Company Law Review Act 1998 (61 of 1998)

Schedule 1   Main amendments of the Corporations Law

5   Part 3.6

Repeal the Part, substitute:

Chapter 2M - Financial reports and audit

Part 2M.1 - Overview

285 Overview of obligations under this Chapter

Obligations under this Chapter

(1) Under this Chapter, all companies, registered schemes and disclosing entities must keep financial records (see sections
286-291) - and some must prepare financial reports (see sections 292-323D). All those that have to prepare financial reports have to prepare them annually; disclosing entities have to prepare half-year financial reports as well. The following table sets out what is involved in annual financial reporting:

Application to disclosing entities

(2) This Chapter covers all disclosing entities incorporated or formed in this jurisdiction (whether or not they are companies or registered schemes).

Application to registered schemes

(3) For the purposes of applying this Chapter to a registered scheme:

(a) the scheme's responsible entity is responsible for the performance of obligations in respect of the scheme; and

(b) the directors and officers of the responsible entity are to be taken to be the directors and officers of the scheme; and

(c) the debts incurred in operating the scheme are to be taken to be the debts of the scheme.

Part 2M.2 - Financial records

286 Obligation to keep financial records

(1) A company, registered scheme or disclosing entity must keep written financial records that:

(a) correctly record and explain its transactions and financial position and performance; and

(b) would enable true and fair financial statements to be prepared and audited.

The obligation to keep financial records of transactions extends to transactions undertaken as trustee.

Note: Section 9 defines financial records .

Period for which records must be retained

(2) The financial records must be retained for 7 years after the transactions covered by the records are completed.

287 Language requirements

(1) The financial records may be kept in any language.

(2) An English translation of financial records not kept in English must be made available within a reasonable time to a person who:

(a) is entitled to inspect the records; and

(b) asks for the English translation.

288 Physical format

If financial records are kept in electronic form, they must be convertible into hard copy. Hard copy must be made available within a reasonable time to a person who is entitled to inspect the records.

289 Place where records are kept

(1) A company, registered scheme or disclosing entity may decide where to keep the financial records.

Records kept outside Australia

(2) If financial records about particular matters are kept outside Australia, sufficient written information about those matters must be kept in Australia to enable true and fair financial statements to be prepared. The company, registered scheme or disclosing entity must give the ASC written notice in the prescribed form of the place where the information is kept.

(3) The ASC may direct a company, registered scheme or disclosing entity to produce specified financial records that are kept outside Australia.

(4) The direction must:

(a) be in writing; and

(b) specify a place in Australia where the records are to be produced (the place must be reasonable in the circumstances); and

(c) specify a day (at least 14 days after the direction is given) by which the records are to be produced.

290 Director access

Personal access

(1) A director of a company, registered scheme or disclosing entity has a right of access to the financial records at all reasonable times.

Court order for inspection on director's behalf

(2) On application by a director, the Court may authorise a person to inspect the financial records on the director's behalf.

(3) A person authorised to inspect records may make copies of the records unless the Court orders otherwise.

(4) The Court may make any other orders it consider appropriate, including either or both of the following:

(a) an order limiting the use that a person who inspects the records may make of information obtained during the inspection

(b) an order limiting the right of a person who inspects the records to make copies in accordance with subsection (3).

291 Signposts to other relevant provisions

The following table sets out other provisions that are relevant to access to financial records.

Part 2M.3 - Financial reporting

Division 1 - Annual financial reports and directors' reports

292 Who has to prepare annual financial reports and directors' reports

(1) A financial report and a directors' report must be prepared for each financial year by:

(a) all disclosing entities; and

(b) all public companies; and

(c) all large proprietary companies; and

(d) all registered schemes.

Note: This Chapter only applies to disclosing entities incorporated or formed in Australia (see subsection 285(2)).

(2) A small proprietary company has to prepare the financial report and directors' report only if:

(a) it is directed to do so under section 293 or 294; or

(b) it was controlled by a foreign company for all or part of the year and it is not consolidated for that period in financial statements for that year lodged with the ASC by:

(i) a registered foreign company; or

(ii) a company, registered scheme or disclosing entity.

The rest of this Part does not apply to any other small proprietary company.

