Decision The decision under review is affirmed.

Corporations Law - relief from audit requirement - large proprietary company - unreasonable burden pre-condition - failure to meet statutory time provisions.

22 October 1999 The Hon. R.N.J. Purvis, Q.C. Deputy President

1. This is an application by Pinpoint Pty Limited (hereinafter referred to as "the Company") seeking review of a decision of the Australian Securities and Investments Commission ("the Commission") whereby relief from the requirement of an audit pursuant to section 313 of the Corporations Law ("the Law") for the financial year ended 30 June 1998 was not granted.

2. The decision of the Commission contained in a letter dated 11 August 1998, inter alia, stated that:

"Case by case audit relief will not be granted unless one of the pre-conditions outlined in section 313(11) of the Corporations Law is satisfied and the general policy requirements set out in Policy Statement 115 are adhered to.

The ASIC has considered your application carefully and has noted the company's internal audit procedures and the nature of the company's creditors. However, the ASIC considers that it is not appropriate to grant audit relief for the year ended 30 June 1998 due to the fact that the inappropriate to the circumstances and unreasonable burden pre-conditions could not be met. Furthermore, pursuant to Policy Statement 115 the company has not satisfied the sound financial precondition at all times during the relevant financial year, has not met the resolution timing requirements and has failed to lodge its unaudited accounts within the deadline prescribed by the Corporations Law for the past two financial years.

3. The initial application for audit relief for the Company (a large proprietary company within the meaning of section 45A(3) of the Law) detailed four prime bases upon which such relief was sought, namely:

1. Directors and shareholders unanimously agree that an audit is not required.

2. The Company is well managed and is in a sound financial condition.

3. The Company's year end financial statements are compiled by professional accountants and a compilation report is attached.

4. There are no tangible benefits resulting from an annual audit. (T3, p26)

4. In its reasons for seeking review of the Commission's decision the Company summarised its then position as:

"The Company's directors and shareholders do not believe that the expense of an audit is warranted nor is it in the Public's interests. No external party relies on the financial accounts for information. the [sic] Company's internal controls, including Internal Audit are sufficient for company and statutory purposes. We seek review of the ASIC's decision on the basis that it was unreasonable and harsh given the circumstances and that audit relief was appropirate [sic]." (T1, p2)

5. The initial application for relief was made on 29 May 1998 and received by the Commission on 12 June 1998, the decision of the Commission being given on 11 August 1998. The application for review to the Tribunal was made on 8 September 1998 but it did not come on for hearing until 19 August 1999. At the hearing of the review application the Company restricted its submissions to a reliance upon section 313(11) of the Law, which section disentitles a company to audit relief unless at least one of the prerequisites set out in subparagraphs (a) or (b) of that section is satisfied. The Company submitted that it should be granted audit relief for the 1998 financial year because the requirement for an external audit for that year "now" imposed an unreasonable burden upon the Company within the meaning of section 313. The Company did not maintain that any other ground in section 313 had relevance to its application.

6. Accordingly, a number of the bases on which the Company initially applied for relief and in respect of which the Commission declined to grant such relief are now no longer the subject of consideration. The Company solely maintains that it should be granted audit relief for the 1998 financial year because the requirement for an external audit now imposes an unreasonable burden upon it.

7. At the hearing the Company was represented by Mr G Sirtes of Counsel, the Commission by Mr M Pesman of Counsel. There was admitted into evidence the documents required to be filed pursuant to section 37 of the Administrative Appeals Tribunal Act. The following additional written material was tended as exhibits:

Exhibit A Statement of Ms K E Harding 6 August 1999

8. There was no issue between the parties as to the factual situation, Counsel for the Commission not seeking to cross-examine any one of the authors of the above statements tendered in evidence.

9. The Company is a large proprietary company within the meaning of the Law, having been so since the year ended 30 June 1996. It was incorporated in 1986. Whilst its principal activity is described as that of a marketing consultant, the major service provided by the Company is the management of credit card loyalty programs. There are two shareholders, each one of whom is also a director of the Company.

10. By reason of the provisions of section 1409 of the Law and Class Order 96/1850, the Company was not required to have its accounts audited in respect of the 1996 and 1997 financial years and unaudited accounts were lodged with the Commission for those years. The Company however was not in a position whereby it could obtain the benefit of the Class Order in respect to the 1998 financial year.

