with a financial reporting requirement - whether the lodging entity has amended, or indicated that it intends to amend, the financial report to incorporate those changes.
Without limiting this, ASIC may make the report and the information referred to in paragraph (7)(b) available on the Internet.
(8) If a copy of the Financial Reporting Panel's report is given to the relevant market operator under paragraph (5)(c), the relevant market operator must take such steps as it considers reasonable and appropriate to make the report available to the users of the market.
(9) This section has effect subject to section 323EL.
323EL Power of Financial Reporting Panel to dismiss referral
(1) The Financial Reporting Panel may, at any stage of the proceeding, dismiss the referral.
(2) Without limiting subsection (1), the Financial Reporting Panel may dismiss the referral if it is satisfied that the disputed financial reporting requirement or requirements are being dealt with or are going to be dealt with in proceedings before a court.
323EM Court, or tribunal of fact, may have regard to Financial Reporting Panel report
A Court, or a tribunal of fact, may have regard to the Financial Reporting Panel's report in determining whether the financial report complied with the referred financial reporting requirements.