The recent changes lifting the threshold for financial
reporting for proprietary companies have highlighted the fact
that many smaller unlisted public companies, whose reporting
obligations have not changed, are subject to similar financial
reporting and auditing obligations as large listed public
companies under the Corporations Act.
These companies, in particular, companies limited by
guarantee, are often not-for-profit in nature, and the
financial reporting obligations have an onerous effect on their
operations. On the other hand, not-for-profits often have a
broader stakeholder base and greater public involvement, making
public reporting an effective governance tool.
The Treasury recognises that legislative reform may be
required in this area and has recently published a discussion
paper titled "Financial Reporting by Unlisted Public
Companies". The paper seeks comments from the public
in relation to a number of issues in this area, including:
should the reporting regime for companies limited by
guarantee differ based on the size of the company and the
nature of their operations, and what should this criteria
whether reporting should be dependent on factors such as
the receipt of grants and donations
whether there is scope to reduce the amount of financial
information that companies limited by guarantee are required
to report, and if so, what should these companies report
whether the current audit requirements for the
not-for-profit sector is appropriate
the need to harmonise the financial reporting
requirements for all not-for-profit entities in Australia
(including state based incorporated associations).
We believe that reform in the reporting requirements in this
area will benefit the not-for-profit sector and could encourage
more not-for-profit and charitable organisations to
incorporate. Those interested in making a submission to the
government should do so before the 3 August 2007 deadline.
Gadens Lawyers will keep you updated on further developments
on these proposals in the future.
On 12th November 2016, new laws will commence to protect small businesses from unfair terms in standard form contracts.
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