Australie

Prepared by the Office of Parliamentary Counsel, Canberra

Corporations Act 2001

No. 50, 2001

Compilation No. 94

Compilation date: 6 April 2019

Includes amendments up to: Act No. 50, 2019

Registered: 14 May 2019

This compilation is in 6 volumes

Volume 1: sections 1–260E

Volume 2: sections 283AA–601DJ

Volume 3: sections 601EA–742

Volume 4: sections 760A–993D

Volume 5: sections 1010A–1369A

Volume 6: sections 1370–1662

Schedules

Endnotes

Each volume has its own contents

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About this compilation

This compilation

This is a compilation of the Corporations Act 2001 that shows the text of the

law as amended and in force on 6 April 2019 (the compilation date).

The notes at the end of this compilation (the endnotes) include information

about amending laws and the amendment history of provisions of the compiled

law.

Uncommenced amendments

The effect of uncommenced amendments is not shown in the text of the

compiled law. Any uncommenced amendments affecting the law are accessible

on the Legislation Register (www.legislation.gov.au). The details of

amendments made up to, but not commenced at, the compilation date are

underlined in the endnotes. For more information on any uncommenced

amendments, see the series page on the Legislation Register for the compiled

law.

Application, saving and transitional provisions for provisions and

amendments

If the operation of a provision or amendment of the compiled law is affected by

an application, saving or transitional provision that is not included in this

compilation, details are included in the endnotes.

Editorial changes

For more information about any editorial changes made in this compilation, see

the endnotes.

Modifications

If the compiled law is modified by another law, the compiled law operates as

modified but the modification does not amend the text of the law. Accordingly,

this compilation does not show the text of the compiled law as modified. For

more information on any modifications, see the series page on the Legislation

Register for the compiled law.

Self-repealing provisions

If a provision of the compiled law has been repealed in accordance with a

provision of the law, details are included in the endnotes.

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Contents

Chapter 2L—Debentures 1

Part 2L.1—Requirement for trust deed and trustee 1 283AA Requirement for trust deed and trustee ..............................1

283AB Trust deed..........................................................................2

283AC Who can be a trustee .........................................................2

283AD Existing trustee continues to act until new trustee

takes office ........................................................................3

283AE Replacement of trustee ......................................................3

Part 2L.2—Duties of borrower 5 283BA Duties of borrower ............................................................5

283BB General duties....................................................................5

283BC Duty to notify ASIC of information related to

trustee ................................................................................5

283BCA Register relating to trustees for debenture holders ............6

283BD Duty to replace trustee.......................................................6

283BE Duty to inform trustee about security interests ..................7

283BF Duty to give trustee and ASIC quarterly reports ...............7

283BG Exceptions to borrower’s duty to report to trustee

and ASIC.........................................................................10

283BH How debentures may be described ..................................10

283BI Offences for failure to comply with statutory

duties ...............................................................................11

Part 2L.3—Duties of guarantor 12 283CA Duties of guarantor..........................................................12

283CB General duties..................................................................12

283CC Duty to inform trustee about security interests ................12

283CD Exceptions to guarantor’s duty to inform trustee.............13

283CE Offences for failure to comply with statutory

duties ...............................................................................13

Part 2L.4—Trustee 14 283DA Trustee’s duties ...............................................................14

283DB Exemptions and indemnifications of trustee from

liability ............................................................................15

283DC Indemnity ........................................................................16

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Part 2L.5—Meetings of debenture holders 17 283EA Borrower’s duty to call meeting ......................................17

283EB Trustee’s power to call meeting.......................................18

283EC Court may order meeting.................................................19

Part 2L.6—Civil liability 20 283F Civil liability for contravening this Chapter ....................20

Part 2L.7—ASIC powers 21 283GA ASIC’s power to exempt and modify ..............................21

283GB ASIC may approve body corporate to be trustee .............22

Part 2L.8—Court 23 283HA General Court power to give directions and

determine questions.........................................................23

283HB Specific Court powers .....................................................23

Part 2L.9—Location of other debenture provisions 25 283I Signpost to other debenture provisions............................25

Chapter 2M—Financial reports and audit 26

Part 2M.1—Overview 26 285 Overview of obligations under this Chapter ....................26

285A Overview of obligations of companies limited by

guarantee .........................................................................30

Part 2M.2—Financial records 33 286 Obligation to keep financial records................................33

287 Language requirements ...................................................33

288 Physical format................................................................34

289 Place where records are kept ...........................................34

290 Director access ................................................................35

291 Signposts to other relevant provisions.............................35

Part 2M.3—Financial reporting 37

Division 1—Annual financial reports and directors’ reports 37

292 Who has to prepare annual financial reports and

directors’ reports .............................................................37

293 Small proprietary company—shareholder direction ........38

294 Small proprietary company—ASIC direction .................38

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294A Small company limited by guarantee—member

direction ..........................................................................39

294B Small company limited by guarantee—ASIC

direction ..........................................................................39

295 Contents of annual financial report .................................40

295A Declaration in relation to listed entity’s financial

statements by chief executive officer and chief

financial officer ...............................................................42

296 Compliance with accounting standards and

regulations .......................................................................44

297 True and fair view ...........................................................45

298 Annual directors’ report ..................................................45

299 Annual directors’ report—general information ...............47

299A Annual directors’ report—additional general

requirements for listed entities ........................................48

300 Annual directors’ report—specific information...............49

300A Annual directors’ report—specific information to

be provided by listed companies .....................................56

300B Annual directors’ report—companies limited by

guarantee .........................................................................61

301 Audit of annual financial report.......................................62

Division 2—Half-year financial report and directors’ report 64

302 Disclosing entity must prepare half-year financial

report and directors’ report ..............................................64

303 Contents of half-year financial report..............................64

304 Compliance with accounting standards and

regulations .......................................................................66

305 True and fair view ...........................................................66

306 Half-year directors’ report ...............................................66

Division 3—Audit and auditor’s report 68

307 Audit................................................................................68

307A Audit to be conducted in accordance with auditing

standards..........................................................................68

307B Audit working papers to be retained for 7 years..............69

307C Auditor’s independence declaration ................................72

308 Auditor’s report on annual financial report .....................75

309 Auditor’s report on half-year financial report..................76

310 Auditor’s power to obtain information ............................78

311 Reporting to ASIC...........................................................78

312 Assisting auditor..............................................................81

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313 Special provisions on audit of debenture issuers

and guarantors .................................................................82

Division 4—Annual financial reporting to members 83

314 Annual financial reporting by companies,

registered schemes and disclosing entities to

members ..........................................................................83

314A Annual financial reporting by notified foreign

passport funds to Australian members.............................86

315 Deadline for reporting to members..................................88

316 Choices for members of companies, registered

schemes or disclosing entities .........................................90

316AA Choices for Australian members of notified

foreign passport funds .....................................................90

316A Annual financial reporting to members of

companies limited by guarantee ......................................91

317 Consideration of reports at AGM ....................................92

318 Additional reporting by debenture issuers .......................92

Division 5—Lodging reports with ASIC 94

319 Lodgment of annual reports with ASIC...........................94

320 Lodgment of half-year reports with ASIC.......................95

321 ASIC power to require lodgment.....................................95

322 Relodgment if financial statements or directors’

reports amended after lodgment ......................................96

Division 6—Special provisions about consolidated financial

statements 98

323 Directors and officers of controlled entity to give

information......................................................................98

323A Auditor’s power to obtain information from

controlled entity...............................................................98

323B Controlled entity to assist auditor ....................................98

323C Application of Division to entity that has ceased to

be controlled....................................................................99

Division 7—Financial years and half-years 100

323D Financial years and half-years for companies,

registered schemes and disclosing entities.....................100

323DAA Financial years for notified foreign passport funds .......101

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Division 8—Disclosure by listed companies of information filed

overseas 102

323DA Listed companies to disclose information filed

overseas .........................................................................102

Part 2M.4—Appointment and removal of auditors 103

Division 1—Entities that may be appointed as an auditor for a

company or registered scheme 103

324AA Individual auditors, audit firms and authorised

audit companies.............................................................103

324AB Effect of appointing firm as auditor—general ...............103

324AC Effect of appointing firm as auditor—

reconstitution of firm.....................................................104

324AD Effect of appointing company as auditor.......................105

324AE Professional members of the audit team........................106

324AF Lead and review auditors...............................................106

Division 2—Registration requirements 108

324BA Registration requirements for appointment of

individual as auditor ......................................................108

324BB Registration requirements for appointment of firm

as auditor .......................................................................108

324BC Registration requirements for appointment of

company as auditor........................................................110

324BD Exception from registration requirement for

proprietary company......................................................112

324BE Exception from registration requirement—

reviewing financial reports of companies limited

by guarantee ..................................................................113

Division 3—Auditor independence 114

Subdivision A—General requirement 114

324CA General requirement for auditor independence—

auditors..........................................................................114

324CB General requirement for auditor independence—

member of audit firm.....................................................118

324CC General requirement for auditor independence—

director of audit company..............................................121

324CD Conflict of interest situation ..........................................125

Subdivision B—Specific requirements 127

324CE Auditor independence—specific requirements for

individual auditor ..........................................................127

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324CF Auditor independence—specific requirements for

audit firm.......................................................................132

324CG Auditor independence—specific requirements for

audit company ...............................................................139

324CH Relevant relationships ...................................................147

324CI Special rule for retiring partners of audit firms and

retiring directors of authorised audit companies............155

324CJ Special rule for retiring professional member of

audit company ...............................................................156

324CK Multiple former audit firm partners or audit

company directors .........................................................156

Subdivision C—Common provisions 157

324CL People who are regarded as officers of a company

for the purposes of this Division....................................157

Division 4—Deliberately disqualifying auditor 159

324CM Deliberately disqualifying auditor .................................159

Division 5—Auditor rotation for listed companies 161

324DA Limited term for eligibility to play significant role

in audit of a listed company or listed registered

scheme...........................................................................161

