ASIC Corporations (Foreign-Controlled Company Reports) Instrument 2017/204

Control as defined by accounting standards. The instrument adopts the definition of “control” from Australian Accounting Standard AASB 10 Consolidated Financial Statements. This is a principles‑based test that depends on power over an investee, exposure to variable returns and the ability to use power to affect returns. It is not the same as legal ownership or the control test used in other parts of the Corporations Act, such as section 50AA. This means a company may be “controlled by a foreign company” for the purposes of the instrument even if the foreign company does not hold a majority of shares, as long as the AASB 10 test is satisfied. Conversely, a foreign company that holds a majority stake but lacks the other elements of control under AASB 10 might not be treated as a controller. This creates an incentive for foreign groups to structure their Australian subsidiaries to avoid control findings, though any such structuring must be genuine and consistent with the accounting standard.

“Group” and “large group”. The definition of “group” in section 4 is deliberately broad. It includes the entity itself, any entity that controlled it during the financial year (and which is registered or formed in Australia or carries on business here), any “corresponding entity” controlled by the same foreign company that controls the entity, any entity controlled by the entity, and any entity controlled by a corresponding entity while that corresponding entity is under common foreign control. This effectively captures the entire Australian‑connected sub‑group under common foreign control. The size test for “large group” uses the combined revenue and gross assets of the whole group, with adjustments as required for consolidation under accounting standards. This is important because even if the individual proprietary company is small, if the Australian sub‑group is large (meeting at least two of the three thresholds), the relief under section 5 is not available. The thresholds are indexed by reference to “any other amount prescribed” under section 45A, so they will automatically update if the regulations change those prescribed amounts.

The distinction between an “order” and a “declaration”. The instrument uses two different mechanisms because the underlying provisions of the Act are different. Section 341(1) gives ASIC the power to make an order relieving a person or class of persons from a provision of Chapter 2M. Part 2 is such an order. Section 601CK(7) gives ASIC the power to make a declaration that one or more of subsections (1) to (6) do not apply to a registered foreign company or a class of registered foreign companies. Part 3 is such a declaration. The practical difference is less significant than the technical one: both provide conditional exemptions, but the declaration under section 601CK is specifically about the obligation of a registered foreign company to lodge financial statements each calendar year. The relief in Part 2 is for the obligation to prepare and lodge an audited financial report under Chapter 2M.

Directors’ resolution and notice requirements. Section 5 requires a directors’ resolution passed no earlier than three months before the start of the financial year. This timing prevents retroactive reliance and forces the board to decide on the compliance strategy before the year begins. The resolution must then be supported by one of three alternative paths under subparagraph 5(2)(c): (i) previous reliance on the section 5(1) relief for the prior year; (ii) lodgement of Form 384 within a window that starts three months before the financial year and ends four months after it ends; or (iii) for a company that relied on the relief in a previous year but then could not rely on it for intervening years because ASIC withdrew the relief, a reference back to the last reliance year. There is also a requirement under paragraph 5(2)(d) that if the company stops relying on the relief in the year after a year of reliance (the “first non‑reliance year”), it must either lodge an annual financial report for that year or lodge Form 394. This ensures that the exit from the relief is transparent and that the company resumes full reporting promptly.

ASIC’s power to withdraw relief. Both the order under section 5 and the declaration under section 6 are subject to ASIC having not notified the company in writing that it may not rely on the instrument. ASIC may also revoke or vary such a notice. This gives ASIC a residual power to deny relief to a particular company even if it meets all the objective conditions. The instrument does not specify the grounds on which ASIC would issue such a notice, which creates uncertainty. A company that meets the size tests and procedural requirements could still be forced into full reporting by an ASIC notice. This may be used to target companies where ASIC suspects abuse or where public interest in transparency outweighs the usual policy of relieving small foreign‑controlled entities. The existence of this discretionary override means that compliance departments must monitor ASIC communications continuously and cannot assume relief is guaranteed.

