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ASIC Class Order [CO 98/1417]

Authoritative Version
CO 98/1417 Orders/ASIC Class Orders as amended, taking into account amendments up to ASIC Class Order [CO 14/757]
Administered by: Treasury
Registered 27 Aug 2014
Start Date 07 Aug 2014
End Date 29 Sep 2016
Date of repeal 29 Sep 2016
Repealed by ASIC Corporations (Amendment and Repeal) Instrument 2016/914

ASIC Class Order [CO 98/1417]

Audit relief for proprietary companies

This instrument has effect under s341(1) of the Corporations Act 2001.

This compilation was prepared on 13 August 2014 taking into account amendments up to [CO 14/757]. See the table at the end of this class order.

Prepared by the Australian Securities and Investments Commission.

Australian Securities and Investments Commission
Corporations Act 2001 — Subsection 341(1)
— Class Order and Revocation

Pursuant to subsection 341(1) of the Corporations Act 2001 (the “Act”), the Australian Securities and Investments Commission ("ASIC") hereby makes an order in relation to each financial year of a Company (“the Company”) that ends on or after 1 July 1998 (the “Relevant Financial Year”) and exempts:

(a)   the Company from compliance with subsection  301(1) and  314(1)(a)(iii) and  314(2)(c) of the Act; and

(b)   the auditor of the Company (if any) from compliance with sections  307 and  308 of the Act,

in relation to the Company's financial report for the Relevant Financial Year, where:

Companies to which the Order applies

(a)   The Company is:

(i)    a large proprietary company; or

(ii)   a small proprietary company controlled by a foreign company for all or part of the Relevant Financial Year;

(b)   If the Company is a large proprietary company,  subsection  319(4) of the Corporations Law, as taken to be included in the Act by  s1408(2) of the Act, does not apply to the Company;

(c)   The Company did not have its financial report or financial statements audited for a financial year ending during 1993 or any later financial year, prior to the Relevant Financial Year  (except for a financial year which ended after 9 December 1995 and  before 24 April 1997 if the company was a small proprietary company for that financial year and was controlled by a foreign company for all or part of that financial year);

(d)  The Company was not, at any time during the Relevant Financial Year, a disclosing entity, a borrower in relation to a debenture, the guarantor of such a borrower, or a financial services licensee;

Resolutions by shareholders and directors, and notice to ASIC

(e)   Within the period commencing 3 months before the commencement of the Relevant Financial Year and ending 4 months after the end of the Relevant Financial Year—the following have occurred:

(i)    all of the directors of the Company resolved that the Company's financial report for the Relevant Financial Year should not be audited; and

 (ii)  all of the shareholders of the Company (irrespective of whether they hold voting or non-voting shares) resolved that the Company's financial report for the Relevant Financial Year should  not be audited; and

(iii) unless the Company applied the relief available under this Order in respect of the financial year immediately preceding the Relevant Financial Year, a notice of the resolutions mentioned in sub-paragraphs (v) and (vi) signed by a director or company secretary is lodged with ASIC using Form 382,

except that, in respect of a financial year ending on or before 30 September 1999:

(iv)  neither of sub-paragraphs (v) and (vi) applies if resolutions were made in accordance with paragraph 1 of either Class Order [CO 96/1850] dated 18 November 1996 or Class Order [CO 97/0567] dated 24 April 1997 (“the Previous Orders”) for the purposes of the Relevant Financial Year; and

(v)   sub-paragraph (vii) does not apply if the Company  lodged notice with ASIC in accordance with paragraph 2 of one of the Previous Orders for the purposes of the Relevant Financial Year (whether or not that order applied for the Relevant Financial Year);

(f)   Before shareholders resolved in the manner contemplated by sub-paragraph (e)(vi) they were provided, either in the notice of meeting or in material accompanying a circular resolution, with a statement by the directors stating whether, in their opinion, the cost of having the financial statements audited outweighs the expected benefits of the audit and setting out their reasons for that opinion;

 (fa) If, on or after 1 July 2010, the relief available under this Order is not applied in respect of the financial year (the first non-reliance year) immediately following a financial year in which relief was applied, a notice that the Company has ceased to apply the relief signed by a director or company secretary is lodged with ASIC using Form 396:

(i)    during the period commencing 3 months before the commencement of the first non-reliance year and ending 4 months after the end of the first non-reliance year; or