11. On 20 May 1998 the directors of the Company resolved that "no audit is required for the Company for the year ended 30 June 1998 should the Australian Securities Commission grant relief from the audit requirements of the Corporations Law" (T3, p31). On 28 May 1998 the shareholders of the Company also resolved that in the event that the relief was granted no audit would be required for the year ended 30 June 1998.

12. The business of the Company is predominantly that of developing and managing credit card loyalty programs for a number of large public companies, included amongst which are Qantas, Telstra, Westfield, ANZ Bank, Commonwealth Bank, Bank of Western Australia and Visa. The Company employs in excess of 350 persons and has experienced an increase in gross revenue from $9,000,000.00 in 1995 to $44,000,000.00 in 1998 and a projected gross income for the 1999 financial year of $65,000,000.00. The Company is said to be well managed and to be in a sound financial position. It is solvent and able to pay its debts as and when they fall due. The Company maintains consistent accounting policies and procedures and each month management meetings are held, attended by key management staff, a director and two chartered accountants. Detailed management information system reports are prepared on a monthly basis.

13. During the 1998 financial year the Company engaged a firm of chartered accountants to perform a complete systems review and to implement an internal audit function. This was done and is presently in operation. The year end financial statements are compiled by the said firm of chartered accountants. In relation to two of the card loyalty reward programs, audits are conducted by the clients to ensure that the Company meets the performance requirements and criteria of the various agreements relating to the particular reward program. An accountant conducts an audit of all other loyalty card programs, processed by the Company under its various management agreements. Each of the loyalty card programs operated by the Company has strict operating and performance specifications. All unsecured creditors of the Company are paid within the usual trading terms other than where there is a dispute between a supplier and the Company.

14. Ms Collins, herself a chartered accountant, of the abovementioned firm of chartered accountants said that she is engaged in the financial affairs of the Company on average 25 hours per week and attends the regular monthly management meetings. She scheduled the asset and liability position of the Company as at 28 February 1999, detailing current assets and non-current assets totalling $28,922,370.00, secured and unsecured creditors with provisions, deferred income and other liabilities totalling $16,341,365.00. She stated that in normal circumstances all creditors are paid within 90 days of receipt of invoice and that all creditors as at 30 June 1998 have been paid subject to those where a dispute exists. From the accounts prepared by her for the period ending 28 February 1999 a net profit before tax of $7,655,000.00 is anticipated.

15. Even be it that the Company has the assistance of professional accounting advice and has in place the above procedures, delays occurred in lodging statutory accounts for the 1997 and 1998 financial years.

16. The Company has within its accounting and financial management structure an internal audit department, the abovementioned external audits being only as to loyalty programs.

17. Ms Collins stated that, because of the accounting practice and procedures currently in place, including the preparation of management information system reports, monthly board meetings, the Company's own internal audit procedures and the external audit for and on behalf of the major clients, it was her expectation that if the 1998 accounts were to be audited the figures would not be materially different from the accounts as prepared and lodged with the Commission.

18. Evidence was also available to the Tribunal from the external accountants, one of whom is chairman of the management committee of the Company. He met upon a monthly basis with the general managers individually and the financial controller and ensured that a detailed management information system report was prepared each month and reviewed by him. He spoke of implementing the internal audit function. An internal audit report is prepared each month and presented to the management committee meetings. His attendance at the premises of the Company is regular, he estimated that at least 40% of his professional time is expended dealing with Company matters. In his opinion the Company is solvent and is capable of meeting its debts as and when they fall due. He detailed in a schedule to his statement the ratios of liabilities to assets of the Company for the financial years 1996, 1997 and 1998 and as at February 1999, such ratio descending from 86% in the 1996 year to 57% at February 1999.

19. Of particular relevance to the submissions made on behalf of the Company, the external chartered accountant estimated the cost of performing an audit of the 1998 accounts at $86,560. He noted that having regard to the duties and obligations of an auditor in preparing a report, the auditor would not be able to issue an unqualified opinion as it would not be possible to attend at a 30 June 1998 stocktake and difficulty would be experienced in conducting an effective debtors circulation. Difficulties were anticipated in performing an audit, in locating and reviewing documentation on account of staff changes and the non-availability of staff who performed the work which would be the subject of an audit enquiry.

20. The independent professional consultant retained by the major clients of the Company, also a chartered accountant, detailed his role and its objectives and the duties entailed in his appointment.