Small proprietary companies controlled by foreign companies. The primary class affected by Part 2 is a “small proprietary company” that is controlled by a foreign company for all or part of a financial year. The instrument uses the existing definition of “small proprietary company” from section 45A of the Act, which turns on the same three thresholds (revenue, assets, employees). However, the relief is not available if the company is part of a group controlled by a foreign company that is a large group. This means the relief is effectively limited to foreign‑controlled small proprietary companies whose entire Australian sub‑group is also small. A foreign‑owned subsidiary that is individually small but is part of a large Australian group (for instance, because it has several other subsidiaries in Australia that collectively exceed the thresholds) cannot rely on the relief. The instrument therefore affects not just the company itself but also its ultimate foreign controller, which must consider whether the Australian operations as a whole are small enough to justify the cost savings from forgoing audited financial reports.

Registered foreign companies. Part 3 affects a different type of entity: a foreign company that is registered under Division 2 of Part 5B.2 of the Act. These are typically foreign companies that carry on business in Australia through a branch rather than a subsidiary. The declaration relieves them from lodging financial statements under section 601CK each calendar year. To qualify, the foreign company must be small by Australian proprietary company standards, must be subject to proprietary‑style restrictions in its home law (limiting the number of members, prohibiting fundraising from the public, etc.), must not be required by its home law to prepare balance sheet, P&L or cash flow statements, and must not have been a disclosing entity, debenture borrower or guarantor during the year. These conditions effectively target foreign companies that are themselves small private entities with no public reporting obligations in their home jurisdiction. If the foreign company is part of a large global group, the relief is only available if it has been consolidated into financial statements lodged with ASIC by an Australian controller - meaning a company, registered scheme or disclosing entity that controlled it for the whole year (or by two or more such entities covering the year). This condition ensures that if the activities of the foreign company are already reflected in Australian‑lodged group accounts, then individual branch lodgement is unnecessary.

Creditors, counterparties and the public. Those who would otherwise rely on publicly available financial reports of these entities are indirectly affected. For a small foreign‑controlled proprietary company that uses the relief, no audited financial report will be on the public record. Creditors, trade suppliers and potential business partners lose access to that information. The same applies for a registered foreign company that uses the declaration. The instrument assumes that the cost of preparing and lodging audited reports for these entities is disproportionate to the benefit that public access provides. But the trade‑off is real: parties dealing with such entities must either rely on other sources of information (such as credit reporting, parent company guarantees or private financial statements) or accept the information asymmetry. For small foreign‑controlled companies that are part of a large group that lodges consolidated accounts, the group accounts provide some transparency, but not the same level of detail about the individual entity.

Directors and officers of affected companies. The directors of a small proprietary company must pass a resolution within the strict time window and ensure that the company satisfies the group size test each financial year. They must also decide whether to rely on prior year relief or lodge a notice. If the company later stops relying on the relief, they must either prepare and lodge an annual report for the first non‑reliance year or lodge a Form 394. For registered foreign companies, the directors must monitor the company’s size each calendar year, verify compliance with home law restrictions and the absence of home‑law reporting obligations, and ensure that if the company is part of a large group, there are consolidated accounts lodged with ASIC covering the period. The directors must also be aware of and respond to any ASIC notice withdrawing the relief. Non‑compliance with these conditions could result in the company inadvertently losing the relief and being in breach of the Act.

Duty to comply with Part 2M.3 and section 601CK unless relief obtained. The starting point is that a small proprietary company controlled by a foreign company must comply with Part 2M.3 (including preparation of an audited financial report and directors’ report, and lodgement with ASIC) by virtue of paragraph 292(2)(b). Similarly, a registered foreign company must lodge financial statements under subsections 601CK(1) to (6) each calendar year. The instrument does not abolish those duties; it provides a conditional exemption. Each year, the relevant entity must actively verify that the exemption conditions are met. There is no presumption that relief applies. The duty to comply revives immediately if any condition ceases to be satisfied or if ASIC issues a notice withdrawing relief.

