Essay on Corporations Act

Added on - 21 Jul 2020

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ASSESSMENT 1 CORPORATION ACT
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1PART 1............................................................................................................................................1Large proprietary companies.......................................................................................................1Small proprietary companies controlled by a foreign company..................................................2Small proprietary companies not controlled by a foreign company............................................2Grand fathered large proprietary company..................................................................................3Listed public company.................................................................................................................3Unlisted public company.............................................................................................................3Public company limited by guarantee..........................................................................................4Registered Scheme – both listed and unlisted..............................................................................4Unlisted disclosing entities..........................................................................................................4Whollyowned subsidiaries with ASIC relief...............................................................................5PART 2............................................................................................................................................5Discuss specific submission topic date for reports......................................................................5Critically review the key steps to assure strong communication.................................................6Discussing problems and its impact on company’s ability to produce reports............................6CONCLUSION................................................................................................................................7REFERENCES................................................................................................................................9
INTRODUCTIONAustralian corporate law is mainly derived from UK company law, ASIC (AustralianSecurities and Investments Commission) is the regulatory or administration authority ofcorporate law. The legislation sets out legal rules and regulations that companies working inAustralia either at Federal & Interstate level need to comply while carrying out their activitiesand functions. The research concentrates on examining financial reporting requirements ofdifferent companies. Later part emphasizes on analyzing the planning requirements whencompleting such reports to lodge to ASIC.PART 1Australian Corporation Act governs and administers the conduct of business entities.Section 45A of the CA, 2001 defined proprietary companies as a company that is a registeredfirm under sec. 118 or 601BD of the act or converts to a proprietary firm under part 2B of theCorporation Act. Such companies may be limited or unlimited company with having a sharecapital and cannot employs above 50 non-employee shareholders. Section 292 of the Actrequires all disclosing entities, public companies, large proprietary firms that are undisclosed,companies limited by guarantee and all small foreign-controlled proprietary companies toprepare their financial reports (Baxt, 2016). It must be prepared with the compliance ofAustralian accounting standards under s296.Large proprietary companiesSection 45A subsection 3 of the act contains definition of large proprietary company. asper the provision, if a proprietary firm meets out at least 2 or all of the below mentionedconditions, then, it would be known as large proprietary company.The revenue of the company and its controllable business entities is equals to or above$25 million or other amount that prescribed under section 45A (2)(a) by the governmentfor such purpose (Halabi, Barrett and Dyt, 2010).At the end of financial year, consolidated gross asset of the company and the otherentities that are under the business control equals to or more than$12.5 million or anamount that is specified under 45A (2)(b).1
Company and controllable entity employs workforce equals to or above 50 or may be anyother number that is presented under paragraph 45A(2)(c).Corporation Acts requires large proprietary firms to make their annual reports bycomplying with Corporation Act’s Part 2M.3. Moreover, they must perpare directors’ report andpresents it to ASIC under lodging requirements for every financial year. Their accounts are alsoneed to be audited that prove its reliability and truthfulness aspect with an only exception ofASIC grant relief, where auditing is not a statutory obligation.Small proprietary companies controlled by a foreign companyAs per s45A (2), if a company’s consolidated revenue is below $25 million, gross assetsvalue is under $12.5 million and have fewer than 50 employees are called small proprietarycompanies. Corporation Act paragraph 292(2)(b) states that small foreign controlled proprietaryfirms are adhere with the financial reporting requirements under part 2M.3 unless it is lodgedwith ASIC registration scheme or a disclosing entity (Hedges and et.al., 2016). Such section-reporting requirement just applies on the Australian counterparts that are controlled by foreigncompany targets to present onerous and genuine financial reports. As per the requirement,registered foreign entity needs to lodge copy of financial statements including P&L, balancesheet and cash flow statement to ASIC every calendar year. As per ASIC Corporation Instrument2017/204 reporting requirement for small foreign-controlled proprietary firms are similar to theother small proprietary companies (Explanatory Statement for ASIC Corporations (Foreign-Controlled Company Reports) Instrument 2017/204, 2017). Such entities are not require to hireauditors in order to prepare or lodge their annual accounts however, small foreign-controlledproprietary companies which financial statements are not yet audited since 1993, need toconstruct financial reports by compliance with chapter 2M and must lodged it within 4 months ofthe reporting year.Small proprietary companies not controlled by a foreign companySuch companies require to prepare financial statements by following accountingstandards whenever requested by shareholders under section 293(3)(a). Moreover, they also needto audit their financial statements under section 293(3)(c) and sent it to the members within just 4months after the preparation of annual accounts.2
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