21. The application for relief was received by the Commission on 12 June 1998. On 30 June 1998 a request was made of the Company for a copy of its financial statements for the year ended 30 June 1997 and a copy of its most recent management accounts. This request was repeated on 27 July 1998. On 10 August 1998 the Commission received management accounts for the period ending 31 March 1998 together with a schedule of debtors and creditors as at that date. The decision to refuse the application was made on 11 August 1998, the Company being advised accordingly.

22. As has already been mentioned, the matter came on for hearing before the Tribunal on 19 August 1999 and it is the position pertaining as at the latter date which is germane to this decision.

23. Whilst section 313 of the Law was repealed by the Company Law Review Act 1998, effective from 1 July 1998, the relevant portions of the repealed section continued to apply in respect of financial periods that end on or before the date of commencement as if they had not been repealed. They thus apply to the circumstances of the present application.

"S 313 (1) A company's directors may apply to the Commission for an order relieving them, relieving the company, or relieving the auditor (if any) of the company, from compliance with specified requirements of this law relating to, or to the audit or review of, accounts or consolidated accounts or to the report required by Division 6.

(2) On an application under subsection (1), the Commission may make an order relieving the directors, the company, or the auditor of the company, as the case may be, from compliance with all or any of the specified requirements either unconditionally or on condition that the directors comply, the company complies, or the auditor of the company complies, as the case may be, with such other requirements relating to, or to the audit of, the accounts or consolidated accounts or to the report as the Commission imposes.

(11) The Commission shall not make an order in relation to a company, or in relation to a class of companies, unless:

(a) in relation to each requirement of this law that is specified in the order, the Commission is of the opinion that compliance with the requirement:

(i) would render accounts or consolidated accounts, or a report required by Division 6, misleading;

(ii) would be inappropriate to the circumstances of the company or of the companies included in that class, as the case may be; or

(A) the company, an officer of the company or the auditor (if any) of the company...

(11A) In deciding for the purposes of subsection (11) whether the audit requirements for a large proprietary company, or a class of large proprietary companies, would impose an unreasonable burden on the company or companies, the Commission is to have regard to:

(a) the expected costs of complying with the audit requirements; and

(b) the expected benefits of having the company or companies comply with the audit requirements; and

(c) any practical difficulties that the company or companies face in complying effectively with the audit requirements (in particular any difficulties that arise because a financial year is the first one for which the audit requirements apply or because the company or companies are likely to move frequently between the small and large proprietary company categories from one beneficial year to another); and

(d) any unusual aspects of the operation of the company or companies during the financial year concerned...

25. The matters which are to be taken into account in assessing benefits for the purpose of section 313(11A) are set out in section 313(11B) as being:

(a) the number of creditors and potential creditors; and

(b) the position of creditors and potential creditors (in particular, their ability to independently obtain financial information about the company or companies); and

(c) the nature and extent of the liabilities of the company or companies."

26. There are two policy statements issued by the Commission applicable to the subject period and relevant to the relief sought pursuant to section 313 of the Law, namely Policy Statement 43 "Accounts and Audit Relief" and Statement 115 "Audit Relief for Proprietary Companies". As now relevant to the application for review they provide:

43.10 Before the ASC can make an order under s313(2) of the Law in relation to a company, it must be satisfied that at least one of the pre-conditions in s313(11)(a) has been met ...

43.11 The onus is on the applicant to provide evidence, as against mere assertion, to satisfy the ASC that relief should be granted having regard to the intention of the legislative requirement and the factors outlined in para 41 and 42 below. It should not be assumed that, if one of the pre-conditions has been satisfied ... relief will automatically be granted.

43.23 A requirement of the Law may be burdensome in one of two ways:

(a) there may be a burden associated with attaining compliance with the requirement; or

(b) a burden may result from having complied with the requirement.

43.24 However, before relief can be granted, the applicant must demonstrate not only that there is a burden, but also that the burden is unreasonable. In the Mazda case [Re Mazda Australia Pty Ltd v ASC (1992) 8 ACSR 613], the Oxford English Dictionary definition of "unreasonable" was invoked to conclude that an unreasonable burden, in the context of the Law, is a burden that goes beyond what is based on reason or good sense, goes beyond what is equitable or is excessive. It was also held that that "applicants have a high standard of proof to overcome in showing the existence of an unreasonable burden" and that "the use of the word 'unreasonable', indicates that the balance must be so far against the interests of the applicant as to be fairly described as overwhelming".