Right to rely on the relief upon satisfying conditions. An entity that meets all conditions has the right to not prepare or lodge the otherwise‑required reports. This right is not automatic for a small proprietary company in the first year: it requires either a prior year reliance (or deemed reliance under transitional rules) or lodgement of Form 384. For subsequent years, it requires that the company has not ceased relying and that the directors pass a new resolution each year. The right is also subject to ASIC’s power to withdraw it by written notice. This creates a form of conditional entitlement rather than an absolute right.

Right to cease relying on the relief and transition back to full reporting. Paragraph 5(2)(d) gives the company a choice when it stops relying on the relief in the year immediately after a year of reliance (the “first non‑reliance year”). It can either lodge an annual financial report for that year or lodge Form 394. The right to lodge a notice rather than a full report allows a clean exit without having to prepare a report for a year in which the company did not have the systems in place to produce one. However, the notice must be lodged within a window starting three months before the financial year and ending four months after it ends.

Right of the registered foreign company to rely on group accounts lodged by its controller. Paragraph 6(2)(f)(ii) provides that if the foreign company is part of a large group, the declaration is still available if it has been consolidated into financial statements lodged with ASIC by a company, registered foreign company, registered scheme or disclosing entity that controlled it for the whole financial year. This allows the foreign company to avoid duplication: the group accounts already cover its financial position. The right is conditional on the group accounts covering the whole year and being lodged by a controller that met the control test throughout the year. If the controller changes during the year, two or more entities can together cover the whole year.

Duty to monitor group size. For a small proprietary company, the group size test under section 5(2)(a) must be assessed annually. The group includes not just the company but all entities within the expansive definition in section 4. The directors must calculate combined revenue and gross assets of the group as adjusted for consolidation, and count employees on a full‑time equivalent basis. If the group becomes large in any year, the relief for that year is lost, and the company must revert to full reporting. If the company then tries to resume relief in a later year when the group becomes small again, it must navigate the conditions in subparagraph 5(2)(c), which require either prior reliance (but it lost reliance in the large‑group year) or use of Form 384 again. The duties here are ongoing and can create a compliance trap if the group fluctuates around the thresholds.

Right to receive ASIC notice and to respond. Both sections 5 and 6 include a condition that ASIC may notify the company that it may not rely on the instrument. The company then loses the relief unless ASIC subsequently revokes or varies the notice. The instrument does not give the company a right to be heard before the notice is issued, nor a right to appeal the notice within the instrument itself (though judicial review rights under the Administrative Decisions (Judicial Review) Act 1977 may apply). The practical right is to monitor correspondence from ASIC and, if a notice is received, to consider making representations to ASIC to have it revoked or varied.

The instrument itself does not create new penalties. It is a relief instrument; penalties arise from non‑compliance with the underlying obligations in the Corporations Act if the relief does not apply or is not properly relied upon. If a small proprietary company controlled by a foreign company does not prepare and lodge an audited financial report when required, it faces the civil and criminal penalty provisions of Chapter 2M. Division 4 of Part 2M.4 imposes strict liability offences on companies for failing to lodge reports, with maximum penalties of 100 penalty units for the company. Directors may also face personal liability for the company’s contravention under section 344 of the Act, which creates a civil penalty provision for directors who fail to take reasonable steps to ensure compliance with financial reporting requirements. The maximum penalty for a director is currently $1.1 million per contravention (indexed) and/or disqualification.

Enforcement by ASIC through written notice. The instrument gives ASIC a direct enforcement lever: it may notify a company in writing that it may not rely on the order or declaration. This power is not conditional on a breach; ASIC appears to have discretion to withdraw relief even from a company that meets all the objective conditions. The instrument does not state the criteria ASIC will use, which means companies face uncertainty. If ASIC issues such a notice, the company must either cease relying on the relief and compliantly prepare and lodge reports, or seek to have the notice revoked or varied. Failure to do so could result in the company continuing to withhold reports, thereby breaching the Act. The notice power is therefore a soft enforcement tool that can be used without court proceedings.