324DAA Directors may extend eligibility term............................162

324DAB Requirements for directors to approve extension of

eligibility term...............................................................163

324DAC Notifications about approval to extend eligibility

term ...............................................................................164

324DAD Approval ineffective unless it complies with

requirements ..................................................................165

324DB Individual’s rotation obligation .....................................165

324DC Audit firm’s rotation obligation.....................................165

324DD Audit company’s rotation obligation .............................167

Division 6—Appointment, removal and fees of auditors for

companies 170

Subdivision A—Appointment of company auditors 170

325 Appointment of auditor by proprietary company ..........170

327A Public company auditor (initial appointment of

auditor) ..........................................................................170

327B Public company auditor (annual appointments at

AGMs to fill vacancies) ................................................171

327C Public company auditor (appointment to fill casual

vacancy) ........................................................................173

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327D Appointment to replace auditor removed from

office .............................................................................174

327E ASIC may appoint a company auditor if auditor

removed but not replaced ..............................................175

327F ASIC’s general power to appoint a company

auditor ...........................................................................176

327G Restrictions on ASIC’s powers to appoint a

company auditor............................................................176

327H Effect on appointment of public company auditor

of company beginning to be controlled by a

corporation ....................................................................177

327I Remaining auditors may act during vacancy .................177

328A Auditor’s consent to appointment..................................177

328B Nomination of auditor ...................................................178

328C Public company auditor (appointment of auditor

when crowd-sourced funding concession ends) ............179

328D Public company auditor (appointment of auditor

when $3 million raised using crowd-sourced

funding) .........................................................................180

328E Crowd-sourced funding—period of office ....................180

Subdivision B—Removal and resignation of company auditors 182

329 Removal and resignation of auditors .............................182

330 Effect of winding up on office of auditor ......................185

Subdivision C—Company auditors’ fees and expenses 185

331 Fees and expenses of auditors .......................................185

Division 7—Appointment, removal and fees of auditors for

registered schemes 186

Subdivision A—Appointment of registered scheme auditors 186

331AAA Registered scheme auditor (initial appointment of

auditor) ..........................................................................186

331AAB Registered scheme auditor (appointment to fill

vacancy) ........................................................................188

331AAC ASIC’s power to appoint registered scheme

auditor ...........................................................................188

331AAD Remaining auditors may act during vacancy .................188

Subdivision B—Removal and resignation of registered scheme

auditors 189

331AC Removal and resignation of auditors .............................189

331AD Effect of winding up on office of auditor ......................190

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Subdivision C—Fees and expenses of auditors 191

331AE Fees and expenses of auditors .......................................191

Part 2M.4A—Annual transparency reports for auditors 192 332 Meaning of transparency reporting auditor and

transparency reporting year..........................................192

332A Transparency reporting auditors must publish

annual transparency reports ...........................................192

332B Content of annual transparency report...........................193

332C Extension of period for publication of annual

transparency report ........................................................193

332D Exemption orders—applications by transparency

reporting auditors ..........................................................194

332E Exemption orders—class orders for transparency

reporting auditors ..........................................................195

332F Exemption orders—criteria for orders...........................195

332G Offences by members of audit firm...............................196

Part 2M.5—Accounting and auditing standards 197 334 Accounting standards ....................................................197

335 Equity accounting..........................................................197

336 Auditing standards.........................................................197

337 Interpretation of accounting and auditing standards ......198

338 Evidence of text of accounting standard or

auditing standard ...........................................................198

Part 2M.6—Exemptions and modifications 200 340 Exemption orders—companies, registered

schemes and disclosing entities .....................................200

340A Exemption orders—notified foreign passport funds......200

341 Exemption orders—class orders for companies,

registered schemes and disclosing entities.....................201

341A Exemption orders—class orders for notified

foreign passport funds ...................................................202

342 Exemption orders—criteria for orders for

companies, registered schemes, notified foreign

passport funds and disclosing entities............................202

342AA Exemption orders—non-auditor members and

former members of audit firms; former employees

of audit companies ........................................................203

342AB Exemption orders—class orders for non-auditor

members etc. .................................................................204

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342AC Exemption orders—criteria for orders for

non-auditor members etc. ..............................................204

342A ASIC’s power to modify the operation of

section 324DA...............................................................205

342B Auditor to notify company or registered scheme of

section 342A declaration ...............................................206

343 Modification by regulations ..........................................207

343A Minister may apply the Chapter to notified foreign

passport funds................................................................207

Part 2M.7—Sanctions for contraventions of Chapter 209 344 Contravention of Part 2M.2 or 2M.3, or of certain

provisions of Part 2M.4 .................................................209

Chapter 2N—Updating ASIC information about

companies, registered schemes and

notified foreign passport funds 210

Part 2N.1—Review date 210 345A Review date ...................................................................210

345B Company, responsible entity or operator may

change review date ........................................................211

345C When choice has effect..................................................211

Part 2N.2—Extract of particulars 213 346A ASIC must give an extract of particulars each year.......213

346B ASIC may ask questions................................................213

346C Requirements in relation to an extract of

particulars......................................................................214

Part 2N.3—Solvency resolution 216 347A Directors must pass a solvency resolution after

each review date ............................................................216

347B Notice to ASIC..............................................................216

347C Payment of review fee is taken to be a

representation by the directors that the company is

solvent ...........................................................................217

Part 2N.4—Return of particulars 218 348A ASIC may give a return of particulars ...........................218

348B ASIC may ask questions................................................218

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348C ASIC may require a solvency resolution and

statement .......................................................................219

348D General requirements in relation to a return of

particulars......................................................................219

Part 2N.5—Notice by proprietary companies of changes to

ultimate holding company 221 349A Proprietary companies must notify ASIC of

changes to ultimate holding company ...........................221

349B Another company becomes an ultimate holding

company ........................................................................221

349C A company ceases to be an ultimate holding

company ........................................................................221

349D Ultimate holding company changes its name ................222

Chapter 2P—Lodgments with ASIC 223 350 Forms for documents to be lodged with ASIC ..............223

351 Signing documents lodged with ASIC ..........................224

352 Documents lodged with ASIC electronically ................224

353 Electronic lodgment of certain documents ....................225

354 Telephone notice of certain changes..............................225

Chapter 5—External administration 227

Part 5.1—Arrangements and reconstructions 227 410 Interpretation .................................................................227

411 Administration of compromises etc...............................227

412 Information as to compromise with creditors ................235

413 Provisions for facilitating reconstruction and

amalgamation of Part 5.1 bodies ...................................237

414 Acquisition of shares of shareholders dissenting

from scheme or contract approved by majority .............239

415 Notification of appointment of scheme manager

and power of Court to require report .............................243

415A Outcome of voting at creditors’ meeting

determined by related entity—Court powers.................243

415B Interim order on application under section 415A ..........245

415C Order under section 415A does not affect act

already done pursuant to resolution...............................245

415D Stay on enforcing rights merely because of a

proceeding under this Part etc. ......................................246

415E Lifting the stay ..............................................................249

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415F Order for rights to be enforceable only with leave

of the Court ...................................................................250

415FA Self-executing provisions ..............................................252

415G When other laws prevail—certain other

Commonwealth Acts .....................................................253

Part 5.2—Receivers, and other controllers, of property of

corporations 254 416 Definitions.....................................................................254

417 Application of Part ........................................................254

418 Persons not to act as receivers .......................................255

418A Court may declare whether controller is validly

acting.............................................................................255

419 Liability of controller ....................................................256

419A Liability of controller under pre-existing

agreement about property used by corporation..............257

420 Powers of receiver .........................................................259

420A Controller’s duty of care in exercising power of

sale ................................................................................261

420B Court may authorise managing controller to

dispose of property despite prior security interest .........261

420C Receiver’s power to carry on corporation’s

business during winding up ...........................................263

421 Managing controller’s duties in relation to bank

accounts and financial records.......................................264

421A Managing controller to report within 2 months

about corporation’s affairs.............................................264

422 Reports by receiver or managing controller ..................265

422A Annual return by controller ...........................................267

422B End of control return .....................................................268

422C Transfer of books to new controller...............................269

422D Transfer of books to ASIC etc. ......................................270

423 Supervision of controller ...............................................272

424 Controller may apply to Court.......................................273

425 Court’s power to fix receiver’s remuneration................274

426 Controller has qualified privilege in certain cases .........276

427 Notification of matters relating to controller .................276

428 Statement that receiver appointed or other

controller acting.............................................................277

429 Officers to report to controller about corporation’s

affairs ............................................................................279

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429A Special rules for scheme property .................................281

430 Controller may require reports ......................................283

431 Controller may inspect books ........................................284

432 Auditing returns by controllers......................................284

433 Property subject to circulating security interest—

payment of certain debts to have priority ......................285

434 Enforcing controller’s duty to make returns ..................287

434A Court may remove controller for misconduct................288

434B Court may remove redundant controller........................288

434C Effect of sections 434A and 434B.................................289

434D Appointment of 2 or more receivers of property of

a corporation..................................................................290

434E Appointment of 2 or more receivers and managers

of property of a corporation...........................................290

434F Appointment of 2 or more controllers of property

of a corporation .............................................................290

434G Appointment of 2 or more managing controllers of

property of a corporation ...............................................291

434H Regulations may provide for reporting to ASIC............291

434J Stay on enforcing rights merely because of the

appointment of a managing controller of a

corporation’s property etc..............................................292

434K Lifting the stay ..............................................................295

434L Order for rights to be enforceable only with leave

of the Court ...................................................................295

434LA Self-executing provisions ..............................................296

434M When other laws prevail—certain other

Commonwealth Acts .....................................................297

Part 5.3A—Administration of a company’s affairs with a view

to executing a deed of company arrangement 299

Division 1—Preliminary 299

435A Object of Part ................................................................299

435B Definitions.....................................................................299

