The Australian Securities and Investments Commission (ASIC) prosecuted 15 companies between 1 July 2022 and 31 December 2022 for failing to lodge financial reports, obtaining over $115,000 in financial penalties.
This article explores the obligations for reporting entities and the details of the recent prosecutions.
Legal requirements to lodge financial reports with ASIC
In Australia, specific types of companies are legally required to submit financial reports to ASIC within a designated timeframe after the completion of the financial year. Some companies must submit financial reports biannually.
For publicly traded companies, it is mandatory to hold Annual General Meetings (AGMs) at least once per calendar year within a specified period after the end of the financial year.
Why is this important?
Compliance with these requirements provides shareholders, creditors and the public with important information, enabling them to make informed decisions when dealing with these companies.
Recent prosecutions
The 15 companies recently convicted and fined by ASIC come from various industries, including property development, investment, and retail. Despite the diverse backgrounds of the companies, they all share a common thread of failing to comply with their legal obligation to submit annual financial reports to ASIC.
Fines issued for failure to lodge financial reports across multiple financial years ranged from $750 to $40,000.
Three companies were convicted and fined for failing to hold AGMs and failing to report to members for various financial years, in addition to failing to lodge annual reports.
Key takeaways
The recent prosecutions by ASIC for companies failing to lodge financial reports highlight the importance of complying with reporting requirements in Australia. By adhering to these regulations, shareholders, creditors, and the public can make informed decisions when dealing with these companies. It is crucial for organisations to take appropriate steps to ensure compliance, as failure to do so can result in significant legal and reputational consequences, as seen in the fines issued by ASIC.
