Lodgement exemption for large grandfathered proprietary companies has been scrapped

On 4 August 2022, the Senate introduced some unexpected amendments to the Treasury Laws Amendment (2022 Measures No. 1) Bill 2022, which will remove the lodgement exemption provided to large grandfathered proprietary companies.

What is the large grandfathered proprietary company exemption?

Since 1995, large grandfathered proprietary companies could avoid lodging their financial statements with the Australian Securities and Investments Commission (ASIC). This is provided they were audited each year, within the four-month deadline applicable to non-exempt large proprietary companies, and met certain other criteria.

A large grandfathered proprietary company is one that meets all of the following criteria:

Met the ‘exempt proprietary company’ definition at all times since 30 June 1994
Were large at the end of the first financial year ending after 9 December 1995
Financial report was audited for the 1993 financial year, and all subsequent financial years
Lodged notice within four months of the end of the first financial year ending after 9 December 1995 (i.e. opted to be a grandfathered large proprietary company).

Refer to the ASIC website for more information.

What are the impacts of these amendments?

We expect that many large, established, family-held groups will be impacted by this decision. This is because they will be required to lodge their audited financial statements on the public record.

Will the amendments affect 30 June 2022 year-ends?

As noted above, the move by the Senate to scrap the exemption for large grandfathered proprietary companies was unexpected. The Senate amendments were subsequently passed by the House of Representatives on 5 August 2022, and received Royal Assent on 9 August 2022.

The amendments are effective from 10 August 2022, which means that large grandfathered proprietary companies with financial years ending on or after 10 August 2022 will no longer be exempt from lodging their financial statements with ASIC. Section 1693A of the amendments clarifies that lodgement relief continues to apply to large grandfathered proprietary companies, if their financial year ended on or before 9 August 2022.

Large grandfathered proprietary companies have always been required to prepare financial statements and have them audited within four months of year-end. For 30 June 2022 year-ends onwards, these financial statements must be prepared as a minimum, applying the Tier 2 (Simplified Disclosures). Therefore, despite being unexpected, these amendments should not create an additional financial reporting burden for large grandfathered proprietary companies.

More information

If you have any questions or require more information regarding these changes, please contact our IFRS & Corporate Reporting team.