Consequences of incorrectly relying on relief. If a company or registered foreign company erroneously believes it satisfies the conditions when it does not, and accordingly fails to prepare or lodge reports, it will be in contravention of the Act from the time the obligation arose. The instrument does not provide a defence if the error was reasonable. For example, if a small proprietary company’s group becomes large during the financial year because of an acquisition or organic growth, and the directors do not detect this until after the lodgement deadline, the company faces late‑lodgement penalties and possible director liability. The instrument’s reliance on the group being not a large group “for the relevant financial year” means the test is assessed at the end of the year based on the full year’s figures. Mid‑year changes matter.

Implications for registered foreign companies that lose eligibility. If a registered foreign company relies on the declaration for a calendar year but later it is discovered that it did not meet all conditions - for example, its home‑law reporting obligations changed or its size exceeded the small proprietary company thresholds - it will have failed to lodge financial statements under section 601CK. The penalty for a registered foreign company that contravenes that section is not specified in the instrument, but under subsection 601CK(7) a declaration that subsections (1) to (6) are inapplicable is the only way to avoid those requirements. Without a valid declaration, the company must lodge. The general penalties for failure to lodge under Part 5B.2 are an offence under section 601CW (max 50 penalty units) and the company’s registration may be cancelled under section 601DN.

No criminal or civil penalty provisions unique to the instrument. The instrument is a legislative instrument made under delegated powers. It does not create offences. Enforcement is entirely through the existing enforcement architecture of the Act. This means that the usual ASIC investigatory powers, including the power to issue notices to produce books and to examine persons, apply if ASIC suspects a breach of the reporting obligations. The instrument’s conditions are therefore self‑enforcing only to the extent that companies self‑assess correctly. ASIC can test compliance by reviewing the company’s resolution, lodged notices and financial records, and can also use its power to request information from related entities to verify group size.

Corporations Act 2001 (the primary interaction). The instrument is made under and modifies the operation of the Act. Section 5 relief operates by providing that a small proprietary company “does not have to comply with Part 2M.3 of the Act as it applies because of paragraph 292(2)(b)”. Part 2M.3 sets out the requirements for financial reports, directors’ reports and audit. The rest of the Act continues to apply. For example, the company still has record‑keeping obligations under section 286 (minimum retention period of seven years) and must keep financial records that correctly record and explain its transactions. The instrument does not relieve the company from preparing financial records; it only relieves from preparing and lodging the full audited report. Similarly, section 6 declares that subsections 601CK(1) to (6) do not apply. Those subsections require a registered foreign company to lodge financial statements within four months of the end of its last financial year. The declaration removes that specific obligation but does not affect other obligations of a registered foreign company, such as the obligation under section 601CT to maintain a registered office in Australia or under section 601CX to notify certain changes.

Australian Accounting Standards. The instrument incorporates AASB 10 for the definition of “control” and requires that adjustments to revenue and gross assets of the group be made “as would be required in preparing consolidated financial statements under accounting standards in force at the relevant time”. This means that if accounting standards change, the calculation methodology changes automatically. The instrument does not require the entity to actually prepare consolidated financial statements; it only requires the calculation of the group’s combined revenue and assets as if such statements were prepared. Entities must therefore maintain sufficient accounting records to be able to make those calculations each year. The interaction with accounting standards also means that the meaning of “employee” for counting employees under paragraph (c) of the large group definition is not defined in the instrument; it likely follows the accounting standard definition of employees for consolidation purposes, which may differ from the definition in workplace relations legislation.

ASIC Class Order [CO 98/98] (the predecessor). Part 4 explicitly deals with the transition from CO 98/98. That class order previously provided relief similar to Part 2. The transitional provisions ensure that companies that relied on CO 98/98 for the financial year immediately before the first year of the new instrument are treated as having met the prior‑reliance condition in subparagraph 5(2)(c)(i). This prevents a gap: without this rule, companies that had been using the old class order would have to lodge a new Form 384 or meet other conditions to continue under the new instrument. The transitional rule smooths the shift but only for the first year; after that, the normal conditions apply.