435C When administration begins and ends ...........................300

Division 2—Appointment of administrator and first meeting of

creditors 302

436A Company may appoint administrator if board

thinks it is or will become insolvent ..............................302

436B Liquidator may appoint administrator ...........................302

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436C Secured party may appoint administrator ......................303

436D Company already under administration.........................303

436DA Declarations by administrator—indemnities and

relevant relationships.....................................................303

436E Purpose and timing of first meeting of creditors ...........306

Division 3—Administrator assumes control of company’s affairs 307

437A Role of administrator.....................................................307

437B Administrator acts as company’s agent .........................307

437D Only administrator can deal with company’s

property .........................................................................307

437E Order for compensation where officer involved in

void transaction .............................................................309

437F Effect of administration on company’s members ..........309

Division 4—Administrator investigates company’s affairs 313

438A Administrator to investigate affairs and consider

possible courses of action..............................................313

438B Directors to help administrator ......................................313

438C Administrator’s rights to company’s books...................314

438D Reports by administrator ...............................................315

Division 5—Meeting of creditors decides company’s future 317

439A Administrator to convene meeting and inform

creditors.........................................................................317

439C What creditors may decide ............................................318

Division 6—Protection of company’s property during

administration 319

440A Winding up company ....................................................319

440B Restrictions on exercise of third party property

rights..............................................................................319

440D Stay of proceedings .......................................................321

440E Administrator not liable in damages for refusing

consent ..........................................................................321

440F Suspension of enforcement process...............................321

440G Duties of court officer in relation to property of

company ........................................................................321

440H Lis pendens taken to exist..............................................323

440J Administration not to trigger liability of director or

relative under guarantee of company’s liability.............323

440JA Property subject to a banker’s lien—exemption

from this Division..........................................................324

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Division 7—Rights of secured party, owner or lessor 326

Subdivision A—General 326

441 Application of Division .................................................326

Subdivision B—Property subject to security interests 326

441AA Application of Subdivision—PPSA security

interests .........................................................................326

441A Secured party acts before or during decision period......326

441B Where enforcement of security interest begins

before administration.....................................................328

441C Security interest in perishable property .........................329

441D Court may limit powers of secured party etc. in

relation to secured property ...........................................329

441E Giving a notice under a security agreement etc. ............330

441EA Sale of property subject to a possessory security

interest ...........................................................................330

Subdivision C—Property not subject to security interests 331

441EB Scope of Subdivision.....................................................331

441F Where recovery of property begins before

administration................................................................332

441G Recovering perishable property.....................................332

441H Court may limit powers of receiver etc. in relation

to property used by company ........................................333

441J Giving a notice under an agreement about property ......333

Division 8—Powers of administrator 334

442A Additional powers of administrator ...............................334

442B Dealing with property subject to circulating

security interests ............................................................334

442C When administrator may dispose of encumbered

property .........................................................................335

442CA Property subject to a possessory security interest—

inspection or examination by potential purchasers

etc. .................................................................................337

442CB Property subject to a security interest or to a

retention of title clause—administrator’s duty of

care in exercising power of sale ....................................337

442CC Proceeds of sale of property ..........................................338

442D Administrator’s powers subject to powers of

secured party, receiver or controller ..............................340

442E Administrator has qualified privilege ............................341

442F Protection of persons dealing with administrator ..........341

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Division 9—Administrator’s liability and indemnity for debts of

administration 343

Subdivision A—Liability 343

443A General debts.................................................................343

443B Payments for property used or occupied by, or in

the possession of, the company .....................................343

443BA Certain taxation liabilities..............................................345

443C Administrator not otherwise liable for company’s

debts ..............................................................................346

Subdivision B—Indemnity 346

443D Right of indemnity ........................................................346

443E Right of indemnity has priority over other debts ...........347

443F Lien to secure indemnity ...............................................349

Division 10—Execution and effect of deed of company

arrangement 350

444A Effect of creditors’ resolution........................................350

444B Execution of deed..........................................................351

444C Creditor etc. not to act inconsistently with deed

before its execution .......................................................351

444D Effect of deed on creditors ............................................352

444DA Giving priority to eligible employee creditors...............353

444DB Superannuation contribution debts not admissible

to proof..........................................................................354

444E Protection of company’s property from persons

bound by deed ...............................................................355

444F Court may limit rights of secured creditor or

owner or lessor ..............................................................356

444G Effect of deed on company, officers and members........357

444GA Transfer of shares ..........................................................358

444H Extent of release of company’s debts ............................358

444J Guarantees and indemnities...........................................358

Division 11—Variation, termination and avoidance of deed 359

445A Variation of deed by creditors .......................................359

445B Court may cancel variation............................................359

445C When deed terminates ...................................................359

445CA When creditors may terminate deed ..............................360

445D When Court may terminate deed ...................................360

445E Creditors may terminate deed and resolve that

company be wound up...................................................361

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445FA Notice of termination of deed........................................361

445G When Court may void or validate deed .........................362

445H Effect of termination or avoidance ................................363

Division 11AA—Notification of contravention of deed 364

445HA Notification of contravention of deed of company

arrangement...................................................................364

Division 12—Transition to creditors’ voluntary winding up 365

446A Administrator becomes liquidator in certain cases ........365

446AA Administrator becomes liquidator—additional

cases ..............................................................................366

446B Regulations may provide for transition in other

cases ..............................................................................368

446C Liquidator may require submission of a report

about the company’s affairs...........................................368

Division 13—Powers of Court 371

447A General power to make orders.......................................371

447B Orders to protect creditors during administration..........371

447C Court may declare whether administrator validly

appointed.......................................................................372

447F Effect of Division ..........................................................372

Division 14—Qualifications of administrators 373

448A Appointee must consent ................................................373

448B Administrator must be registered liquidator ..................373

448C Disqualification of person connected with

company ........................................................................373

Division 15—Removal and replacement of administrator 376

449A Appointment of administrator cannot be revoked .........376

449C Vacancy in office of administrator of company ............376

449CA Declarations by administrator—indemnities and

relevant relationships.....................................................377

Division 16—Notices about steps taken under Part 380

450A Appointment of administrator .......................................380

450B Execution of deed of company arrangement .................381

450C Failure to execute deed of company arrangement .........381

450D Termination of deed of company arrangement ..............381

450E Notice in public documents etc. of company.................381

450F Effect of contravention of this Division ........................382

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Division 17—Miscellaneous 383

451A Appointment of 2 or more administrators of

company ........................................................................383

451B Appointment of 2 or more administrators of deed

of company arrangement ...............................................383

451C Effect of things done during administration of

company ........................................................................384

451D Time for doing act does not run while act

prevented by this Part ....................................................384

451E Stay on enforcing rights merely because the

company is under administration etc. ............................384

451F Lifting the stay ..............................................................387

451G Order for rights to be enforceable only with leave

of the Court ...................................................................387

451GA Self-executing provisions ..............................................388

451H When other laws prevail—certain other

Commonwealth Acts .....................................................390

Part 5.4—Winding up in insolvency 391

Division 1—When company to be wound up in insolvency 391

459A Order that insolvent company be wound up in

insolvency .....................................................................391

459B Order made on application under section 234, 462

or 464 ............................................................................391

459C Presumptions to be made in certain proceedings...........391

459D Contingent or prospective liability relevant to

whether company solvent ..............................................392

Division 2—Statutory demand 393

459E Creditor may serve statutory demand on company........393

459F When company taken to fail to comply with

statutory demand ...........................................................394

Division 3—Application to set aside statutory demand 396

459G Company may apply......................................................396

459H Determination of application where there is a

dispute or offsetting claim .............................................396

459J Setting aside demand on other grounds .........................398

459K Effect of order setting aside demand .............................398

459L Dismissal of application ................................................398

459M Order subject to conditions............................................398

459N Costs where company successful ..................................398

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Division 4—Application for order to wind up company in

insolvency 399

459P Who may apply for order under section 459A ..............399

459Q Application relying on failure to comply with

statutory demand ...........................................................400

459R Period within which application must be

determined.....................................................................400

459S Company may not oppose application on certain

grounds..........................................................................401

459T Application to wind up joint debtors in insolvency .......401

Part 5.4A—Winding up by the Court on other grounds 402 461 General grounds on which company may be

wound up by Court ........................................................402

462 Standing to apply for winding up ..................................403

464 Application for winding up in connection with

investigation under ASIC Act .......................................404

Part 5.4B—Winding up in insolvency or by the Court 405

Division 1A—Preliminary 405

465 Definitions.....................................................................405

Division 1—General 406

465A Notice of application .....................................................406

465B Substitution of applicants ..............................................406

465C Applicant to be given notice of grounds for

opposing application......................................................407

466 Payment of preliminary costs etc...................................407

467 Court’s powers on hearing application ..........................408

467A Effect of defect or irregularity on application

under Part 5.4 or 5.4A ...................................................409

467B Court may order winding up of company that is

being wound up voluntarily...........................................410

468 Avoidance of dispositions of property, attachments

etc. .................................................................................410

468A Effect of winding up on company’s members ...............411

469 Application to be lis pendens ........................................414

470 Certain notices to be lodged ..........................................414

Division 1A—Effect of winding up order 416

471 Effect on creditors and contributories............................416

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471B Stay of proceedings and suspension of

enforcement process ......................................................416

471C Secured creditor’s rights not affected ............................416

Division 2—Court-appointed liquidators 417

472 Court to appoint registered liquidator............................417

473 Resignation of liquidators..............................................418

473A Vacancies in office of court-appointed liquidator .........418

474 Custody and vesting of company’s property .................418

475 Report as to company’s affairs to be submitted to

liquidator .......................................................................419

477 Powers of liquidator ......................................................421

478 Application of property; list of contributories ...............424

480 Release of liquidator and deregistration of

company ........................................................................425