43.41 The ASC must take into account the matters in s313(11) of the Law and the objectives underlying the establishment of the ASC ... in performing its functions and exercising its powers, the ASC shall, in the interest of commercial certainty, reducing business costs, and the efficiency and development of the economy, strive to maintain, facilitate, and improve the performance of companies and to maintain the confidence of investors in the securities markets by ensuring adequate protection for such investors.

43.42 The accounts, audit and directors' report provisions of the Law are directed to attaining the objectives of the maintenance of investor confidence and the enhancement of market efficiency through the provision of relevant, reliable and timely financial and other information to market participants and in particular to shareholders and debentureholders and present and prospective creditors.

115.10 The objective of an audit of a financial report is to enable an auditor to express an opinion as to whether the financial report is prepared, in all material respects, according to an identified financial reporting framework: see Auditing Standard AUS 202...

115.11 The persons most likely to benefit from an audit include, but are not limited to, shareholders, directors, creditors and potential creditors. For these persons an audit enhances the credibility and reliability of a company's financial report.

115.12 Compliance with the audit requirements imposes a burden on the company, its officers and its auditors, Depending on the expected costs and benefits that an audit provides, the burden may be unreasonable.

115.31 ASIC will generally only give audit relief to a proprietary company under this policy statement if the following requirements are met:

(a) directors and shareholders of the company agree that an audit is not required;

(b) ASIC is satisfied that the company applying for audit relief is well managed and in a sound financial condition, in respects most directly relevant to the interests of creditors;

(c) the company's year end financial report is compiled by a "Prescribed Accountant"; and

(d) the company lodges its financial report within the deadlines in the Law.

27. It is not necessary for the purpose of these reasons to detail other provisions of the Policy Statements, suffice it to say that Policy Statement 115.42 deals with well managed companies in a sound financial condition, 115.43 specifically with well managed companies, and 115.45 specifically with sound financial condition. 115.50 deals with the financial statements being compiled by a prescribed accountant. Paragraph 115.53, referrable to lodging financial statements and annual returns, provides:

"Relief from the audit requirements is only available if a company lodges its financial report and directors' report... within the deadlines in the Law or within such additional time as is approved in writing by an officer of ASIC. ASIC regards timely lodgment of the company's unaudited financial report... as an essential requirement for audit relief."

Unreasonable Burden Pre-condition - Benefit of an Audit

28. In the statement of reasons for its decision, the Commission in October 1998 stated that the Company had neither quantified the likely administrative or financial burden of compliance with the audit requirements, nor had it addressed whether such a burden would be out of all proportion to the expected benefits resulting from an audit. In its evidence before the Tribunal the Company did quantify the anticipated cost of compliance with the audit requirements and sought to deal with the expected absence of benefit resulting from an audit. In effect the Company says that there is no benefit to the Company or a third party creditor or prospective creditor in the 1998 accounts being the subject of audit at this time. Further, the Company says that all creditors as at 30 June 1998 have been paid, other than those in respect of whom there is a continuing disputation.

29. Noting that the Company initiated an internal audit function expanded to cover all major marketing programs and operating functions, the Commission was of the view that any administrative burden of complying with the audit requirements of the Law would not be unreasonable.

30. There is no issue as to a burden inevitably arising from the requirement of audit, but in the present circumstances it is contended that the auditor in all probability would be unable to do other than provide a qualified report. Even be it that the audits conducted by and on behalf of the major customers of the Company are compliance audits rather than financial audits, the significance of the procedures put in place by the Company in the 1998 financial year so far as internal audit is concerned is not, it was submitted, to be minimised. In addition, two chartered accountants apply a measurable part of their professional time to the affairs of the Company.

31. The Commission, having in mind that the directors of the Company were and are also its shareholders and a measurable portion of the Company's assets consisted of a loan to one of the director/shareholders, contended that on this account the Company was not financially sound within the meaning of Policy Statement 115. The position has now changed in that, whilst in 1998 the liabilities to assets ratio was 75%, by February 1999 it was 57%. However, the percentile requirement of the code relevant to liabilities and assets has only been met by way of payment of a dividend in the 1999 financial year, the same being repaid to the Company in order to reduce if not eliminate the shareholder's loan.