(ii)   such other time as is approved in writing by ASIC;

Notice requiring an audit

(g)   Written notice that this order is not to apply to the Company for the Relevant Financial Year has not been served on the Company by:

(i)    a director, at any time before the directors' statement for the Relevant Financial Year is signed;

(ii)   shareholders who control 5% or more of the votes which might be cast at a general meeting of the Company (as calculated as at the close of business on the day before the shareholders serve  the notice), at any time up to one month before the end of the Relevant Financial Year, or within such other time as approved in writing by an ASIC Officer;

(iii)  or any person who is owed Approved Subordinated Debt by the Company, at any time up to one month before the end of the  Relevant Financial Year, or within such other time as approved in writing by an ASIC Officer; or

(iv)  ASIC;

Solvency declarations

(h)   The directors' declarations made under subsections  295(4) and  295(5) of the Act in respect of each financial year which ended on or after 1 July 1998 up to, and including, the Relevant Financial Year contained unqualified statements that in the directors' opinion there were,  when the declaration was made, reasonable grounds to believe that the Company would be able to pay its debts as and when they become due and payable;

(i)    All directors' statements made under the former subsection  301(5) of the Act in respect of all years ending on or after 18 November 1996 contained unqualified statements that in the directors' opinion there were, when the statement was made, reasonable grounds to believe that the Company would be able to pay its debts as and when they fell due;

Procedures to assess solvency

(j)    The Company has had procedures in place from the commencement of the Relevant Financial Year which enable all the directors to assess whether the Company is able to pay all its debts as and when they become due and payable (including, without limiting the generality of this requirement, any debts for which the Company may become liable by virtue of any deed of cross guarantee to which the Company has become a party for the purposes of relief to its wholly-owned entities under ASIC Class Order [CO 98/1418]) and the  nature and frequency of those procedures were adequate for that purpose, having regard to the business and financial circumstances of the Company;

Quarterly management accounts

(k)   To enable the directors to make the resolution required in paragraph (l), the directors of the Company have caused Management Accounts covering the Company to be prepared for each Quarter within one month after the end of the relevant Quarter, or within such other time as is approved in writing by an ASIC Officer;

(l)    Within one month after the end of each Quarter, or  within such other time as approved in writing by an ASIC Officer, the directors have considered:

(i)    the Management Accounts prepared for that Quarter; and

(ii)   all information that has become available since the end of the Quarter about the Company's affairs which is material to the assessment of the Management Accounts for that Quarter,

       and, having regard to this information, the directors have resolved that, at the end of the Quarter and at the time the resolution was made:

(iii)  the total liabilities of the Company did not exceed 70% of total tangible assets; and

(iv)  the Company was able to pay all its debts as and when they become due and payable;

(m)  If the Company prepared Management Accounts on a consolidated basis for any Quarter during the Relevant Financial Year, at the end of any such Quarter and at the time a resolution is made in accordance with paragraph (l), the total consolidated liabilities did not exceed 70% of the total consolidated tangible assets;

(n)   If the Company is a party to any deed of cross guarantee for the purposes of relief to its wholly-owned entities under ASIC Class Order [CO 98/1418], the directors have resolved, at the end of any such Quarter and at the time the resolution is made in accordance with paragraph (l) that the total consolidated liabilities did not exceed 70% of the total consolidated tangible assets in respect of:

(i)    if the Company prepares Management Accounts on a consolidated basis covering those (and only those) entities comprising the Closed Group (“Closed Group” being as defined in that class order) — those entities; and

(ii)   if the Company prepares Management Accounts on a consolidated basis covering those (and only those) entities which are parties to the deed — those entities;

Annual financial requirements

(o)   At the time the directors' declaration was made under subsections  295(4) and  295(5) of the Act for the Relevant Financial Year, the directors considered:

(i)    the financial report of the Company for the Relevant Financial Year (including any consolidated financial statements required by accounting standards); and

(ii)   all information that has become available since the end of the Relevant Financial Year about the Company's affairs, which is material to the assessment of the financial report of the Company, and, where relevant, the assessment of the consolidated financial  statements,

       and, having regard to this information, the directors resolved that, at the end of the Relevant Financial Year and at the time the resolution was made:

(iii)  the total liabilities of the Company did not exceed 70% of total tangible assets;

(iv)  if relevant, the total consolidated liabilities did not exceed 70% of the total consolidated tangible assets for the Company and its controlled entities; and