293 Small proprietary company - shareholder direction

(1) Shareholders with at least 5% of the votes in a small proprietary company may give the company a direction to:

(a) prepare a financial report and directors' report for a financial year; and

(b) send them to all shareholders.

(2) The direction must be:

(a) signed by the shareholders giving the direction; and

(b) made no later than 12 months after the end of the financial year concerned.

(3) The direction may specify all or any of the following:

(a) that the financial report does not have to comply with some or all of the accounting standards

(b) that a directors' report or a part of that report need not be prepared

(c) that the financial report is to be audited.

294 Small proprietary company - ASC direction

(1) The ASC may give a small proprietary company a direction to comply with requirements of this Division and Divisions 3, 4, 5 and 6 for a financial year.

(2) The direction may be general or may specify the particular requirements that the company is to comply with.

(3) The direction must specify the date by which the documents have to be prepared, sent or lodged. The date must be a reasonable one in view of the nature of the direction.

(4) The direction must:

(a) be made in writing; and

(b) specify the financial year concerned; and

(c) be made no later than 6 years after the end of that financial year.

295 Contents of annual financial report

Basic contents

(1) The financial report for a financial year consists of:

(a) the financial statements for the year; and

(b) the notes to the financial statements; and

(c) the directors' declaration about the statements and notes.

Financial statements

(2) The financial statements for the year are:

(a) a profit and loss statement for the year; and

(b) a balance sheet as at the end of the year; and

(c) a statement of cash flows for the year; and

(d) if required by the accounting standards - a consolidated profit and loss statement, balance sheet and statement of cash flows.

Notes to financial statements

(3) The notes to the financial statements are:

(a) disclosures required by the regulations; and

(b) notes required by the accounting standards; and

(c) any other information necessary to give a true and fair view (see section 297).

Directors' declaration

(4) The directors' declaration is a declaration by the directors:

(a) that the financial statements, and the notes referred to in paragraph (3)(b), comply with the accounting standards; and

(b) that the financial statements and notes give a true and fair view (see section 297); and

(c) whether, in the directors' opinion, there are reasonable grounds to believe that the company, registered scheme or disclosing entity will be able to pay its debts as and when they become due and payable; and

(d) whether, in the directors' opinion, the financial statement and notes are in accordance with this law, including:

(i) section 296 (compliance with accounting standards); and

(ii) section 297 (true and fair view).

Note: See paragraph 285(3)(c) for the reference to the debts of a registered scheme.

(5) The declaration must:

(a) be made in accordance with a resolution of the directors; and

(b) specify the date on which the declaration is made; and

(c) be signed by a director.

296 Compliance with accounting standards and regulations

(1) The financial report for a financial year must comply with the accounting standards. However, a small proprietary company's report does not have to comply with particular accounting standards if:

(a) the report is prepared in response to a shareholder direction under section 293; and

(b) the direction specifies that the report does not have to comply with those accounting standards.

(2) The financial report must comply with any further requirements in the regulations.

297 True and fair view

The financial statements and notes for a financial year must give a true and fair view of:

(a) the financial position and performance of the company, registered scheme or disclosing entity; and

(b) if consolidated financial statements are required - the financial position and performance of the consolidated entity.

This section does not affect the obligation under section 296 for a financial report to comply with accounting standards.

Note: If the financial statements and notes prepared in compliance with the accounting standards would not give a true and fair view, additional information must be included in the notes to the financial statements under paragraph 295(3)(c).

298 Annual directors' report

(1) The company, registered scheme or disclosing entity must prepare a directors' report for each financial year. The report must include:

(a) the general information required by section 299; and

(b) the specific information required by section 300.

(2) The report must:

(a) be made in accordance with a resolution of the directors; and

(b) specify the date on which the report is made; and

(c) be signed by a director.

(3) A small proprietary company does not have to comply with subsection (1) for a financial year if:

(a) it is preparing financial statements for that year in response to a shareholder direction under section 293; and

(b) the direction specified that a directors' report need not be prepared.