Section 113 of the Corporations Act (proprietary company limits). Section 113 imposes restrictions on proprietary companies: they cannot have more than 50 non‑employee members, cannot engage in activity that would require disclosure to investors under Chapter 6D, etc. For the declaration under Part 3 to apply, the registered foreign company must be subject to restrictions, limitations and prohibitions “of the kind that section 113 imposes on proprietary companies” that are contained in its home law or constitution and are “no less strict” than those in section 113. This requires a comparison between Australian and foreign law. If the foreign law has less strict restrictions, the declaration is unavailable. This interaction creates a potential foreign‑law analysis burden for the company’s advisers, especially if the home jurisdiction’s company law does not have an exact analogue of section 113.

Other ASIC instruments and regulatory guides. The instrument does not reference any other ASIC instruments, but ASIC may issue regulatory guides that explain how it will use its discretion to issue notices withdrawing relief. Companies should be aware that the instrument is not the only source of relief from financial reporting; there are other class orders for specific circumstances, such as for wholly‑owned subsidiaries. The interaction between multiple relief instruments may require a company to choose which one to rely on, potentially layering conditions.

The instrument is ASIC Corporations (Foreign-Controlled Company Reports) Instrument 2017/204, made on 23 March 2017 and registered on the Federal Register of Legislation. It replaced earlier ASIC Class Order [CO 98/98] (also known as Class Order 98/98), which had been in effect for approximately two decades. The instrument was made by Stephen Yen PSM as a delegate of ASIC. The text provided does not include any subsequent amending instruments. Based on the instrument itself, the only transitional provisions relate to the replacement of CO 98/98; there are no amendments to this instrument recorded in the source.

The instrument’s commencement is the later of the day after registration and the day it is gazetted. That means it came into force during 2017. The declaration in Part 3 applies to calendar years commencing on or after 1 January 2017, indicating that the instrument was intended to be in place before the start of the 2017 calendar year for registered foreign companies. No subsequent amendments are visible, but it is possible that later instruments have updated the definition of “large group” by referencing changes to the prescribed amounts under section 45A. The instrument uses the phrase “or any other amount prescribed for the purposes of paragraph 45A(2)(a)…”, so the thresholds are dynamic. If the regulations under the Act increase the prescribed amounts, the instrument’s thresholds automatically increase without needing a direct amendment. This is a form of indirect amendment by reference.

The instrument has likely been reviewed as part of ASIC’s periodic sunsetting process for legislative instruments. Under the Legislation Act 2003, an ASIC instrument generally sunsets (automatically repeals) after 10 years unless extended. This instrument would have been registered in 2017, so its sunset date would be around 2027. No extension or replacement instrument is noted in the source, but users should check the current status of the instrument on the Federal Register of Legislation, as it may have been varied, repealed or replaced since the text provided.

The source text does not mention any cases, and no litigation directly addressing this specific instrument is known from the provided information. As a relatively technical and uncontroversial relief instrument, it is unlikely to have been the subject of litigation by the parties affected. Challenges would more likely arise from the underlying provisions of the Act or from ASIC’s exercise of its discretion to issue a notice withdrawing relief. If ASIC notifies a company that it may not rely on the instrument, the company could seek judicial review under the Administrative Decisions (Judicial Review) Act 1977 or under section 75(v) of the Constitution on grounds such as a denial of procedural fairness or improper purpose. No such challenge is reported in the source.

The instrument’s reliance on accounting standards (AASB 10) for the definition of “control” could potentially become part of a dispute about whether a particular entity is controlled by a foreign company for the purposes of the instrument. If ASIC were to argue that a company incorrectly assessed control, and that the relief was therefore invalid, that might lead to litigation about the interpretation of AASB 10 in the context of the instrument. Again, no case law is cited.

Practitioners should also be aware that the predecessor instrument CO 98/98 may have been the subject of commentary or private rulings, but no litigation history for that class order is provided. The lack of litigation does not mean the instrument is risk‑free; it may simply reflect that compliance costs are low relative to the cost of litigation, or that ASIC has not aggressively enforced the conditions. However, the absence of case law means there is no judicial guidance on ambiguous terms such as “subject to restrictions, limitations and prohibitions of the kind that section 113 imposes on proprietary companies” in paragraph 6(2)(b). That provision could be fertile ground for future disputes if ASIC challenges a registered foreign company’s reliance on the declaration.