481 Orders for release or deregistration ...............................425

Division 3—General powers of Court 427

Subdivision A—General powers 427

482 Power to stay or terminate winding up ..........................427

483 Delivery of property to liquidator..................................429

484 Appointment of special manager ...................................430

485 Claims of creditors and distribution of property............431

486 Inspection of books by creditors and contributories ......431

486A Court may make order to prevent officer or related

entity from avoiding liability to company .....................431

486B Warrant to arrest person who is absconding, or

who has dealt with property or books, in order to

avoid obligations in connection with winding up ..........434

487 Power to arrest absconding contributory .......................434

488 Delegation to liquidator of certain powers of Court ......435

489 Powers of Court cumulative ..........................................435

Subdivision B—Procedures relating to section 486B warrants 436

489A Arrest of person subject to warrant................................436

489B Procedure after arrest.....................................................436

489C Procedure on remand on bail .........................................436

489D Court’s power to make orders under other

provisions ......................................................................437

489E Jurisdiction under this Subdivision................................437

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Part 5.4C—Winding up by ASIC 438 489EA ASIC may order the winding up of a company .............438

489EB Deemed resolution that company be wound up

voluntarily .....................................................................439

489EC Appointment of liquidator .............................................440

Part 5.5—Voluntary winding up 441

Division 1A—Preliminary 441

489F Definitions.....................................................................441

Division 1—Resolution for winding up 442

490 When company cannot wind up voluntarily ..................442

491 Circumstances in which company may be wound

up voluntarily ................................................................442

493 Effect of voluntary winding up......................................443

493A Effect of voluntary winding up on company’s

members ........................................................................443

494 Declaration of solvency.................................................445

Division 2—Members’ voluntary winding up 448

495 Appointment of liquidator etc........................................448

496 Duty of liquidator where company turns out to be

insolvent ........................................................................448

Division 3—Creditors’ voluntary winding up 450

497 Information about the company’s affairs.......................450

499 Liquidators ....................................................................451

500 Execution and civil proceedings....................................454

Division 4—Voluntary winding up generally 455

501 Distribution of property of company .............................455

506 Powers and duties of liquidator .....................................455

506A Declarations by liquidator—relevant relationships

and indemnities .............................................................456

507 Power of liquidator to accept shares etc. as

consideration for sale of property of company ..............458

509 Deregistration ................................................................460

510 Arrangement: when binding on creditors ......................460

Part 5.6—Winding up generally 462

Division 1—Preliminary 462

513 Application of Part ........................................................462

513AA Definitions.....................................................................462

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Division 1A—When winding up taken to begin 463

513A Winding up ordered by the Court ..................................463

513B Voluntary winding up....................................................463

513C Section 513C day in relation to an administration

under Part 5.3A .............................................................464

513D Validity of proceedings in earlier winding up ...............465

Division 2—Contributories 466

514 Where Division applies .................................................466

515 General liability of contributory ....................................466

516 Company limited by shares ...........................................466

517 Company limited by guarantee......................................466

518 Company limited both by shares and by guarantee .......466

519 Exceptions for former unlimited company ....................467

520 Past member: later debts................................................467

521 Person ceasing to be a member a year or more

before winding up..........................................................467

522 Present members to contribute first ...............................467

523 Past member of former unlimited company ..................467

524 Past member of former limited company ......................468

526 Liability on certain contracts .........................................468

527 Nature of contributory’s liability ...................................468

528 Death of contributory ....................................................468

529 Bankruptcy of contributory ...........................................469

Division 3—Liquidators 470

530 Appointment of 2 or more liquidators of a

company ........................................................................470

530AA Appointment of 2 or more provisional liquidators

of a company .................................................................470

530A Officers to help liquidator .............................................470

530B Liquidator’s rights to company’s books ........................472

530C Warrant to search for, and seize, company’s

property or books ..........................................................473

532 Disqualification of liquidator ........................................474

533 Reports by liquidator .....................................................476

534 Prosecution by liquidator of delinquent officers

and members .................................................................477

535 When liquidator has qualified privilege ........................478

537 Notice of appointment and address of liquidator ...........478

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Division 4—General 479

541 Notification that company is in liquidation ...................479

543 Investment of surplus funds on general account............479

544 Unclaimed money to be paid to ASIC...........................480

545 Expenses of winding up where property

insufficient.....................................................................481

Division 6—Proof and ranking of claims 482

Subdivision A—Admission to proof of debts and claims 482

553 Debts or claims that are provable in winding up ...........482

553A Member cannot prove debt unless contributions

paid................................................................................483

553AA Selling shareholder cannot prove debt unless

documents given............................................................483

553AB Superannuation contribution debts not admissible

to proof..........................................................................483

553B Insolvent companies—penalties and fines not

generally provable .........................................................485

553C Insolvent companies—mutual credit and set-off ...........485

553D Debts or claims may be proved formally or

informally......................................................................485

553E Application of Bankruptcy Act to winding up of

insolvent company.........................................................486

Subdivision B—Computation of debts and claims 486

554 General rule—compute amount as at relevant date .......486

554A Determination of value of debts and claims of

uncertain value ..............................................................486

554B Discounting of debts payable after relevant date ...........488

554C Conversion into Australian currency of foreign

currency debts or claims................................................488

Subdivision C—Special provisions relating to secured creditors of

insolvent companies 489

554D Application of Subdivision............................................489

554E Proof of debt by secured creditor ..................................489

554F Redemption of security interest by liquidator................490

554G Amendment of valuation ...............................................491

554H Repayment of excess .....................................................491

554J Subsequent realisation of security interest.....................492

Subdivision D—Priorities 492

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555 Debts and claims proved to rank equally except as

otherwise provided ........................................................492

556 Priority payments ..........................................................492

558 Debts due to employees.................................................500

559 Debts of a class to rank equally .....................................501

560 Advances for company to make priority payments

in relation to employees ................................................501

561 Priority of employees’ claims over circulating

security interests ............................................................502

562 Application of proceeds of contracts of insurance.........503

562A Application of proceeds of contracts of

reinsurance ....................................................................503

563 Provisions relating to injury compensation ...................505

563AA Seller under a buy-back agreement................................506

563A Postponing subordinate claims ......................................506

563AAA Redemption of debentures.............................................507

Subdivision E—Miscellaneous 507

563B Interest on debts and claims from relevant date to

date of payment .............................................................507

563C Debt subordination ........................................................508

564 Power of Court to make orders in favour of certain

creditors.........................................................................508

Division 7—Effect on certain transactions 509

565 Undue preference ..........................................................509

566 Effect of floating charge................................................509

567 Liquidator’s right to recover in respect of certain

transactions....................................................................509

Division 7A—Disclaimer of onerous property 513

568 Disclaimer by liquidator; application to Court by

party to contract.............................................................513

568A Liquidator must give notice of disclaimer .....................515

568B Application to set aside disclaimer before it takes

effect..............................................................................515

568C When disclaimer takes effect.........................................516

568D Effect of disclaimer .......................................................517

568E Application to set aside disclaimer after it has

taken effect ....................................................................517

568F Court may dispose of disclaimed property ....................518

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Division 7B—Effect on enforcement process against company’s

property 520

569 Executions, attachments etc. before winding up............520

570 Duties of sheriff after receiving notice of

application .....................................................................521

Division 8—Pooling 525

Subdivision A—Pooling determinations 525

571 Pooling determination ...................................................525

572 Variation of pooling determination ...............................528

573 Lodgment of copy of pooling determination etc............528

577 Eligible unsecured creditors may decide to

approve the determination or variation..........................529

578 When pooling determination comes into force etc. .......529

579 Duties of liquidator........................................................531

579A Court may vary or terminate pooling

determination.................................................................531

579B Court may cancel or confirm variation..........................533

579C When Court may void or validate pooling

determination.................................................................534

579D Effect of termination or avoidance ................................535

Subdivision B—Pooling orders 536

579E Pooling orders ...............................................................536

579F Variation of pooling orders ...........................................540

579G Court may make ancillary orders etc. ............................540

579H Variation of ancillary orders etc. ...................................542

579J Notice of application for pooling order etc....................543

579K Notice of pooling order etc............................................544

579L Consolidated meetings of creditors ...............................547

Subdivision C—Other provisions 548

579M When debts or claims are provable in winding up.........548

579N Group of companies ......................................................548

579P Secured debt may become unsecured ............................549

579Q Eligible unsecured creditor............................................549

Division 9—Co-operation between Australian and foreign courts

in external administration matters 550

580 Definitions.....................................................................550

581 Courts to act in aid of each other ...................................550

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Part 5.7—Winding up bodies other than companies 552 582 Application of Part ........................................................552

583 Winding up Part 5.7 bodies ...........................................552

585 Insolvency of Part 5.7 body...........................................553

586 Contributories in winding up of Part 5.7 body ..............554

587 Power of Court to stay or restrain proceedings..............555

588 Outstanding property of defunct registrable body .........555

Part 5.7B—Recovering property or compensation for the

benefit of creditors of insolvent company 557

Division 1—Preliminary 557

588C Definitions.....................................................................557

588D Secured debt may become unsecured ............................557

588E Presumptions to be made in recovery proceedings........557

588F Certain taxation liabilities taken to be debts ..................560

Division 2—Voidable transactions 562

588FA Unfair preferences .........................................................562

588FB Uncommercial transactions ...........................................563

588FC Insolvent transactions ....................................................563

588FD Unfair loans to a company.............................................564

588FDA Unreasonable director-related transactions....................565

588FE Voidable transactions ....................................................566

588FF Courts may make orders about voidable

transactions....................................................................569

588FG Transaction not voidable as against certain persons ......571

588FGA Directors to indemnify Commissioner of Taxation

if certain payments set aside..........................................573

588FGB Defences in proceedings under section 588FGA...........574

588FH Liquidator may recover from related entity benefit

resulting from insolvent transaction ..............................575

588FI Creditor who gives up benefit of unfair preference

may prove for preferred debt .........................................576

588FJ Circulating security interest created within 6

months before relation-back day ...................................577

Division 2A—Vesting of PPSA security interests if not

continuously perfected 579

588FK Interpretation and application........................................579

588FL Vesting of PPSA security interests if collateral not

registered within time....................................................579

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588FM Extension of time for registration ..................................582

