It also fundamentally changed the rules regulating dividends declared (or paid) on or after 28 June 2010 and implemented various other reforms to the corporate regulatory framework.
Summary of key changes
The key changes implemented by the amending Act include:
- dividend payment rules: replacing the “profits” test for paying dividends (section 254T of the Corporations Act 2001 (Act)) with a new “balance sheet/solvency” test.
- companies limited by guarantee: introducing a new three-tiered differential financial reporting framework for companies limited by guarantee determined by reference to their annual revenue and deductible gift recipient status. Audit review rather than a full audit is permitted in some cases.
- parent entity financial statements: abolishing the requirement to prepare parent entity financial statements where consolidated financial statements are required. Summary parent entity financial information must be included by way of a note in the annual consolidated financial statements.
- change of financial years: allowing a company to more easily change its financial year-end date to minimise the burden on companies and their auditors during peak reporting periods.
- directors’ reports for listed trusts: extending the requirement to include a review of operations and financial condition in the directors’ report for all listed managed investment schemes in respect of financial years ending on or after 30 June 2011.
- IFRS declaration: amending the content requirements for the statutory directors’ declaration to include a reference to the inclusion in the notes to the financial statements of a statement of compliance with the International Financial Reporting Standards (where the financial statements include such a statement as required by the accounting standards).
- cancellation of share capital: clarifying the circumstances in which a company can cancel share capital which is lost or not represented by available assets.
Written by John McCombe, Partner and Sanushka Seomangal, Associate.
Related Articles
- Corporate and Commercial July 2010 Newsletter
- Corporate Reporting Reform Act 2010
- Dividend payment rules
- Companies limited by guarantee
- Parent entity financial statements
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