299 Annual directors' report - general information

General information about operations and activities

(1) The directors' report for a financial year must:

(a) contain a review of operations during the year of the entity reported on and the results of those operations; and

(b) give details of any significant changes in the entity's state of affairs during the year; and

(c) state the entity's principal activities during the year and any significant changes in the nature of those activities during the year; and

(d) give details of any matter or circumstance that has arisen since the end of the year that has significantly affected, or may significantly affect:

(i) the entity's operations in future financial years; or

(ii) the results of those operations in future financial years; or

(iii) the entity's state of affairs in future financial years; and

(e) refer to likely developments in the entity's operations in future financial years and the expected results of those operations; and

(f) if the entity's operations are subject to any particular and significant environmental regulation under a law of the Commonwealth or of a State or Territory - details of the entity's performance in relation to environmental regulation.

(2) The entity reported on is:

(a) the company, registered scheme or disclosing entity (if consolidated financial statements are not required); or

(b) the consolidated entity (if consolidated financial statements are required).

Prejudicial information need not be disclosed

(3) The report may omit material that would otherwise be included under paragraph (1)(e) if it is likely to result in unreasonable prejudice to:

(a) the company, registered scheme or disclosing entity; or

(b) if consolidated financial statements are required - the consolidated entity or any entity (including the company, registered scheme or disclosing entity) that is part of the consolidated entity.

If material is omitted, the report must say so.

300 Annual directors' report - specific information

(1) The directors' report for a financial year must include details of:

(a) dividends or distributions paid to members during the year; and

(b) dividends or distributions recommended or declared for payment to members, but not paid, during the year; and

(c) the name of each person who has been a director of the company, registered scheme or disclosing entity at any time during or since the end of the year and the period for which they were a director; and

(d) options that are:

(i) granted over unissued shares or unissued interests during or since the end of the year; and

(ii) granted to any of the directors or any of the 5 most highly remunerated officers of the company; and

(iii) granted to them as part of their remuneration;

(see subsections (3), (4) and (5)); and

(e) unissued shares or interests under option as at the day the report is made (see subsections (3) and (6)); and

(f) shares or interests issued during or since the end of the year as a result of the exercise of an option over unissued shares or interests (see subsections (3) and (7)); and

(g) indemnities given and insurance premiums paid during or since the end of the year for a person who is or has been an officer or auditor (see subsections (8) and (9)).

Public companies, listed companies and registered schemes must include additional information under subsections (10), (11), (12) and (13).

(2) Details do not have to be included in the directors' report under this section if they are included in the company's financial report for the financial year.

(3) Paragraphs (1)(d), (e) and (f) cover:

(a) options over unissued shares and interests of the company, registered scheme or disclosing entity; and

(b) if consolidated financial statements are required - options over unissued shares and interests of any controlled entity that is a company, registered scheme or disclosing entity.

(4) For the purpose of paragraph (1)(d), remuneration includes anything that would be remuneration for the purposes of subsections 243K(4), (5), (6), (7) and (7B).

Note: The rules in subsections 243K(4) to (7B) deal with related party benefits such as fringe benefits, superannuation contributions, retirement benefits and indemnities.

Options details

(5) The details of an option granted are:

(a) the company, registered scheme or disclosing entity granting the option; and

(b) the name of the person to whom the option is granted; and

(c) the number and class of shares or interests over which the option is granted.

(6) The details of unissued shares or interests under option are:

(a) the company, registered scheme or disclosing entity that will issue shares or interests when the options are exercised; and

(b) the number and classes of those shares or interests; and

(c) the issue price, or the method of determining the issue price, of those shares or interests; and

(d) the expiry date of the options; and

(e) any rights that option holders have under the options to participate in any share issue or interest issue of the company, registered scheme or disclosing entity or of any other body corporate or registered scheme.

Shares or interests issued as a result of exercise of option

(7) The details of shares or interests issued as a result of the exercise of an option are:

(a) the company, registered scheme or disclosing entity issuing the shares or interests; and

(b) the number of shares or interests issued; and

(c) if the company, registered scheme or disclosing entity has different classes of shares or interests - the class to which each of those shares or interests belongs; and

(d) the amount unpaid on each of those shares or interests; and

(e) the amount paid, or agreed to be considered as paid, on each of those shares or interests.

Indemnities and insurance premiums for officers or auditors

(8) The report for a company must include details of:

(a) any indemnity that is given to a current or former officer or auditor against a liability and that is covered by subsection 241(2) or (3), or any relevant agreement under which an officer or auditor may be given an indemnity of that kind; and

(b) any premium that is paid, or agreed to be paid, for insurance against a current or former officer's or auditor's liability and that is covered by subsection 241A(3).