588FN PPSA security interests unaffected by

section 588FL................................................................583

588FO Certain lessors, bailors and consignors entitled to

damages.........................................................................585

Division 2B—Security interests in favour of company officers

etc. 587

588FP Security interests in favour of an officer of a

company etc. void .........................................................587

Division 3—Director’s duty to prevent insolvent trading 590

588G Director’s duty to prevent insolvent trading by

company ........................................................................590

588GA Safe harbour—taking course of action reasonably

likely to lead to a better outcome for the company........592

588GB Information or books not admissible to support the

safe harbour if failure to permit inspection etc. .............595

588H Defences about reasonable grounds, illness or

reasonable steps.............................................................597

588HA Review relating to safe harbour.....................................598

Division 4—Director liable to compensate company 600

Subdivision A—Proceedings against director 600

588J On application for civil penalty order, Court may

order compensation .......................................................600

588K Criminal court may order compensation .......................601

588L Enforcement of order under section 588J or 588K........601

588M Recovery of compensation for loss resulting from

insolvent trading............................................................601

588N Avoiding double recovery .............................................602

588P Effect of sections 588J, 588K and 588M.......................602

588Q Certificates evidencing contravention ...........................603

Subdivision B—Proceedings by creditor 603

588R Creditor may sue for compensation with

liquidator’s consent .......................................................603

588S Creditor may give liquidator notice of intention to

sue for compensation.....................................................604

588T When creditor may sue for compensation without

liquidator’s consent .......................................................604

588U Events preventing creditor from suing ..........................605

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Division 5—Liability of holding company for insolvent trading

by subsidiary 606

588V When holding company liable.......................................606

588W Recovery of compensation for loss resulting from

insolvent trading............................................................606

588WA Safe harbour—taking reasonable steps to ensure

company’s directors have the benefit of the

directors’ safe harbour...................................................607

588X Defences about reasonable grounds, illness or

reasonable steps.............................................................608

Division 6—Application of compensation under Division 4 or 5 609

588Y Application of amount paid as compensation................609

Division 7—Person managing a corporation while disqualified

may become liable for corporation’s debts 610

588Z Court may make order imposing liability ......................610

Division 8—Employee entitlements contribution orders 611

588ZA Employee entitlements contribution orders ...................611

588ZB Who may apply for an employee entitlements

contribution order ..........................................................613

Part 5.8—Offences 615 589 Interpretation and application........................................615

590 Offences by officers of certain companies ....................618

592 Incurring of certain debts; fraudulent conduct...............621

593 Powers of Court.............................................................623

594 Certain rights not affected .............................................624

595 Inducement to be appointed liquidator etc. of

company ........................................................................625

596 Frauds by officers..........................................................625

Part 5.8A—Employee entitlements 627 596AA Objects and coverage of this Part ..................................627

596AB Relevant agreements or transactions that avoid

employee entitlements—offences..................................628

596AC Relevant agreements or transactions that avoid

employee entitlements—civil contraventions................631

596ACA Person who contravenes section 596AC liable to

compensate for loss .......................................................634

596AD Avoiding double recovery .............................................635

596AE Effect of section 596ACA .............................................635

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596AF Proceedings for compensation.......................................635

596AG Events preventing proceedings......................................637

596AH Joining parties to proceedings .......................................637

Part 5.9—Miscellaneous 639

Division 1—Examining a person about a corporation 639

596A Mandatory examination.................................................639

596B Discretionary examination.............................................639

596C Affidavit in support of application under

section 596B..................................................................640

596D Content of summons......................................................640

596E Notice of examination ...................................................640

596F Court may give directions about examination ...............641

597 Conduct of examination ................................................641

597A When Court is to require affidavit about

corporation’s examinable affairs ...................................644

597B Costs of unnecessary examination or affidavit ..............645

Division 2—Orders against a person in relation to a corporation 647

598 Order against person concerned with corporation .........647

Division 3—Provisions applying to various kinds of external

administration 649

599 Appeals from decisions of receivers etc. .......................649

600AA Duty of receiver, administrator or liquidator—

parental leave pay..........................................................649

600F Limitation on right of suppliers of essential

services to insist on payment as condition of

supply ............................................................................650

600G Electronic methods of giving or sending certain

notices etc......................................................................651

600H Rights if claim against the company postponed ............653

600J Acts of external administrator valid etc.........................653

Division 4—Insolvency Practice Schedule (Corporations) 655

600K Insolvency Practice Schedule (Corporations)................655

Chapter 5A—Deregistration, and transfer of

registration, of companies 656

Part 5A.1—Deregistration 656 601 Definitions.....................................................................656

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601AA Deregistration—voluntary.............................................656

601AB Deregistration—ASIC initiated .....................................658

601AC Deregistration—following amalgamation or

winding up.....................................................................659

601AD Effect of deregistration ..................................................660

601AE What the Commonwealth or ASIC does with the

property .........................................................................661

601AF The Commonwealth’s and ASIC’s power to fulfil

outstanding obligations of deregistered company..........664

601AG Claims against insurers of deregistered company..........664

601AH Reinstatement ................................................................664

Part 5A.2—Transfer of registration 667 601AI Transferring registration................................................667

601AJ Applying to transfer registration....................................667

601AK ASIC makes transfer of registration declaration............668

601AL ASIC to deregister company .........................................668

Chapter 5B—Bodies corporate registered as

companies, and registrable bodies 669

Part 5B.1—Registering a body corporate as a company 669

Division 1—Registration 669

601BA Bodies corporate may be registered as certain

types of companies ........................................................669

601BB Bodies registered as proprietary companies ..................670

601BC Applying for registration under this Part .......................670

601BD ASIC gives body ACN, registers as company and

issues certificate ............................................................674

601BE Registered office ...........................................................675

601BF Name .............................................................................675

601BG Constitution ...................................................................675

601BH Modifications of constitution ........................................676

601BJ ASIC may direct company to apply for Court

approval for modifications of constitution.....................676

601BK Establishing registers and minute books........................677

601BL Registration of registered bodies ...................................677

Division 2—Operation of this Act 678

601BM Effect of registration under this Part..............................678

601BN Liability of members on winding up .............................678

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601BP Bearer shares .................................................................678

601BQ References in pre-registration contracts and other

documents to par value in existing contracts and

documents .....................................................................679

601BR First AGM .....................................................................680

601BS Modification by regulations ..........................................680

Part 5B.2—Registrable bodies 681

Division 1A—Preliminary 681

601C Definitions.....................................................................681

Division 1—Registrable Australian bodies 682

601CA When a registrable Australian body may carry on

business in this jurisdiction and outside its place of

origin .............................................................................682

601CB Application for registration ...........................................682

601CC Cessation of business etc. ..............................................683

Division 2—Foreign companies 686

601CD When a foreign company may carry on business in

this jurisdiction..............................................................686

601CDA Limited disclosure if place of origin is a prescribed

country ..........................................................................686

601CE Application for registration ...........................................686

601CF Appointment of local agent ...........................................687

601CG Local agent: how appointed...........................................688

601CH Local agent: how removed ............................................689

601CJ Liability of local agent ..................................................689

601CK Balance-sheets and other documents .............................689

601CL Cessation of business etc. ..............................................691

601CM Register of members of foreign company......................694

601CN Register kept under section 601CM ..............................695

601CP Notifying ASIC about register kept under

section 601CM ..............................................................696

601CQ Effect of right to acquire shares compulsorily...............696

601CR Index of members and inspection of registers ...............697

601CS Certificate as to shareholding ........................................697

Division 3—Bodies registered under this Part 698

601CTA Limited disclosure if place of origin is a prescribed

country ..........................................................................698

601CT Registered office ...........................................................698

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601CU Certificate of registration...............................................699

601CV Notice of certain changes ..............................................699

601CW Body’s name etc. must be displayed at office and

place of business............................................................700

601CX Service of documents on registered body......................701

601CY Power to hold land.........................................................702

Division 4—Register of debenture holders for non-companies 703

601CZA Certain documents are debentures .................................703

601CZB Register of debenture holders to be maintained by

non-companies ..............................................................703

601CZC Location of register .......................................................703

601CZD Application of sections 173 to 177 ................................704

Part 5B.3—Names of registrable Australian bodies and foreign

companies 705 601DA Reserving a name ..........................................................705

601DB Acceptable abbreviations...............................................705

601DC When a name is available ..............................................706

601DD Registered Australian bodies and registered

foreign companies can carry on business with

some names only ...........................................................707

601DE Using a name and ARBN ..............................................708

601DF Exception to requirement to have ARBN on

receipts ..........................................................................709

601DG Regulations may exempt from requirement to set

out information on documents.......................................709

601DH Notice of name change must be given to ASIC.............709

601DJ ASIC’s power to direct a registered name be

changed .........................................................................710

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Debentures Chapter 2L

Requirement for trust deed and trustee Part 2L.1

Section 283AA

Corporations Act 2001 1

Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19

Chapter 2L—Debentures

Part 2L.1—Requirement for trust deed and trustee

283AA Requirement for trust deed and trustee

(1) Before a body:

(a) makes an offer of debentures in this jurisdiction that needs

disclosure to investors under Chapter 6D, or does not need

disclosure to investors under Chapter 6D because of

subsection 708(14) (disclosure document exclusion for

debenture roll overs) or section 708A (sale offers that do not

need disclosure); or

(b) makes an offer of debentures in this jurisdiction or elsewhere

as consideration for the acquisition of securities under an

off-market takeover bid; or

(c) issues debentures in this jurisdiction or elsewhere under a

compromise or arrangement under Part 5.1 approved at a

meeting held as a result of an order under subsection 411(1)

or (1A);

regardless of where any resulting issue, sale or transfer occurs, the

body must enter into a trust deed that complies with section 283AB

and appoint a trustee that complies with section 283AC.

