- The Australian Securities and Investments Commission (ASIC) relaxes some red tape for businesses in external administration
- The new rules extend the time by which insolvent companies need to prepare and lodge financial reports
- The deferral relief comes into effect as soon as a control of a company is handed over to a third party such as a voluntary administrator or provisional liquidator
- The companies can then defer financial reporting obligations by a minimum of six months and a maximum of two years
- At the same time, a company can put off holding an AGM until two months after the deferral relief ends
The Australian Securities and Investments Commission (ASIC) has this week relaxed some red tape for businesses in external administration.
The relief relates to financial reporting and annual general meeting (AGM) obligations for businesses that have gone bust.
Insolvent companies often need to appoint an external administrator to review business affairs and propose a course of action for repaying creditors.
During this administration process, however, companies are still bound by certain reporting and AGM obligations to keep relevant stakeholders informed about the state of the business.
These obligations are the focus of the regulatory relief announced by ASIC Commissioner Sean Hughes this week.
“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,” Mr Hughes said.
The relaxed rules expand the time by which a company needs to prepare and lodge financial reports for between six months and 24 months, depending on the company’s situation.
At the same time, a company can put off holding an AGM until two months after the deferral relief ends.
Essentially, the rules give companies more time to put together reports and presentations in the midst of their financial distress.
According to the new rules, the deferral relief comes into effect as soon as a control of a company is handed over to a third party such as a voluntary administrator or provisional liquidator.
The deferral relief lasts for a minimum of six months but can be extended to two years so long as the deed administrator remains in control of the company.