For the purposes of this subsection, officer has the same meaning as in section 241.

Note: Sections 241 and 241A contain general prohibitions against giving certain indemnities and paying certain insurance premiums. This subsection requires transactions that are exceptions to these prohibitions to be reported.

(9) The details required under subsection (8) are:

(a) for an officer - their name or the class of officer to which they belong or belonged; and

(b) for an auditor - their name; and

(c) the nature of the liability; and

(d) for an indemnity given - the amount the company paid and any other action the company took to indemnify the officer or auditor; and

(e) for an agreement to indemnify - the amount that the relevant agreement requires the company to pay and any other action the relevant agreement requires the company to take to indemnify the officer or auditor; and

(f) for an insurance premium - the amount of the premium.

The report need not give details of the nature of the liability covered by, or the amount of the premium payable under, a contract of insurance to the extent that disclosure of those details is prohibited by the insurance contract.

Special rules for public companies

(10) The report for a public company that is not a wholly-owned subsidiary of another company or of a recognised company must also include details of:

(a) each director's qualifications, experience and special responsibilities; and

(b) the number of meetings of the board of directors held during the year and each director's attendance at those meetings; and

(c) the number of meetings of each board committee held during the year and each director's attendance at those meetings.

Special rules for listed companies

(11) The report for a listed company must also include the following details for each director:

(a) their relevant interests in shares of the company or a related body corporate

(b) their relevant interests in debentures of, or interests in a registered scheme made available by, the company or a related body corporate

(c) their rights or options over shares in, debentures of or interests in a registered scheme made available by, the company or a related body corporate

(d) contracts:

(i) to which the director is a party or under which the director is entitled to a benefit; and

(ii) that confer a right to call for or deliver shares in, or debentures of or interests in a registered scheme made available by the company or a related body corporate.

Note: Directors must also disclose interests of these kinds to the ASX under section 235 as they are acquired.

Special rules for listed registered schemes

(12) The report for a registered scheme whose interests are quoted on a stock market of a securities exchange must also include the following details for each director of the company that is the responsible entity for the scheme:

(a) their relevant interests in interests in the scheme

(b) their rights or options over interests in the scheme

(c) contracts to which the director is a party or under which the director is entitled to a benefit and that confer a right to call for or deliver interests in the scheme.

Special rules for registered schemes

(13) The report for a registered scheme must also include details of:

(a) the fees paid to the responsible entity and its associates out of scheme property during the financial year; and

(b) the number of interests in the scheme held by the responsible entity or its associates as at the end of the financial year; and

(c) interests in the scheme issued during the financial year; and

(d) withdrawals from the scheme during the financial year; and

(e) the value of the scheme's assets as at the end of the financial year, and the basis for the valuation; and

(f) the number of interests in the scheme as at the end of the financial year.

300A Annual directors' report - specific information to be provided by listed companies

(1) The directors' report for a financial year for a company must also include:

(a) discussion of broad policy for determining the nature and amount of emoluments of board members and senior executives of the company; and

(b) discussion of the relationship between such policy and the company's performance; and

(c) details of the nature and amount of each element of the emolument of each director and each of the 5 named officers of the company receiving the highest emolument.

(2) This section applies only to a company that is:

(a) incorporated in Australia; and

(b) included in an official list of the Exchange.

(3) This section applies despite anything in the company's constitution.

301 Audit of annual financial report

(1) A company, registered scheme or disclosing entity must have the financial report for a financial year audited in accordance with Division 3 and obtain an auditor's report.

(2) A small proprietary company's financial report for a financial year does not have to be audited if:

(a) the report is prepared in response to a direction under section 293; and

(b) the direction did not ask for the financial report to be audited.

Division 2 - Half-year financial report and directors' report

302 Disclosing entity must prepare half-year financial report and directors' report

A disclosing entity must:

(a) prepare a financial report and directors' report for each half-year; and

(b) have the financial report audited or reviewed in accordance with Division 3 and obtain an auditor's report; and

(c) lodge the financial report, the directors' report and the auditor's report on the financial report with the ASC;

unless the entity is not a disclosing entity when lodgment is due.

Note 1: This Chapter only applies to disclosing entities incorporated or formed in Australia (see subsection 285(2)).