32. It was said by the Commission that it would generally not grant relief from the audit requirements of the Law unless a company met the prerequisites contained in Policy Statement 115 paragraph 35. Directors and shareholders need to agree and resolve that an audit is not required and the relevant resolutions are to be passed within the period prescribed, namely "before the start of the financial year but not more than three months before the start of the financial year or within such other time as approved in writing by an officer of the ASC". The subject resolutions of directors and shareholders were not passed in accord with these requirements and "such other time" was not approved in writing by an officer of the Commission. Indeed, the relevant resolutions were not passed until 20 May 1998 so far as the directors' resolution was concerned, and 28 May 1998 so far as that of the shareholders, the latter approximately 11 months after the prescribed period.

33. Mention has already been made of the failure by the Company to lodge its financial statements and annual returns within the time requirements of the Law. As to the financial year ended 30 June 1996 the annual accounts were lodged on 17 July 1997, some eight months after they were due, and in respect of the financial year ended 30 June 1997 the accounts were lodged on 26 June 1998, over seven months since they were due. The "external" chartered accountant acknowledged that the accounts were lodged late but denied any default on the part of the Company. No explanation was however provided to the Tribunal as to circumstances surrounding such a delay in lodging the accounts.

34. It is trite to say that time provisions are inserted in legislation to ensure that relevant material is available to interested parties whilst it is still current and of practical use. Time strictures are not merely of academic importance. Non-compliance, often as not, can attract a financial sanction. They are not to be disregarded, or if so without an adverse consequence. The Company did not and has not met the pre-conditions for the exercise of the Commission's discretion as prescribed by section 313(11) of the Law.

35. Even be it that there has been a substantial change in the size of the Company over the relevant periods, a comparison of audited accounts could still be of benefit. A prospective creditor would gain a more informed view of the affairs of the Company if it was able to make this comparison. The situation is compounded by the history of non-compliance with the Law. The Company should not be relieved of its responsibility or enabled to avoid a statutory obligation merely by reason of the passage of time. The actual dollar cost of an audit is minimal in the context of the profitability of the Company and no unreasonable burden, in this sense, having been established.

36. The Company does not contend that the Policy Statements 43 and 115 are other than relevant to the present determination. What it does submit is that the Tribunal is not constrained to make decisions within the parameters of the Policy Statements but may grant the relief sought if it is of the opinion that to grant the audit relief would be the correct or preferable decision, having in mind the statutory requirements, the Policy Statements and other relevant considerations. However, as seen by the Tribunal, the correct or preferable decision is one that is to be made in the context of the Policy Statements and the statutory prerequisites.

37. The Company contends that at this time the matters to be determined are whether a burden exists and whether such burden is unreasonable, and in determining these matters consideration is to be given to the requirements of section 313(11A) and (11B), namely the expected costs of complying with the requirements, the expected benefits of having the company comply with the requirements, the position of creditors and potential creditors, the nature and extent of the liabilities of the Company, the management of its affairs and its financial condition.

38. It is estimated that the cost of an audit will be in the vicinity of $86,560.00. Policy Statement 43, paragraphs 20, 23 and 25, contemplate that there may be a burden associated with attaining compliance with the requirement or a burden may result from having complied with the requirement. The needs of other users of the accounts, creditors and prospective creditors, must be taken into consideration. But the administrative burden it is submitted is not to be out of all proportion to the value of the result and disclosure to users of the accounts. Policy Statement 115, paragraph 13, states that a burden is unreasonable if it goes beyond what is based on reason or good sense and goes beyond what is equitable or is excessive. It was submitted that as at August 1999 an audit requirement for the 1998 financial year would impose an unreasonable burden as the cost of the exercise is out of all proportion to any benefits that may be obtained. Indeed, the evidence, it was said, did not support the existence of any benefit from carrying out such an audit, either actual or expected, unless "the blind adherence to policy is elevated to a beneficial end in itself". Thus the question is raised as to whether there is any benefit at all in the expenditure of the abovementioned amount of money.

39. Consideration of expected benefits is indeed one of the prerequisites which must be taken into consideration. Section 313(11B) requires the decision-maker to take into account the number of creditors and potential creditors, the position of creditors and potential creditors, the nature and extent of the liabilities of the company or companies and other matters. It is said on behalf of the Company that there is no benefit which could be bestowed on creditors and potential creditors, this because there are no relevant creditors or potential creditors existent at this time in relation to the 1998 financial year. All creditors as at 30 June 1998 have been paid except for those where a dispute is current. From the perspective of creditors and potential creditors, no benefit it is said could be obtained from looking at the Company's 1998 accounts even be they audited, such audited accounts not being available in any event until toward the end of the 1999 calendar year. The creditors existent at this time would not it is said have any relevant interest in having 1998 audited financial figures, any creditor or potential creditor having access to the Company's 1988 financial accounts, be they unaudited, as lodged with the Commission.

