ASIC has today released Consultation Paper 337 Externally administered companies: Extending financial reporting and AGM relief (CP 337) seeking feedback on proposals to reduce the regulatory burden for externally administered companies.
ASIC is proposing to expand the relief in ASIC Corporations (Externally-Administered Bodies) Instrument 2015/251 (LI 2015/251) to companies where a voluntary administrator, controller or provisional liquidator (relevant external administrator) is first appointed by conditionally:
extending the deferral of financial reporting obligations for the period of the external administration up to a maximum of 24 months; and
allowing public companies to defer their obligation to hold an Annual General Meeting (AGM) until two months after the financial reporting deferral relief expires.
Unless ASIC relief applies, companies in external administration must continue to meet financial reporting and AGM obligations. Currently, LI 2015/251 grants a deferral of financial reporting obligations falling due within six months from the date of the first appointment of a relevant external administrator, and any continuing financial reporting obligations that were due before the appointment of the relevant external administrator. LI 2015/251 does not currently provide relief to extend the time in which an externally administered public company must hold an AGM.
If an externally administered company requires a longer period of financial reporting deferral relief, or if an externally administered public company requires additional time to hold its AGM, then it must apply to ASIC for individual relief and pay application fees.
ASIC routinely grants individual financial reporting deferral relief for externally administered companies on the basis of unreasonable burden (see RG 174). We also routinely grant deferral of AGM relief where the public company has financial reporting relief or individual financial reporting deferral relief from ASIC. Extending the relief in LI 2015/251 may reduce the time and cost incurred by companies in obtaining individual relief.
ASIC Commissioner Cathie Armour said, ‘Our proposal to cut red-tape for externally administered companies is timely, given the number of corporate insolvencies is forecast to increase following the withdrawal of temporary COVID-related relief. The aim of the proposals is to provide financially distressed companies more breathing room to comply with their financial reporting and AGM obligations, while ensuring members continue to have access to other financial information about the externally administered company.’
Consultation Paper 337 Externally administered companies: extending financial reporting and AGM relief seeks feedback on the proposed relief and the specific terms that should apply.
ASIC will accept submissions on CP 337 until 11 March 2021.