Note 2: See section 320 for the time for lodgment with the ASC.

Note 3: Subsection 318(4) requires disclosing entities that are borrowing corporations to also report to the trustee for debenture holders.

303 Contents of half-year financial report

Basic contents

(1) The financial report for a half-year consists of:

(a) the financial statements for the half-year; and

(b) the notes to the financial statements; and

(c) the directors' declaration about the statements and notes.

Financial statements

(2) The financial statements for the half-year are:

(a) except where paragraph (b) applies:

(i) a profit and loss statement for the half-year; and

(ii) a balance sheet as at the end of the half-year; and

(iii) a statement of cash flows for the half-year; and

(b) if required by the accounting standards - a consolidated profit and loss statement, balance sheet and statement of cash flows.

Notes to financial statements

(3) The notes to the financial statements are:

(a) disclosures required by the regulations; and

(b) notes required by the accounting standards; and

(c) any other information necessary to give a true and fair view (see section 305).

Directors' declaration

(4) The directors' declaration is a declaration by the directors:

(a) that the financial statements, and the notes referred to in paragraph (3)(b), comply with the accounting standards; and

(b) that the financial statements and notes give a true and fair view (see section 305); and

(c) whether, in the directors' opinion, there are reasonable grounds to believe that the disclosing entity will be able to pay its debts as and when they become due and payable.

Note: See paragraph 285(3)(c) for the reference to the debts of a disclosing entity that is a registered scheme.

(5) The declaration must:

(a) be made in accordance with a resolution of the directors; and

(b) specify the day on which the declaration is made; and

(c) be signed by a director.

304 Compliance with accounting standards and regulations

The financial report for a half-year must comply with the accounting standards and any further requirements in the regulations.

305 True and fair view

The financial statements and notes for a half-year must give a true and fair view of:

(a) the financial position and performance of the disclosing entity; or

(b) if consolidated financial statements are required - the financial position and performance of the consolidated entity.

This section does not affect the obligation under section 304 for financial reports to comply with accounting standards.

Note: If the financial statements prepared in compliance with the accounting standards would not give a true and fair view, additional information must be included in the notes to the financial statements under paragraph 303(3)(c).

306 Half-year directors' report

The directors of the disclosing entity must prepare a directors' report for each half-year that consists of:

(a) a review of the entity's operations during the half-year and the results of those operations; and

(b) the name of each person who has been a director of the disclosing entity at any time during or since the end of the half-year and the period for which they were a director.

If consolidated financial statements are required, the review under paragraph (a) must cover the consolidated entity.

Division 3 - Audit and auditor's report

307 Audit

An auditor who conducts an audit of the financial report for a financial year or half-year must form an opinion about:

(a) whether the financial report is in accordance with this Law, including:

(i) section 296 or 304 (compliance with accounting standards); and

(ii) section 297 or 305 (true and fair view); and

(b) whether the auditor has been given all information, explanation and assistance necessary for the conduct of the audit; and

(c) whether the company, registered scheme or disclosing entity has kept financial records sufficient to enable a financial report to be prepared and audited; and

(d) whether the company, registered scheme or disclosing entity has kept other records and registers as required by this Law.

308 Auditor's report on annual financial report

(1) An auditor who audits the financial report for a financial year must report to members on whether the auditor is of the opinion that the financial report is in accordance with this Law, including:

(a) section 296 (compliance with accounting standards); and

(b) section 297 (true and fair view).

If not of that opinion, the auditor's report must say why.

(2) If the auditor is of the opinion that the financial report does not comply with an accounting standard, the auditor's report must, to the extent it is practicable to do so, quantify the effect that non-compliance has on the financial report. If it is not practicable to quantify the effect fully, the report must say why.

(3) The auditor's report must describe:

(a) any defect or irregularity in the financial report; and

(b) any deficiency, failure or shortcoming in respect of the matters referred to in paragraph 307(b), (c) or (d).

(4) The report must specify the date on which it is made.

309 Auditor's report on half-year financial report

Audit of financial report

(1) An auditor who audits the financial report for a half-year must report to members on whether the auditor is of the opinion that the financial report is in accordance with this Law, including:

(a) section 304 (compliance with accounting standards); and

(b) section 305 (true and fair view).

If not of that opinion, the auditor's report must say why.

