ASIC has today issued regulatory relief to help reduce red tape and provide certainty for companies in external administration.
The relief relates to certain financial reporting and annual general meeting (AGM) obligations which continue to apply when a company is in external administration.
Specifically, it provides conditional relief to companies in external administration by:
extending the time by which a company is required to prepare and lodge financial reports for a minimum period of six months and a maximum period of up to 24 months (deferral relief), and
extending the time by which a public company is required to hold an AGM until two months after the deferral relief ends.
ASIC Commissioner Sean Hughes said, ‘Our new legislative relief will provide companies in financial distress more time to comply with financial reporting and AGM obligations while ensuring members are able to continue to access information about the externally administered company.’
The deferral relief commences when a voluntary administrator or provisional liquidator, or a managing controller over substantially the whole of the property of the company, is appointed. The relief will cease after a minimum period of six months and up to a maximum period of 24 months, or when the external administration ends.
If a voluntary administration is followed by a deed of company arrangement, the relief will continue up to 24 months after the voluntary administration commenced, so long as the deed administrator exercises all or most of the management functions and powers of the company.
The relief is effected by ASIC Corporations (Amendment) Instrument 2021/506, which amends ASIC Corporations (Externally-Administered Bodies) Instrument 2015/251.
ASIC has also updated its guidance in Regulatory Guide 174 Relief for externally administered companies and registered schemes being wound up (RG 174) in relation to deferral relief for externally administered companies and AGM relief for externally administered public companies. RG 174 provides guidance on the circumstances in which an externally administered company may rely upon ASIC’s relief. ASIC will continue to consider individual relief applications in relation to financial reporting and AGM obligations for situations outside of the legislative relief.
Report 703 Response to submissions on CP 337 Externally administered companies: Extending financial reporting and AGM relief (REP 703) also published today, highlights key issues arising from the submissions.
The relief and updated guidance follows ASIC’s public consultation in January 2021 in Consultation Paper 337 Externally administered companies: Extending financial reporting and AGM relief (CP 337). CP 337 sets out ASIC’s proposal to conditionally provide legislative relief for companies in external administration to defer their financial reporting and AGM obligations.
ASIC received five non-confidential submissions in response to CP 337. Most of the submissions received were generally supportive of ASIC’s proposal in CP 337 but provided comments about some of the specific requirements and conditions of the proposed relief. ASIC’s consideration of these submissions is detailed in REP 703.