(v)   if the Company is a party to any deed of cross guarantee for the purposes of relief to its wholly-owned entities under ASIC Class Order [CO 98/1418], the total consolidated liabilities did not exceed 70% of total consolidated tangible assets in respect of:

(1)   those (and only those) entities comprising the Closed Group (“Closed Group” being as defined in that class order); and

(2)   those (and only those) entities which are parties to the deed;

(p)   For either:

(i)    the Relevant Financial Year; or

(ii)   the financial year immediately preceding the Relevant Financial Year,

       the Company made  a profit from ordinary activities after related income tax expense on the following bases:

(i)    a single entity basis;

(ii)   if the Company is a party to any deed of cross guarantee for the purposes of relief to its wholly-owned entities under ASIC Class Order [CO 98/1418], on a consolidated basis separately for both:

(1)   those (and only those) entities comprising the Closed Group (“Closed Group” being as defined in that class order); and

(2)   those (and only those) entities which are parties to the deed; and

(iii)  if the Company is required under the Act or another ASIC order pursuant to section  340 or section  341 of the Act to prepare consolidated financial statements, on a consolidated basis for the Company and its controlled entities;

(q)   Assets, liabilities, and  profit from ordinary activities after related income tax expense for the purposes of paragraphs (l) to (p) have been determined in accordance with accounting standards (as if the Company, any controlled entities and the economic entity were reporting entities) except that liabilities must include any Unapproved Subordinated Debt and may exclude Approved Subordinated Debt;

Compilation of the financial reports

(r)   The directors of the Company have caused the year end financial report of the Company to be compiled by a Prescribed Accountant in accordance with the Miscellaneous Professional Statement APS 9 “Statement on Compilation of Financial Reports” (“APS 9”) (or some corresponding compilation rules or guidelines approved by ASIC);

(s)   A compilation report prepared by the Prescribed Accountant in accordance with APS 9 (or its approved corresponding compilation rules or guidelines) is attached to the financial report and is included with all copies of the financial report distributed to members, lodged with ASIC or provided to any other person;

Requests for Management Accounts

(t)   If a shareholder or a person who is owed Approved Subordinated Debt requests, in writing, a copy of the Management Accounts mentioned in paragraphs (k), (m) or (n) or a copy of the directors' resolution mentioned in paragraph (l) for a Quarter specified in the request, the Company makes a copy of the relevant Management Accounts or the resolution (as the case may be) available to that person, free of charge, at the Company's registered office or by despatching these documents by pre-paid ordinary post, within 14 days after receiving the request, or
14 days after the resolution is passed, whichever
is the later, or within such other time as approved in writing by an ASIC Officer;

Lodgment of financial reports

(u)   The financial report and directors’ report for the Relevant Financial Year and for the immediately preceding financial year:

(i)    substantially comply with Chapter 2M; and

(ii)   are or were lodged with ASIC in accordance with subsections 319(1) and 319(3)(b) of the Act.

Statement in directors' report

(v)   In the directors' report for the Relevant Financial Year, the directors state that the financial report for that financial year has not been audited, in reliance on this Order, and that the requirements of this Order have been complied with;

No proposed modified auditor's report

(w)  A registered company auditor or an affected auditor (as defined in ASIC Class Order [CO 14/757]) to whom the Company has granted access to any of the books of the Company has not indicated to the Company, any of its directors or other officers that, if the financial report of the Company for the Relevant Financial Year were audited in accordance with Division 3 of Part 2M.3 of the Act, the auditor’s report may contain a modified opinion within the meaning of paragraph 5(b) of Auditing Standard ASA 705 Modifications to the Opinion in the Independent Auditor’s Report, and there are no material disagreements or unresolved issues as between the Company and any such auditor in relation to accounting treatments or amounts that may appear in the financial report of the Company for the Relevant Financial Year.