(2) If the auditor is of the opinion that the financial report does not comply with an accounting standard, the auditor's report must, to the extent that it is practicable to do so, quantify the effect that non-compliance has on the financial report. If it is not practicable to quantify the effect fully, the report must say why.

(3) The auditor's report must describe:

(a) any defect or irregularity in the financial report; and

(b) any deficiency, failure or shortcoming in respect of the matters referred to in paragraph 307(d), (e) or (f).

Review of financial report

(4) An auditor who reviews the financial report for a half-year must report to members on whether the auditor became aware of any matter in the course of the review that makes the auditor believe that the financial report does not comply with Division 2.

(5) A report under subsection (4) must:

(a) describe any matter referred to in subsection (4); and

(b) say why that matter makes the auditor believe that the financial report does not comply with Division 2.

Report to specify day made

(6) A report under subsection (1) or (4) must specify the date on which it is made.

310 Auditor's power to obtain information

The auditor:

(a) has a right of access at all reasonable times to the books of the company, registered scheme or disclosing entity; and

(b) may require any officer to give the auditor information, explanations or other assistance for the purposes of the audit or review.

A request under paragraph (b) must be a reasonable one.

311 Reporting to ASC

The auditor conducting an audit or review must, as soon as possible, notify the ASC in writing if the auditor:

(a) has reasonable grounds to suspect that a contravention of this Law has occurred; and

(b) believes that the contravention has not been or will not be adequately dealt with by commenting on it in the auditor's report or bringing it to the attention of the directors.

Note: Section 1289 gives an auditor qualified privilege for a notification to the ASC under this section.

312 Assisting auditor

An officer of a company, registered scheme or disclosing entity must:

(a) allow the auditor access to the books of the company, scheme or entity; and

(b) give the auditor any information, explanation or assistance required under section 310.

Note: Books include registers and documents generally (not only the accounting “books”): see the definition of books in section 9.

313 Special provisions on audit of borrowing corporations and guarantor bodies

Auditor to give trustee for debenture holders copies of reports, certificates etc.

(1) A borrowing corporation's auditor must give the trustee for debenture holders:

(a) a copy of any report, certificate or other document that the auditor must give the borrowing corporation or its members under this Law, the debentures or the trust deed; and

(b) a copy of any document that accompanies it.

The copies must be given within 7 days after the auditor gives the originals to the borrowing corporation or its members.

Auditor to report on matters prejudicial to debenture holders' interests

(2) The auditor of a borrowing corporation or guarantor body must give the borrowing corporation or guarantor body a written report about any matter that:

(a) the auditor became aware of in conducting the audit or review; and

(b) in the auditor's opinion, is or is likely to be prejudicial to the interests of debenture holders; and

(c) in the auditor's opinion, is relevant to the exercise of the powers of the trustee for debenture holders, or the performance of the trustee's duties, under this Law or the trust deed.

The auditor must give a copy of the report to the trustee for debenture holders. The report and the copy must be given within 7 days after the auditor becomes aware of the matter.

Division 4 - Annual financial reporting to members

314 Annual financial reporting to members

Full or concise report to members

(1) A company, registered scheme or disclosing entity must report to members for a financial year by either:

(a) sending members copies of:

(i) the financial report for the year; and

(ii) the directors' report for the year (see sections 298-300); and

(iii) the auditor's report on the financial report; or

(b) sending members a concise report for the year that complies with subsection (2).

Concise report

(2) A concise report for a financial year consists of:

(a) a concise financial report for the year drawn up in accordance with accounting standards made for the purposes of this paragraph; and

(b) the directors' report for the year (see sections 298-300); and

(c) a statement by the auditor:

(i) that the financial report has been audited; and

(ii) whether, in the auditor's opinion, the concise financial report complies with the accounting standards made for the purposes of paragraph (a); and

(d) a copy of any qualification in, and of any statements included in the emphasis of matter section of, the auditor's report on the financial report; and

(e) a statement that the report is a concise report and that the full financial report and auditor's report will be sent to the member free of charge if the member asks for them.

315 Deadline for reporting to members

Public companies and disclosing entities that are not registered schemes

(1) A public company, or a disclosing entity that is not a registered scheme, must report to members under section 314 by the earlier of:

(a) 21 days before the next AGM after the end of the financial year; or

(b) 4 months after the end of the financial year.