The group size test uses Australian accounting consolidation adjustments even if the entity does not prepare consolidated accounts. Under the definitions in section 4, “combined revenue of the group” and “combined value of gross assets of the group” require “making all adjustments as would be required in preparing consolidated financial statements under accounting standards in force at the relevant time (even if the standard does not otherwise apply to the financial year of some or all of the companies concerned).” This means that intra‑group transactions must be eliminated, and fair value adjustments may be required even if none of the entities in the group actually prepares consolidated financial statements. A common mistake is to simply add up the standalone revenues or assets of each entity. If elimination entries are missed, the group may appear larger (or smaller) than it actually is, potentially causing the company to incorrectly conclude it is not part of a large group when it is, or vice versa. The latter error - thinking the group is large when it is not - would lead to unnecessary compliance. The former - thinking the group is small when it actually is large - could result in a breach.

The directors’ resolution must be passed no earlier than three months before the start of the financial year. This is a strict timing requirement. If the resolution is passed earlier, the relief is unavailable even if all other conditions are met. For a company with a financial year ending 30 June, the resolution cannot be passed before 1 October of the previous year (assuming a 1 July start). Companies that habitually pass blanket resolutions well in advance must adjust their calendar. The instrument does not allow a corrective resolution later; once the window is missed, the relief is lost for that year.

Lodgement of Form 394 when ceasing relief is mandatory if the company does not lodge an annual report. Paragraph 5(2)(d) offers a binary choice: either lodge an annual financial report for the first non‑reliance year, or lodge Form 394. If the company does neither, it is in breach of the condition and the relief for any other year may be jeopardised. The form must be lodged within the same window as the resolution (from three months before the start of the financial year to four months after its end). A company that simply stops preparing reports without lodging the form will have inadvertently failed to meet the condition if it later tries to rely on relief again.

The “last reliance year” trap in subparagraph 5(2)(c)(iii). This path allows a company that has previously relied on the relief, then could not rely on it because ASIC withdrew relief, and then has a later year where ASIC has not withdrawn relief, to bypass the Form 384 requirement. However, the path applies only if the company “was not able to rely on that relief in respect of each financial year since the last reliance year and before the relevant financial year because of the operation of paragraph (e)”. Paragraph (e) refers to ASIC notification. If the company could not rely on the relief for any other reason - for instance, because the group became large - this path is not available. The company must instead use Form 384. This subtle distinction can catch those who assume any intervening interruption qualifies.

The registered foreign company must check its home‑law reporting obligations each year. Paragraph 6(2)(c) requires that the foreign company “is not required by the law in its place of origin to prepare any of the following: a balance sheet… a profit and loss statement… a cash flow statement”. This is an absolute bar: if the home law requires any of those three financial statements, the declaration is unavailable, even if the company is small. Some jurisdictions require even small companies to file abbreviated financial statements. The company must monitor changes in home‑law requirements. Also, note that the requirement is about being required to “prepare”, not “lodge”. If the home law requires preparation but not public filing, that still blocks the declaration.

Consolidated group accounts condition for foreign companies in large groups. Paragraph 6(2)(f)(ii) requires that the foreign company was “consolidated in financial statements which… were lodged with ASIC by a company, registered foreign company, registered scheme or disclosing entity which controlled the foreign company for the whole of that financial year”. If the controller that lodged the accounts is not the same entity that controls the foreign company for the whole year, or if the consolidated accounts do not cover the foreign company’s entire financial year, the condition fails. For example, if the foreign company was controlled by a different Australian entity for part of the year, either both controllers must lodge accounts covering the whole year or the foreign company cannot rely on the declaration. This requires careful tracking of control changes.

ASIC notice can be issued at any time and without stated reasons. Both sections 5 and 6 allow ASIC to notify the company that it may not rely on the order or declaration. The instrument does not limit when ASIC can issue the notice. It could come during the financial year or after its end. This means a company cannot be certain it will have the relief for the full year until ASIC’s notice period expires. ASIC’s practice is not defined in the instrument, but the mere possibility creates a contingent liability: the company may have to prepare and lodge reports retrospectively if a notice arrives after the end of the year but before the statutory lodgement deadline.

