Up until August 2022, some privately owned Australian companies were exempt from having to lodge financial statements with the Australian Securities and Investments Commission (ASIC).
Changes to legislation came into effect from 10 August 2022, and this means that those companies who benefited from “grandfathered” status now have new financial reporting obligations.
The changes to the Grandfathering exemption were announced suddenly and implemented rapidly, coming into effect within days of being announced.
Who do these changes impact?
There are approximately 1100 privately owned companies who were exempt from having to submit general purpose financial statements to ASIC. The exemption was based on eligibility set out by the Keating government during a 1995 legislative overhaul.
These companies still had to prepare financial documents and have them audited within four months of the financial year end, but were not actually required to officially lodge them. This exemption was known as “grandfathering” when the legislative changes came into effect almost three decades ago.
Many of the companies impacted by these changes are going to be the larger, family-held organisations established in or before the mid-1990’s.
What do the companies have to do differently?
Companies grandfathered under the old legislation now need to apply the new Tier 2 Simplified Disclosure framework, have their financial statements audited and ensure they are ready to submit to ASIC within four months of the years’ end.
If the company’s financial year ended on or before August 9, 2022 they are still exempt this year but will need to comply with these changes for their 2023 financial year and beyond.
Is there anything else the companies need to know?
The ASIC website has already been updated with the key information about these changes however it is advisable that you or your financial team seek advice about how it will impact you.
We recommend you get in touch with your Accru Advisor to understand the changes and what you may need to do differently to ensure compliance.