Note: For the deadline for holding an AGM, see section 250N.

Small proprietary companies (shareholder direction under section 293)

(2) If a shareholder direction is given to a small proprietary company under section 293 after the end of the financial year, the company must report to members under section 314 by the later of:

(a) 2 months after the date on which the direction is given; and

(b) 4 months after the end of the financial year.

Registered schemes

(3) A registered scheme must report to members under section 314 within 3 months after the end of the financial year.

Other proprietary companies

(4) A proprietary company that is not covered by subsection (1) or (2) must report to members under section 314 within 4 months after the end of the financial year.

316 Member's choices for annual financial information

(1) A member may request the company, registered scheme or disclosing entity:

(a) not to send them the material required by section 314; or

(b) to send them a full financial report and the directors' report and auditor's report.

A request may be a standing request or for a particular financial year. The member is not entitled to a report for a financial year earlier than the one before the financial year in which the request is made.

(2) The time for complying with a request under paragraph (1)(b) is:

(a) 7 days after the request is received; or

(b) the deadline for reporting under section 315;

whichever is later.

(3) A full financial report, directors' report and auditor's report are to be sent free of charge unless the member has already received a copy of them free of charge.

317 Consideration of reports at AGM

The directors of a public company that is required to hold an AGM must lay before the AGM:

(a) the financial report; and

(b) the directors' report; and

(c) the auditor's report;

for the last financial year that ended before the AGM.

Note 1: If the company's first AGM is held before the end of its first financial year, there will be no reports to lay before the meeting.

Note 2: A public company that has only 1 member is not required to hold an AGM (see section 250N).

318 Additional reporting by debenture issuers

(1) A company or disclosing entity that was a borrowing corporation at the end of a financial year must give a copy of the annual financial report, directors' report and auditor's report to the trustee for debenture holders by the deadline for the financial year set by section 315.

(2) A debenture holder may ask the company or disclosing entity that issued the debenture for copies of:

(a) the last reports sent to members under section 314; or

(b) the full financial report and the directors' report and auditor's report for the last financial year.

(3) The company or entity must give the debenture holder the copies as soon as practicable after the request and free of charge.

(4) A disclosing entity that was a borrowing corporation at the end of a half-year must give a copy of the half-year financial report, directors' report and auditor's report to the trustee for debenture holders within 75 days after the end of the half-year.

Division 5 - Lodging reports with the ASC

319 Lodgment of annual reports with the ASC

(1) A company, registered scheme or disclosing entity that has to prepare or obtain a report for a financial year under Division 1 must lodge the report with the ASC. This obligation extends to a concise report sent to members under section 314.

(2) Subsection (1) does not apply to a small proprietary company that prepares a report in response to a shareholder direction under section 293 or an ASC direction under section 294.

(3) The time for lodgment is:

(a) within 3 months after the end of the financial year for a disclosing entity or registered scheme; and

(b) within 4 months after the end of the financial year for anyone else.

(4) Subsection (1) does not apply to a large proprietary company that is not a disclosing entity if:

(a) the company was an exempt proprietary company on 30 June 1994; and

(b) the company has continued to meet the definition of exempt proprietary company (as in force at 30 June 1994) at all times since that date; and

(c) the company was a large proprietary company at the end of the first financial year that ended after 9 December 1995; and

(d) the company's financial statements and financial reports for the financial year ending during 1993 and each later financial year have been audited before the deadline for reporting to members for that year; and

(e) within 4 months after the end of the first financial year that ended after 9 December 1995, the company lodged with the ASC a notice that the company wanted subsection 317B(3), as in force at that time, to apply to the company. (The ASC may extend this period.)

Note: 9 December 1995 is the day on which the First Corporate Law Simplification Act 1995 commenced.

(5) A company that has the benefit of subsection (4) must lodge with the ASC notice of any of the following events:

(a) the resignation or retirement of the company's auditor

(b) the appointment of a new auditor (including details of the new auditor).

The notice must be lodged within 14 days after the resignation, retirement or appointment.

(6) For the purposes of paragraph (4)(d), the deadline for reporting to members is:

(a) for a financial year to which this Part applies - the deadline for reporting to members under section 315; and

(b) for an earlier financial year - the deadline for that year within the meaning of this Law as in force immediately before the commencement of this Part.