Step 1: Determine whether the company is controlled by a foreign company. For a proprietary company, apply the AASB 10 test. Look at the ultimate foreign parent and any intermediate entities. Document the analysis in board minutes. For a registered foreign company, the foreign company is by definition foreign, so the control test is less relevant; instead, verify that the company is registered under Division 2 of Part 5B.2 and meets the other conditions.

Step 2: Assess the size of the relevant group. For a small proprietary company, calculate the combined revenue, gross assets and employee count of the group defined in section 4. Use consolidation adjustments (eliminate intra‑group transactions and balances) even if no actual consolidated accounts exist. Document the calculation methodologies. Determine whether the group is a “large group” (at least two of the three thresholds). If it is large, the relief under section 5 is not available; proceed to prepare and lodge full reports under Chapter 2M. For a registered foreign company, assess whether the company itself satisfies the small proprietary company criteria under section 45A(2) using its own financials. Then determine whether it is part of a large group. If it is, check whether it has been consolidated into financial statements lodged with ASIC by a controller. If not, the declaration under section 6 is unavailable.

Step 3: If eligible, prepare directors’ resolution (for proprietary companies). The board must resolve to rely on the relief no earlier than three months before the start of the financial year. The resolution should record the basis for the decision, including the group size analysis. File the resolution in the company’s minutes.

Step 4: Lodge or have a prior reliance history (for proprietary companies). If the company has not relied on this instrument (or its predecessor CO 98/98) for the immediately preceding financial year, lodge Form 384 (notice of resolution) with ASIC during the period commencing three months before the start of the financial year and ending four months after its end. If the company has previously relied and has not had a break (other than a break due to ASIC notification), no form is needed for that year; the prior reliance satisfies subparagraph 5(2)(c)(i). If there was a break due to ASIC notification, use the “last reliance year” path, but be aware of the conditions. Note the transitional rule for first‑time users of the instrument who previously relied on CO 98/98: no Form 384 is needed for the first year, as subparagraph 5(2)(c)(i) is deemed satisfied.

Step 5: Monitor for ASIC notices. Establish a process to check for any written communication from ASIC, particularly notices that withdraw relief. If such a notice is received, the company must assess whether it applies to the relevant year and, if so, immediately begin preparing and lodging reports. The company may also consider contacting ASIC to request revocation or variation.

Step 6: Cease reliance properly if the company later becomes ineligible. If the company is no longer eligible (e.g., the group becomes large), and it had been relying on the relief in the prior year, it must either lodge an annual financial report for the year in which it ceases reliance (the first non‑reliance year) or lodge Form 394. Do not simply stop preparing reports without taking one of these actions. The form must be lodged within the window starting three months before the financial year and ending four months after its end.

For registered foreign companies using the declaration: No resolution or lodgement is required to activate the declaration; the conditions are self‑assessed. However, the company should document each year that it continues to satisfy the conditions, especially the home‑law reporting requirement and the size test. If the company is part of a large group, ensure that the controller that lodges consolidated accounts with ASIC covers the whole financial year. If the controller changes, obtain confirmation that the successor controller also lodges accounts covering the full period. Keep copies of the consolidated accounts lodged. If ASIC issues a notice withdrawing the declaration, the company must immediately comply with section 601CK and lodge financial statements.

Step 7: Review the instrument annually. Conditions change each year. Group size may fluctuate. Home‑law reporting requirements may change. Directors should consider the relief afresh each year and record their conclusion. Maintain a compliance diary with key dates: resolution deadline, Form 384 or 394 lodgement deadlines, and ASIC notice review dates.

Step 8: Seek advice if in doubt. The instrument involves complex definitions (control, group, consolidation adjustments) and comparisons with foreign law. If the group is borderline large, or if the home‑law restrictions are not clearly analogous to section 113, professional advice is warranted. Self‑assessment errors can lead to costly penalties and director liability.