Note: For rules about when an offer of debentures will need disclosure to

investors under Chapter 6D, see sections 706, 707, 708, 708AA and

708A.

(1A) An offence based on subsection (1) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

(2) The body may revoke the trust deed after it has repaid all amounts

payable under the debentures in accordance with the debentures’

terms and the trust deed.

(3) The body must comply with this Chapter.

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Chapter 2L Debentures

Part 2L.1 Requirement for trust deed and trustee

Section 283AB

2 Corporations Act 2001

Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19

Note: Sections 168 and 601CZB require a register of debenture holders to be

set up and kept.

(4) The regulations may exempt a specified offer of debentures, or a

specified class of offers of debentures, from subsection (1).

283AB Trust deed

(1) The trust deed must provide that the following are held in trust by

the trustee for the benefit of the debenture holders:

(a) the right to enforce the borrower’s duty to repay;

(b) any charge or security for repayment;

(c) the right to enforce any other duties that the borrower and

any guarantor have under:

(i) the terms of the debentures; or

(ii) the provisions of the trust deed or this Chapter.

Note: For information about the duties that the borrower and any guarantor

body have under this Chapter, see sections 283BB to 283CE.

(2) An offence based on subsection (1) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

283AC Who can be a trustee

Who can be trustee

(1) The trustee must be:

(a) the Public Trustee of any State or Territory; or

(aa) a licensed trustee company; or

(b) a body corporate authorised by a law of any State or

Territory to take in its own name a grant of probate of the

will, or letters of administration of the estate, of a deceased

person; or

(c) a body corporate registered under section 21 of the Life

Insurance Act 1995; or

(d) an Australian ADI; or

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Requirement for trust deed and trustee Part 2L.1

Section 283AD

Corporations Act 2001 3

Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19

(e) a body corporate, all of whose shares are held beneficially by

a body corporate or bodies corporate of the kind referred to in

paragraph (b), (c) or (d) if that body or those bodies:

(i) are liable for all of the liabilities incurred, or to be

incurred, by the trustee as trustee; or

(ii) have subscribed for and beneficially hold shares in the

trustee and there is an uncalled liability of at least

$500,000 in respect of those shares that can only be

called up if the trustee becomes a Chapter 5 body

corporate (see section 254N); or

(f) a body corporate approved by ASIC (see section 283GB).

Note: Section 283BD provides that if the borrower becomes aware that the

trustee cannot be a trustee, the trustee must be replaced.

Circumstances in which a person cannot be trustee

(2) A person may only be appointed or act as trustee (except to the

extent provided for by section 283AD) if the appointment or acting

will not result in a conflict of interest or duty. This subsection is

not intended to affect any rule of law or equity.

(3) An offence based on subsection (1) or (2) is an offence of strict

liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

283AD Existing trustee continues to act until new trustee takes office

An existing trustee continues to act as the trustee until a new

trustee is appointed and has taken office as trustee, despite any rule

of law or equity to the contrary.

Note: This section applies even if the existing trustee resigns.

283AE Replacement of trustee

Related party of existing trustee may be appointed as a new trustee

(1) In addition to any other powers of appointment under the terms of

the debentures or provisions of the trust deed, the borrower may

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Chapter 2L Debentures

Part 2L.1 Requirement for trust deed and trustee

Section 283AE

4 Corporations Act 2001

Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19

appoint a body corporate that is related to the existing trustee as

trustee in place of the existing trustee if:

(a) the body corporate can be a trustee under section 283AC; and

(b) the existing trustee consents in writing to the appointment.

The appointment has effect despite any terms of the debentures or

provisions of the trust deed.

Appointment by Court

(2) The Court may:

(a) appoint a person who may be a trustee under section 283AC

as trustee on the application of the borrower, a debenture

holder or ASIC if:

(i) a trustee has not been validly appointed; or

(ii) the trustee has ceased to exist; or

(b) terminate the existing trustee’s appointment and appoint a

person who may be a trustee under section 283AC as trustee

in the existing trustee’s place on the application of the

borrower, the existing trustee, a debenture holder or ASIC if:

(i) the existing trustee cannot be trustee under

section 283AC; or

(ii) the existing trustee fails, or refuses, to act.

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Debentures Chapter 2L

Duties of borrower Part 2L.2

Section 283BA

Corporations Act 2001 5

Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19

Part 2L.2—Duties of borrower

283BA Duties of borrower

A borrower that is required to enter into a trust deed under

section 283AA has the duties imposed by this Part.

283BB General duties

The borrower must:

(a) carry on and conduct its business in a proper and efficient

manner; and

(b) provide a copy of the trust deed to:

(i) a debenture holder; or

(ii) the trustee;

if they request a copy; and

(c) make all of its financial and other records available for

inspection by:

(i) the trustee; or

(ii) an officer or employee of the trustee authorised by the

trustee to carry out the inspection; or

(iii) a registered company auditor appointed by the trustee to

carry out the inspection;

and give them any information, explanations or other

assistance that they require about matters relating to those

records.

Note: The borrower also has a duty to call a meeting of debenture holders in

certain circumstances (see section 283EA).

283BC Duty to notify ASIC of information related to trustee

(1) Within 14 days after the trustee is appointed, the borrower must

lodge with ASIC a notice containing the following information:

(a) the name of the trustee;

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Part 2L.2 Duties of borrower

Section 283BCA

6 Corporations Act 2001

Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19

(b) any other information related to the trustee or the debentures

that is prescribed by the regulations.

(2) If there is any change to the information, the borrower must, within

14 days of the change, lodge with ASIC a notice containing the

changed information.

(3) A notice under subsection (1) or (2) must be in the prescribed

form.

283BCA Register relating to trustees for debenture holders

The register

(1) ASIC must establish and maintain a register relating to trustees for

debenture holders.

(2) The regulations may prescribe the way in which the register must

be established or maintained, including the details that ASIC must

enter in the register.

Inspection of register

(3) A person may inspect the register, and may make copies of, or take

extracts from, the register.

(4) The regulations may prescribe the fees that a person must pay

ASIC to do the things mentioned in subsection (3).

(5) Any disclosure necessary for the purposes of this section is

authorised by this section.

283BD Duty to replace trustee

The borrower must take all reasonable steps to replace the trustee

under section 283AE as soon as practicable after the borrower

becomes aware that the trustee:

(a) has ceased to exist; or

(b) has not been validly appointed; or

(c) cannot be a trustee under section 283AC; or

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Section 283BE

Corporations Act 2001 7

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(d) has failed or refused to act as trustee.

283BE Duty to inform trustee about security interests

If the borrower creates a security interest, it must:

(a) give the trustee written details of the security interest within

21 days after it is created; and

(b) if the total amount to be advanced on the security of the

security interest is indeterminate and the advances are not

merged in a current account with bankers, trade creditors or

anyone else—give the trustee written details of the amount of

each advance within 7 days after it is made.

Note: If the advances are merged in a current account the borrower must

give the trustee the details in the quarterly report (see

subsection 283BF(4)).

283BF Duty to give trustee and ASIC quarterly reports

Quarterly reports

(1) Within 1 month after the end of each quarter, the borrower must:

(a) give the trustee a quarterly report that sets out the

information required by subsections (4), (5) and (6); and

(b) lodge a copy of the report with ASIC (see section 351).

First quarter

(2) The first quarter is the period of 3 months ending on a day fixed by

the borrower, by written notice to the trustee. The day must be less

than 6 months after the first issue of a debenture under the trust

deed.

Subsequent quarters

(3) Each of the subsequent quarters are periods of 3 months. The

trustee may allow a particular quarter to be a period of less than 3

months if the trustee is satisfied that special circumstances justify

doing so.

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Part 2L.2 Duties of borrower

Section 283BF

8 Corporations Act 2001

Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19

Content of quarterly report

(4) The report for a quarter must include details of:

(a) any failure by the borrower and each guarantor to comply

with the terms of the debentures or the provisions of the trust

deed or this Chapter during the quarter; and

(b) any event that has happened during the quarter that has

caused, or could cause, 1 or more of the following:

(i) any amount deposited or lent under the debentures to

become immediately payable;

(ii) the debentures to become immediately enforceable;

(iii) any other right or remedy under the terms of the

debenture or provisions of the trust deed to become

immediately enforceable; and

(c) any circumstances that have occurred during the quarter that

materially prejudice:

(i) the borrower, any of its subsidiaries, or any of the

guarantors; or

(ii) any security interest included in or created by the

debentures or the trust deed; and

(d) any substantial change in the nature of the business of the

borrower, any of its subsidiaries, or any of the guarantors that

has occurred during the quarter; and

(e) any of the following events that happened in the quarter:

(i) the appointment of a guarantor;

(ii) the cessation of liability of a guarantor body for the

payment of the whole or part of the money for which it

was liable under the guarantee;

(iii) a change of name of a guarantor (if this happens, the

report must also disclose the guarantor’s new name);

and

(f) the net amount outstanding on any advances at the end of the

quarter if the borrower has created a security interest where:

(i) the total amount to be advanced on the security of the

security interest is indeterminate; and

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Section 283BF

Corporations Act 2001 9

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(ii) the advances are merged in a current account with

bankers, trade creditors or anyone else; and

(g) any other matters that may materially prejudice any security

interests or other interests of the debenture holders.

Note: Paragraph (f)—the borrower has a duty to inform the trustee about

security interests as they are created (see section 283BE).

(5) If the borrower has deposited money with, or lent money to, a

related body corporate during the quarter, the report must also

include details of:

(a) the total of the money deposited with, or lent to, the related

body corporate during the quarter (see subsection (7)); and

(b) the total amount of money owing to the borrower at the end

of the quarter in respect of the deposits or loans to the related

body corporate.

Disregard any amount that the borrower deposits with an ADI in

the normal course of the borrower’s business.

