Guide to ASIC financial reporting obligations for foreign companies in Australia

Types of foreign companies required to lodge financial reports to ASIC

In general, ASIC categorises foreign companies required to lodge financial reports into two types:

• registered foreign company
• small proprietary company controlled by a foreign company

Registered foreign companies must lodge financial information once every calendar year and at intervals of no more than 15 months. 

Foreign-controlled small proprietary companies are required to prepare and lodge a financial report if:

• it was controlled by the foreign company for all or part of the year; and
• for the applicable year, it is not consolidated for that period in financial statements lodged with ASIC by the registered foreign company, Australian company, registered scheme, or disclosing entity

A small proprietary company controlled by a foreign corporation must lodge 4 months after the end of the fiscal year. Consecutively, if a registered foreign company intends to file consolidated financial statements, then:

• the small proprietary company it controls is not required to prepare and lodge its own financial, directors’, and auditors’ reports; and
• the registered foreign company must file its consolidated financial statements within four months after the small proprietary company’s end of fiscal year.

Financial reporting requirements for foreign companies in Australia

Registered foreign companies covered under Section 601CK(7) declaration of the Corporations Act 2001 are required to lodge the following:

• balance sheets;
• profit and loss statements;
• cash flow statements; and
• other documents as may be requested by ASIC.

Unless relieved by ASIC under an instrument (i.e., ASIC Corporations Instrument 2017/204 or ASIC Corporations Instrument 2016/784), foreign-controlled small proprietary companies must fulfil the following default requirements under the Corporations Act:

• prepare annual financial report (including financial statements, notes to the financial statements, and the directors’ declaration);
• prepare annual directors’ report;
• appoint an auditor and have the financial report audited;
• lodge the financial report with ASIC within 4 months after year-end; and
• distribute the financial report to members within 4 months after year-end.

Some types of foreign companies, especially those not disclosing entities, may be required to submit additional requirements, to which you must seek the assistance of a professional services provider to ensure full compliance. 

Relief from reporting obligations for foreign entities in Australia

At present, ASIC provides a series of exemptions and instruments to provide relief from reporting obligations to eligible entities. Included in these instruments are the following:

Section 601CK of the Corporations Act

ASIC can exempt registered foreign companies from any or all of the requirements under Section 601CK, but the exemption may not be granted if the registered foreign company lodges less information compared to an equivalent Australian company.

Registered foreign companies that qualify for relief must file an annual return through Form 406 (Annual return of a foreign company) with ASIC at least once every calendar year and within 1 month after the date of the annual general meeting (AGM). 

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

Small proprietary companies controlled by a foreign company may be eligible for relief from preparing and lodging financial reports if they are not part of a ‘large group’. 

Under ASIC Corporations Instrument 2017/204, eligible companies will not be required to appoint auditors or prepare or lodge financial reports. They must, however, lodge Form 384 (Resolution by directors of a small proprietary company controlled by a foreign company which is not part of a ‘large group’) within the deadline set out in this instrument. 

The Corporations Act defines a ‘large group’ as a group in which, for a financial year, satisfies at least two of the following:

1. the group’s combined income for the financial year is $25 million or any other amount prescribed for the purposes of paragraph 45A(2)(a) of the Corporations Act;
2. the group’s combined value of gross assets at the end of the financial year is $12.5 million, or any other amount prescribed for the purpose of paragraph 45A(2)(a) of the Corporations Act; or 
3. at the end of the financial year, the group’s has 50, or any other number stipulated for the purposes of paragraph 45A(2)(c) of the Corporations Act, or more employees (part-time employees are counted as an appropriate fraction of a full-time equivalent). 

ASIC Corporations (Audit Relief) Instrument 2016/784

To be eligible for audit relief under ASIC Corporations Instrument 2016/784, the directors and shareholders of a foreign company or foreign-controlled small proprietary company must pass a resolution stating that the company’s financial report for the relevant financial year should not be audited. This resolution must be passed 3 months immediately before the start of the relevant financial year and no later than 4 months after the end of the financial year. 

This instrument only provides relief from the audit requirements. Eligible companies still need to prepare and lodge financial reports. 

The company must notify ASIC of this resolution by lodging Form 382 (Notification of resolutions for audit relief: Proprietary companies) within the deadline specified by this instrument. 

Stay on top of your reporting requirements with our expert team

Fulfilling statutory requirements in Australia as a foreign company can be challenging. Especially if you are not entirely familiar with the laws and legislations in effect for foreign entities in the country. 

Foreign companies and foreign-controlled small proprietary companies that are not disclosing entities may be required to submit additional requirements, subject to ASIC’s conditions. To ensure full compliance, you can reach out to our business consultants for a comprehensive walk through on your specific financial reporting obligations.