With the recent spate of corporate collapses it is now even more important for Australian directors to ensure that their companies comply with their legal obligations, as people are seeking as much commercial certainty as they can by checking out companies they're dealing with.
One piece of information about a company that is relied upon is the company's financial reports.
Large proprietary companies, public companies and managed investment schemes (MIS) have an obligation under the Corporations Act to lodge financial reports, on time, with ASIC.
The financial statements are intended to give a " true and fair view" , and directors must declare that there are reasonable grounds to believe that the company or registered scheme will be able to pay its debts as and when they become due and payable. This is important information that must be lodged. Do this and save yourself and your company from penalties and possible legal action.
When is the deadline?
If you are a director of a large proprietary company or a public company (including a non-profit company) you must lodge with us a copy of your audited financial statements and reports, attached to a Form 388. The lodgement date for Form 388 is within three months of the end of the financial year of the disclosing entity or managed investment scheme, or otherwise within four months.
If you are a director of a small proprietary company (as defined in the Corporations Act) you will generally not have to lodge formal financial reports under the Corporations Act each year. But you must still keep financial records and you will need financial reports for managing and measuring your company's progress, for tax purposes or for raising finance.
What are the penalties?
If your reports aren't lodged on time, ASIC has the power under section 1274(11) of the Corporations Act to bring legal proceedings against a company for failing to comply with a statutory obligation to lodge documents. This action can result in court orders being obtained against the company to lodge the financial report, and may result in significant legal costs for the company.
If the company fails to comply with such a court order, this may be considered by the court to be contempt of their orders and may result in penalties and further legal costs. Further, ASIC has the power to seek a Declaration of contravention against the company directors relating to any continuing failure by a company to lodge financial reports.
We are currently forwarding warning letters to companies who have not lodged the necessary documentation by the due dates, and will begin court proceedings against companies who fail to respond to our warning.
Where to get help
For more information and advice about lodging company reports, contact customer inquiries on (03) 5177 3988 or visit the " Companies" page on our ASIC website at www.asic.gov.au
The purpose of this database is to provide a full-text record of all articles that have appeared in the CDJ since February 1997. It is aimed to assist in the research and reference process. The database has a full-text index and will enable articles to be easily retrieved.It should be noted that information contained in this database is in pre-publication format only - IT IS NOT THE FINAL PRINTED VERSION OF THE CDJ - therefore there might be slight discrepancies between the contents of this database and the printed CDJ.
Already a member?
Login to view this content