(6) If the borrower has assumed a liability of a related body corporate

during the quarter, the report must also include details of the extent

of the liability assumed during the quarter and the extent of the

liability as at the end of the quarter.

(7) For the purposes of subsections (5) and (6), the report:

(a) must distinguish between deposits, loans and assumptions of

liability that are secured and those that are unsecured; and

(b) may exclude any deposit, loan or assumption of liability on

behalf of the related body corporate if it has:

(i) guaranteed the repayment of the debentures of the

borrower; and

(ii) secured the guarantee by a security interest over all of

its property in favour of the trustee.

Formalities

(8) The report must:

(a) be made in accordance with a resolution of the directors; and

(b) specify the date on which the report is made.

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Chapter 2L Debentures

Part 2L.2 Duties of borrower

Section 283BG

10 Corporations Act 2001

Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19

283BG Exceptions to borrower’s duty to report to trustee and ASIC

Section 283BF does not apply in respect of:

(a) a borrower, while:

(i) it is under external administration; or

(ii) a receiver, or a receiver and manager, of property of the

borrower has been appointed and has not ceased to act

under that appointment; or

(b) a security interest in PPSA retention of title property.

283BH How debentures may be described

(1) The borrower may describe or refer to the debentures in:

(a) any disclosure in relation to the offer of the debentures; or

(b) any other document constituting or relating to the offer of the

debentures; or

(c) the debentures themselves;

only in accordance with the following table:

How debentures may be described

Item Description When description may be used

1 mortgage debenture only if the circumstances set out in

subsection (2) are satisfied

2 debenture only if the circumstances set out in

subsection (2) or (3) are satisfied

3 unsecured note or

unsecured deposit note

in any other case

(1A) The borrower commits an offence if it intentionally or recklessly

contravenes subsection (1).

When debentures can be called mortgage debentures or debentures

(2) The borrower may describe or refer to the debentures as:

(a) mortgage debentures; or

(b) debentures;

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Section 283BI

Corporations Act 2001 11

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if:

(c) the repayment of all money that has been, or may be,

deposited or lent under the debentures is secured by a first

mortgage given to the trustee over land vested in the

borrower or in any of the guarantors; and

(d) the mortgage has been registered, or is a registrable mortgage

that has been lodged for registration, in accordance with the

law relating to the registration of mortgages of land in the

place where the land is situated; and

(e) the total amount of that money and of all other liabilities (if

any) secured by the mortgage of that land ranking equally

with the liability to repay that money does not exceed 60% of

the value of the borrower’s or guarantor’s interest in that land

as shown in the valuation included in the disclosure

document for the debentures.

When debentures can be called debentures

(3) The borrower may describe or refer to the debentures as debentures

if:

(a) the repayment of all money that has been, or may be,

deposited or lent under the debentures has been secured by a

security interest in favour of the trustee over the whole or any

part of the tangible property of the borrower or of any of the

guarantors; and

(b) the tangible property that constitutes the security for the

security interest is sufficient and is reasonably likely to be

sufficient to meet the liability for the repayment of all such

money and all other liabilities that:

(i) have been or may be incurred; and

(ii) rank in priority to, or equally with, that liability.

283BI Offences for failure to comply with statutory duties

The borrower commits an offence if it intentionally or recklessly

contravenes section 283BB, 283BC, 283BD, 283BE, 283BF or

283EA.

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Chapter 2L Debentures

Part 2L.3 Duties of guarantor

Section 283CA

12 Corporations Act 2001

Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19

Part 2L.3—Duties of guarantor

283CA Duties of guarantor

If a borrower is required to enter into a trust deed under

section 283AA in relation to debentures, a guarantor in respect of

the debentures has the duties imposed by this Part.

283CB General duties

The guarantor must:

(a) carry on and conduct its business in a proper and efficient

manner; and

(b) make all of its financial and other records available for

inspection by:

(i) the trustee; or

(ii) an officer or employee of the trustee authorised by the

trustee to carry out the inspection; or

(iii) a registered company auditor appointed by the trustee to

carry out the inspection;

and give them any information, explanations or other

assistance that they require about matters relating to those

records.

283CC Duty to inform trustee about security interests

If the guarantor creates a security interest, it must:

(a) give the trustee written details of the security interest within

21 days after it is created; and

(b) if the total amount to be advanced on the security of the

security interest is indeterminate, give the trustee written

details of:

(i) the amount of each advance made within 7 days after it

is made; or

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Duties of guarantor Part 2L.3

Section 283CD

Corporations Act 2001 13

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(ii) where the advances are merged in a current account

with bankers, trade creditors or anyone else—the net

amount outstanding on the advances at the end of every

3 months.

283CD Exceptions to guarantor’s duty to inform trustee

Section 283CC does not apply in respect of:

(a) the guarantor, while:

(i) it is under external administration; or

(ii) a receiver, or a receiver and manager, of property of the

guarantor has been appointed and has not ceased to act

under that appointment; or

(b) a security interest in PPSA retention of title property.

283CE Offences for failure to comply with statutory duties

The guarantor commits an offence if it intentionally or recklessly

contravenes paragraph 283CB(b) or section 283CC.

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Chapter 2L Debentures

Part 2L.4 Trustee

Section 283DA

14 Corporations Act 2001

Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19

Part 2L.4—Trustee

283DA Trustee’s duties

The trustee of a trust deed entered into under section 283AA must:

(a) exercise reasonable diligence to ascertain whether the

property of the borrower and of each guarantor that is or

should be available (whether by way of security or

otherwise) will be sufficient to repay the amount deposited or

lent when it becomes due; and

(b) exercise reasonable diligence to ascertain whether the

borrower or any guarantor has committed any breach of:

(i) the terms of the debentures; or

(ii) the provisions of the trust deed or this Chapter; and

(c) do everything in its power to ensure that the borrower or a

guarantor remedies any breach known to the trustee of:

(i) any term of the debentures; or

(ii) any provision of the trust deed or this Chapter;

unless the trustee is satisfied that the breach will not

materially prejudice the debenture holders’ interests or any

security for the debentures; and

(e) notify ASIC as soon as practicable if:

(i) the borrower has not complied with section 283BE,

283BF or subsection 318(1) or (4); or

(ii) a guarantor has not complied with section 283CC; and

(f) notify ASIC and the borrower as soon as practicable if the

trustee discovers that it cannot be a trustee under

section 283AC; and

(g) give the debenture holders a statement explaining the effect

of any proposal that the borrower submits to the debenture

holders before any meeting that:

(i) the Court calls in relation to a scheme under

subsection 411(1) or (1A); or

(ii) the trustee calls under subsection 283EB(1); and

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Trustee Part 2L.4

Section 283DB

Corporations Act 2001 15

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(h) comply with any directions given to it at a debenture holders’

meeting referred to in section 283EA, 283EB or 283EC

unless:

(i) the trustee is of the opinion that the direction is

inconsistent with the terms of the debentures or the

provisions of the trust deed or this Act or is otherwise

objectionable; and

(ii) has either obtained, or is in the process of obtaining, an

order from the Court under section 283HA setting aside

or varying the direction; and

(i) apply to the Court for an order under section 283HB if the

borrower requests it to do so.

Note 1: Paragraph (g)—Section 411 relates to compromises and arrangements.

Note 2: Section 283DC deals with indemnification in respect of a trustee’s

liability to the debenture holders.

283DB Exemptions and indemnifications of trustee from liability

(1) A term of a debenture, provision of a trust deed or a term of a

contract with holders of debentures secured by a trust deed, is void

in so far as the term or provision would have the effect of:

(a) exempting a trustee from liability for breach of

section 283DA for failure to show the degree of care and

diligence required of it as trustee; or

(b) indemnifying the trustee against that liability;

unless the term or provision:

(c) releases the trustee from liability for something done or

omitted to be done before the release is given; or

(d) enables a meeting of debenture holders to approve the release

of the trustee from liability for something done or omitted to

be done before the release is given.

(2) For the purposes of paragraph (1)(d):

(a) a release is approved if the debenture holders who vote for

the resolution hold 75% of the nominal value of the

debentures held by all the debenture holders who attend the

meeting and vote on the resolution; and

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Part 2L.4 Trustee

Section 283DC

16 Corporations Act 2001

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(b) a debenture holder attends the meeting and votes on the

resolution if:

(i) they attend the meeting in person and vote on the

resolution; or

(ii) if proxies are permitted—they are represented at the

meeting by a proxy and the proxy votes on the

resolution.

283DC Indemnity

The trustee is not liable for anything done or omitted to be done in

accordance with a direction given to it by the debenture holders at

any meeting called under section 283EA, 283EB or 283EC.

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Meetings of debenture holders Part 2L.5

Section 283EA

Corporations Act 2001 17

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Part 2L.5—Meetings of debenture holders

283EA Borrower’s duty to call meeting

Duty to call meeting

(1) The borrower must call a meeting of debenture holders if:

(a) debenture holders who together hold 10% or more of the

nominal value of the issued debentures to which the trust

relates direct the borrower to do so; and

(b) the direction is given to the borrower in writing at its

registered office; and

(c) the purpose of the meeting is to:

(i) consider the financial statements that were laid before

the last AGM of the borrower; or

(ii) give the trustee directions in relation to the exercise of

any of its powers.

Note: The trustee usually must comply with any directions given to it by the

debenture holders at the meeting (see paragraph 283DA(h)).

Duty to give notification of meeting

(2) If the borrower is required to call a meeting, it must give notice of

the time and place of the meeting to:

(a) the trustee; and

(b) the borrower’s auditor; and

(c) each of the debenture holders whose names are entered on

the register of debenture holders.

Notice to joint holders of a debenture must be given to the joint

holder named first in the register of debenture holders.

(3) The borrower may give the notice to a debenture holder:

(a) personally; or

(b) by sending it by post to the address for the debenture holder

in the register of debenture holders; or

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Part 2L.5 Meetings of debenture holders

Section 283EB

18 Corporations Act 2001

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(c) by sending it to the fax number or electronic address (if any)

nominated by the debenture holder; or

(d) by any other means that the trust deed or the terms of the

debentures permit.