40. The Law requires consideration to be given to the position of creditors and potential creditors and in particular their ability to independently inform themselves of financial information about a company. Both secured and unsecured creditors are able to obtain copies of statutory accounts as lodged by the Company with the Commission for the 1997 and 1998 years. So far as creditors are concerned, they have all been paid other than disputed claims. There are thus, it is said, not any creditors who would have an interest in or connection with the 1998 financial year.

41. There is no issue that the Company is well managed and is in a sound financial position. Evidence as to revenue, current assets and trading results reflect an increase in trading and profitability, the ratio of assets and liabilities having fallen year by year. The need then to provide non-existent creditors with financial information, duly audited, as to how the Company performed in the 1998 year is unsubstantiated.

42. There is no issue as to the Company being managed in a sound manner, maintaining consistent policies and procedures, with monthly management meetings, information system reports being available, budgets prepared in relation to its marketing programs, quality control and quality assurance. The presence of an independent external chartered accountant, appointed by major clients of the Company in the role of an investigating accountant, is indicative of a degree of external assessment. The review undertaken each month of the management information system report, which includes detailed profit and loss statements with comparison to detailed budgets, is also noted.

43. The factors mentioned in the preceding paragraphs are said to be sufficient to overcome any imperatives that might have been seen in the policy directives and in respect of which the Company might have been at fault. They are also said to be sufficient to justify the contention that an unreasonable burden would be imposed upon the Company and no benefit would accrue to third party interested persons. This situation, it is said, is compounded by the inability of an auditor to attend a stocktake and conduct an effective debtors' verification with a consequent inability to issue an unqualified audit report.

44. Finally, it is submitted by and on behalf of the Company that it has not sought an audit exemption for the 1999 financial year and it is the figures for that year which will provide a true and fair picture of the affairs of the Company. For the Company to engage resources in creating a set of figures which will not be of any assistance to anybody and slow down the ability of the Company to prepare audited accounts in respect of the 1999 financial year would itself be an unreasonable burden. The Company, as it exists at the present time, is said to be substantially different from that which it was as at 30 June 1998 and the accounts for that year would not be of any benefit to any third party. The past non-compliance by the Company with the statutory obligations is said to be not apposite to the present situation.

45. Potential creditors can take comfort from the existence of audited accounts, even be they or one of them qualified, especially if they are available for more than one year. In the circumstances of this matter there are seen to be "some benefits and the costs are marginal". The Policy Statements have not in a relevant sense been complied with, the time criteria have not been met and the Company does not have a favourable compliance history. The effect upon community perception of corporate responsibility cannot be discounted.

46. The Tribunal is not unmindful of the lengthy and carefully structured submissions put to it on behalf of the Company. To an extent the position taken, namely that audited accounts for the 1998 year would be of historical significance only and not directly relate to the current financial position or to current creditors, is made out. However, there is merit in the position taken by the Commission, that a prospective creditor can obtain a more informed and reliable view of the position of a Company if able to compare like financial statements the one against the other. It is true to say that unaudited accounts have been lodged in respect of the 1998 year. However, they do not provide the base for an appropriate comparison to be made with audited accounts for the 1999 year.

47. The Tribunal, as earlier indicated, is not constrained by the matters contained in the relevant policy considerations, but nevertheless is to pay heed to them in the context of the purport and intent of the legislative provisions. This it has done.

48. There has indeed been a delay in this matter being heard and determined. The delay has enabled the Company to found its submission as to the lack of utility of 1998 audited accounts at this time. It is no doubt true that such audited accounts would not be of assistance to the same number or manner of creditors now as it might have been 12 months ago. However, it cannot be said that such accounts would not be of assistance to prospective creditors in the comparative sense already mentioned.

49. In all the circumstances of this case, having in mind the position of third parties, the benefit that might well accrue to them as already outlined, the lack of compliance by the Company with the statutory prerequisites for the holding of meetings and the passing of resolutions, the purpose of which is no doubt to give the Commission sufficient time to consider the matter and the Company to exhaust any appeal process before an audit would or would not be required and the corporate history of the Company, the Tribunal is of the view that the decision under review should be affirmed.

50. Accordingly, the decision under review is affirmed and the exemption not granted.

I certify that the 50 preceding paragraphs are a true copy of the reasons for the decision herein of

Signed: .....................................................................................