320 Lodgment of half-year reports with the ASC

A disclosing entity that has to prepare or obtain a report for a half-year under Division 2 must lodge the report with the ASC within 75 days after the end of the half-year.

321 ASC power to require lodgment

(1) The ASC may give a company, registered scheme or disclosing entity a direction to lodge with the ASC a copy of reports prepared or obtained by it under Division 1 or 2.

(2) The direction must:

(a) be made in writing; and

(b) specify the period or periods concerned; and

(c) be made no later than 6 years after the end of the period or periods; and

(d) specify the date by which the documents have to be lodged.

The date specified under paragraph (d) must be at least 14 days after the date on which the direction is given.

322 Relodgment if financial statements or directors' reports amended after lodgment

(1) If a financial report or directors' report is amended after it is lodged with the ASC, the company, registered scheme or disclosing entity must:

(a) lodge the amended report with the ASC within 14 days after the amendment; and

(b) give a copy of the amended report free of charge to any member who asks for it.

(2) If the amendment is a material one, the company, registered scheme or disclosing entity must also notify members as soon as practicable of:

(a) the nature of the amendment; and

(b) their right to obtain a copy of the amended report under subsection (1).

Division 6 - Special provisions about consolidated financial statements

323 Directors and officers of controlled entity to give information

If a company, registered scheme or disclosing entity has to prepare consolidated financial statements, a director or officer of a controlled entity must give the company, registered scheme or disclosing entity all information requested that is necessary to prepare the consolidated financial statements and the notes to those statements.

323A Auditor's power to obtain information from controlled entity

(1) An auditor who audits or reviews a financial report that includes consolidated financial statements:

(a) has a right of access at all reasonable times to the books of any controlled entity; and

(b) may require any officer of the entity to give the auditor information, explanations or other assistance for the purposes of the audit or review.

A request under paragraph (b) must be a reasonable one.

(2) The information, explanations or other assistance required under paragraph (1)(b) is to be given at the expense of the company, registered scheme or disclosing entity whose financial report is being audited or reviewed.

323B Controlled entity to assist auditor

If a company, registered scheme or disclosing entity has to prepare a financial report that includes consolidated financial statements, an officer or auditor of a controlled entity must:

(a) allow the auditor for the company, scheme or entity access to the controlled entity's books; and

(b) give the auditor any information, explanation or assistance required under section 323A.

323C Application of Division to entity that has ceased to be controlled

Sections 323, 323A and 323B apply to the preparation or audit of a financial report that covers a controlled entity even if the entity is no longer controlled by the company, registered scheme or disclosing entity whose financial report is being prepared or audited.

Division 7 - Financial years and half-years

323D Financial years and half-years

First financial year

(1) The first financial year for a company, registered scheme or disclosing entity starts on the day on which it is registered or incorporated. It lasts for 12 months or the period (not longer than 18 months) determined by the directors.

Financial years after first year

(2) Subject to subsection (4), subsequent financial years must:

(a) start at the end of the previous financial year; and

(b) be 12 months long.

The directors may determine that the financial year is to be shorter or longer (but not by more than 7 days).

Synchronisation of financial years where consolidated financial statements are required

(3) A company, registered scheme or disclosing entity that has to prepare consolidated financial statements must do whatever is necessary to ensure that the financial years of the consolidated entities are synchronised with its own financial years. It must achieve this synchronisation by the end of 12 months after the situation that calls for consolidation arises.

(4) To facilitate this synchronisation, the financial year for a controlled entity may be extended or shortened. The extended financial year cannot be longer than 18 months.

Half-years

(5) A half-year for a company, registered scheme or disclosing entity is the first 6 months of a financial year. The directors may determine that the half-year is to be shorter or longer (but not by more than 7 days).

Division 8 - Disclosure by listed companies of information filed overseas

323DA Listed companies to disclose information filed overseas

(1) A company that discloses information to, or as required by:

(a) the Securities and Exchange Commission of the United States of America; or

(b) the New York Stock Exchange; or

(c) a prescribed securities exchange in a foreign country;

must disclose that information in English to the Exchange on the next business day after doing so.

(2) This section applies only to a company that is:

(a) incorporated in Australia; and

(b) included in an official list of the Exchange.

(3) This section applies despite anything in the company's constitution.