Interpretation

In this Order:

“Approved Subordinated Debt” means debt of the Company which:

(a)   has been subordinated under an agreement which has:

(i)    been executed by the Company and the creditor and lodged with ASIC prior to the commencement of the Relevant Financial Year; and

(ii)   has been approved by ASIC for the purposes of this Order; and

(b)   is not provided by an entity controlled by the Company and is not funded directly or indirectly by the Company or one of  its controlled entities;

“control” has the same meaning as that term has in accounting standard AASB 127 “Consolidated and Separate Financial Statements”;

 “directors” means the directors of the Company;

“financial services licensee” means:

(a)   a financial services licensee within the meaning of the Act; and

(b)   during the transition period (within the meaning of subsection 1431(1) of the Act) for a regulated principal, also includes a reference to a regulated principal referred to in items 1 and 3 of the table in subsection 1430(1) of the Act;

 “Management Accounts” means accounts which include:

(a)   for a Relevant Financial Year that commenced on or after 1 January 2006—an income statement, statement of changes in equity, balance sheet and cash flow statement;

(b)   for a Relevant Financial Year that commenced on or before 31 December 2004—a profit and loss statement, balance sheet and cash flow statement; and

(c)   for any other Relevant Financial Year—either the documents referred to in paragraph (a) or those referred to in paragraph (b);

 “Prescribed Accountant” means:

(a)   a member of the CPA Australia (“CPAA”), who is  entitled to use the post-nominals “CPA” or “FCPA”, and is subject to and complies with the CPAA's continuing professional development requirements; or

(b)   a member of the Institute of Chartered Accountants in Australia (“the ICAA”), who is entitled to use the post-nominals “CA”, “ACA” or “FCA”, and is subject to and complies with the ICAA's continuing professional education requirements; or

(c)   a member of the National Institute of Accountants (“the NIA”), who is entitled to use the post-nominals “MNIA”, “FNIA”, “PNA” or “FPNA”, and is subject to and complies with the NIA's continuing professional education requirements; or

another accountant approved by ASIC for the purpose of compiling financial reports under this Order who complies with such other requirements as may be specified by ASIC;

 “Quarter” means one of the periods of no more than 3 months into which the Relevant Financial Year is divided; and

“Unapproved Subordinated Debt” means any subordinated debt which is not Approved Subordinated Debt.

Pursuant to 341(1) of the Corporations Act 2001 the Australian Securities and Investments Commission hereby revokes Class Orders [CO 96/1850] dated 18 November 1996, 97/0567 dated 24 April 1997 and [CO 98/0121] dated 19 February 1998 with effect for:

(i)    in respect of entities which apply the relief provided by Class Order [CO 98/0095] dated 1 July 1998, financial years ending after 7 July 1998; and

(ii)   in all other cases, financial years ending after 30 June 1998.

Notes to ASIC Class Order [CO 98/1417]

Note 1

ASIC Class Order [CO 98/1417] (in force under s341(1) of the Corporations Act 2001) as shown in this compilation comprises that Class Order amended as indicated in the tables below.

Table of Instruments

Instrument number

Date of making or FRLI registration

Date of commencement

Application, saving or transitional provisions

[CO 98/1417]

13/8/1998 (see F2006B01567)

13/8/1998

 

[CO 99/90]

11/2/1999 (see F2006B00368)

11/2/1999

-

[CO 01/1086]

3/10/2001 (see F2006B01572)

3/10/2001

-

[CO 01/1550]

5/11/2001 (see F2006B01569)

5/11/2001

-

[CO 02/247]

2/3/2002 (see F2006B01571)

11/3/2002

-

[CO 02/1016]

26/7/2002 (see F2006B01570)

26/7/2002

-

[CO 06/51]

31/1/2006 (see F2006L00292)

31/1/2006

-

[CO 10/545]

26/8/2010 (see F2010L02389)

26/8/2010

-

[CO 14/757]

7/8/2014 (see F2014L01082)

7/8/2014

-

Table of Amendments

ad. = added or inserted     am. = amended     rep. = repealed     rs. = repealed and substituted

Provision affected

How affected

Para (a)........................

am. [CO 99/90] and [CO 01/1550]

Para (b).......................

rs. [CO 01/1086]

Para (d).......................

am. [CO 01/1086] and [CO 02/247]

Para (e)........................

am. [CO 10/545]

Para (f)........................

rs. [CO 01/1086]

Para (fa)......................

ad. [CO 10/545]

Para (p).......................

am. [CO 02/1016]

Para (q).......................

am. [CO 02/1016]

Para (u).......................

rs. [CO 06/51]

Para (v).......................

am. [CO 10/545]

Para (w)......................

ad. [CO 10/545]

am. [CO 14/757]

Interpretation...............

am. [CO 01/1086]; [CO 01/1550]; [CO 02/247] and [CO 06/51]