Note: A defect in the notice may not invalidate a meeting (see section 1322).

When notice by post or fax is given

(4) A notice of meeting sent to a debenture holder is taken to be given:

(a) 3 days after it is posted, if it is posted; or

(b) on the business day after it is sent, if it is sent by fax or other

electronic means;

unless the trust deed or the terms of the debentures provide

otherwise.

283EB Trustee’s power to call meeting

Trustee may call meeting in event of breach

(1) If the borrower or a guarantor fails to remedy any breach of the

terms of the debentures or provisions of the trust deed or this

Chapter when required by the trustee, the trustee may:

(a) call a meeting of debenture holders; and

(b) inform the debenture holders of the failure at the meeting;

and

(c) submit proposals for protection of the debenture holders’

interests to the meeting; and

(d) ask for directions from the debenture holders in relation to

the matter.

Trustee may appoint person to chair meeting

(2) The trustee may appoint a person to chair a meeting of debenture

holders called under subsection (1). If the trustee does not exercise

this power, the debenture holders present at the meeting may

appoint a person to chair the meeting.

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Section 283EC

Corporations Act 2001 19

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283EC Court may order meeting

(1) Without limiting section 283HA or 283HB, the Court may make an

order under either of those sections for a meeting of all or any of

the debenture holders to be held to give directions to the trustee.

The order may direct the trustee to:

(a) place before the debenture holders any information

concerning their interests; and

(b) place before the debenture holders any proposals to protect

their interests that the Court directs or the trustee considers

appropriate; and

(c) obtain the debenture holders’ directions concerning the

protection of their interests.

(2) The meeting is to be held and conducted in the manner the Court

directs. The trustee may appoint a person to chair the meeting. If

the trustee does not exercise this power, the debenture holders

present at the meeting may appoint a person to chair the meeting.

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Chapter 2L Debentures

Part 2L.6 Civil liability

Section 283F

20 Corporations Act 2001

Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19

Part 2L.6—Civil liability

283F Civil liability for contravening this Chapter

(1) A person who suffers loss or damage because a person contravenes

a provision of this Chapter may recover the amount of the loss or

damage from:

(a) the person who contravened the provision; or

(b) a person involved in the contravention.

This is so even if the person did not commit, and was not involved

in, the contravention.

(2) An action under subsection (1) may begin at any time within 6

years after the day on which the cause of action arose.

(3) This Part does not affect any liability that a person has under any

other law.

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Debentures Chapter 2L

ASIC powers Part 2L.7

Section 283GA

Corporations Act 2001 21

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Part 2L.7—ASIC powers

283GA ASIC’s power to exempt and modify

(1) ASIC may:

(a) exempt a person from a provision of this Chapter; or

(b) declare that this Chapter applies to a person as if specified

provisions were omitted, modified or varied as specified in

the declaration.

(2) The exemption or declaration may do all or any of the following:

(a) apply to all or specified provisions of this Chapter;

(b) apply to all persons, specified persons, or a specified class of

persons;

(c) relate to all debentures, specified debentures or a specified

class of debentures;

(d) relate to any other matter generally or as specified.

(3) An exemption may apply unconditionally or subject to specified

conditions. A person to whom a condition specified in an

exemption applies must comply with the condition. The Court may

order the person to comply with the condition in a specified way.

Only ASIC may apply to the Court for the order.

(4) The exemption or declaration must be in writing and ASIC must

publish notice of it in the Gazette.

(5) For the purposes of this section, the provisions of this Chapter

include:

(a) regulations made for the purposes of this Chapter; and

(b) definitions in this Act or the regulations as they apply to

references in:

(i) this Chapter; or

(ii) regulations made for the purposes of this Chapter; and

(c) the old Division 12 of Part 11.2 transitionals.

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Chapter 2L Debentures

Part 2L.7 ASIC powers

Section 283GB

22 Corporations Act 2001

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283GB ASIC may approve body corporate to be trustee

(1) ASIC may approve a body corporate in writing to be a trustee for

the purposes of paragraph 283AC(1)(f). The approval may allow

the body corporate to act as trustee:

(a) in any circumstances; or

(b) in relation to a particular borrower or particular class of

borrower; or

(c) in relation to a particular trust deed;

and may be given subject to conditions.

(2) ASIC must publish notice of the approval in the Gazette.

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Debentures Chapter 2L

Court Part 2L.8

Section 283HA

Corporations Act 2001 23

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Part 2L.8—Court

283HA General Court power to give directions and determine

questions

If the trustee applies to the Court for any direction in relation to the

performance of the trustee’s functions or to determine any question

in relation to the interests of the debenture holders, the Court may

give any direction and make any declaration or determination in

relation to the matter that the Court considers appropriate. The

Court may also make ancillary or consequential orders.

Note: Under this section, the Court may order a meeting of debenture

holders to be held, see section 283EC.

283HB Specific Court powers

(1) If the trustee or ASIC applies to the Court, the Court may make

any or all of the following orders:

(a) an order staying an action or other civil proceedings before a

court by or against the borrower or a guarantor body;

(b) an order restraining the borrower from paying any money to

the debenture holders or any holders of any other class of

debentures;

(c) an order that any security for the debentures be enforceable

immediately or at the time the Court directs (even if the

debentures are irredeemable or redeemable only on the

happening of a contingency);

(d) an order appointing a receiver of any property constituting

security for the debentures;

(e) an order restricting advertising by the borrower for deposits

or loans;

(f) an order restricting borrowing by the borrower;

(g) any other order that the Court considers appropriate to

protect the interests of existing or prospective debenture

holders.

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Chapter 2L Debentures

Part 2L.8 Court

Section 283HB

24 Corporations Act 2001

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(2) In deciding whether to make an order under subsection (1), the

Court must have regard to:

(a) the ability of the borrower and each guarantor to repay the

amount deposited or lent as and when it becomes due; and

(b) any contravention of section 283GA by the borrower; and

(c) the interests of the borrower’s members and creditors; and

(d) the interests of the members of each of the guarantors.

Note: The Court may order a meeting of debenture holders to be held (see

section 283EC).

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Debentures Chapter 2L

Location of other debenture provisions Part 2L.9

Section 283I

Corporations Act 2001 25

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Part 2L.9—Location of other debenture provisions

283I Signpost to other debenture provisions

There are other rules relating to debentures in paragraph 124(1)(b)

and section 563AAA.

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Chapter 2M Financial reports and audit

Part 2M.1 Overview

Section 285

26 Corporations Act 2001

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Chapter 2M—Financial reports and audit

Part 2M.1—Overview

285 Overview of obligations under this Chapter

Obligations under this Chapter—companies, registered schemes

and disclosing entities

(1) Under this Chapter, all companies, registered schemes and

disclosing entities must keep financial records (see

sections 286-291)—and some must prepare financial reports (see

sections 292-323D). All those that have to prepare financial reports

have to prepare them annually; disclosing entities have to prepare

half-year financial reports as well. The following table sets out

what is involved in annual financial reporting:

Annual financial reporting for companies, registered schemes and disclosing

entities

steps sections comments

1 prepare financial report s. 295 The financial report

includes:

• financial statements

• disclosures and notes

• directors’ declaration.

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Section 285

Corporations Act 2001 27

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Annual financial reporting for companies, registered schemes and disclosing

entities

steps sections comments

2 prepare directors’ report s. 298 Unless the report relates to a

company limited by

guarantee, it has a general

component (sections 299 and

299A), a specific component

(section 300) and a special

component for listed

companies (section 300A).

See section 285A for an

overview of the obligations

of companies limited by

guarantee.

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Section 285

28 Corporations Act 2001

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Annual financial reporting for companies, registered schemes and disclosing

entities

steps sections comments

3 have the financial report

audited and obtain

auditor’s report

s. 301, 307, 308 A small proprietary company

preparing a financial report

because it has CSF

shareholders only has to

have an audit if it has raised

a total equal to or exceeding

the CSF audit threshold from

CSF offers. A small

proprietary company

preparing a financial report

in response to a shareholder

direction under section 293

usually only has to have an

audit if the direction asks for

it.

There are similar rules for

companies limited by

guarantee (see section 285A

for an overview).

Under s. 312, officers must

assist the auditor in the

conduct of the audit.

ASIC may use its exemption

powers under s. 340 and 341

to relieve large proprietary

companies from the audit

requirements in appropriate

cases (s. 342(2) and (3)).

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Section 285

Corporations Act 2001 29

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Annual financial reporting for companies, registered schemes and disclosing

entities

steps sections comments

4 provide the financial

report, directors’ report

and auditor’s report to

members

s. 314 Unless the report relates to a

company limited by

guarantee, a concise

financial report may be

provided to members instead

of the full financial

statements

(subsections 314(1) and (2)).

For deadline, see

subsections 315(1) to (4).

See section 285A for an

overview of the obligations

of companies limited by

guarantee.

5 lodge the financial

report, directors’ report

and auditor’s report with

ASIC

s. 319 For deadline see s. 319(3).

Companies that have the

benefit of the grandfathering

in the relevant Part 10.1

transitionals do not have to

lodge.

6 [public companies only]

lay financial report,

directors’ report and

auditor’s report before

AGM

s. 317 For the AGM deadline see s.

250N.

Obligations under this Chapter—notified foreign passport funds

(1A) Under this Chapter, all notified foreign passport funds must

provide reports on financial matters to Australian members of the

fund (see section 314A) and to ASIC (see section 319).

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Section 285A

30 Corporations Act 2001

Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19

Application to disclosing entities

(2) This Chapter covers all disclosing entities:

(a) incorporated or formed in Australia; and

(b) whether or not they are companies or registered schemes.

Application to registered schemes

(3) For the purposes of applying this Chapter to a registered scheme:

(a) the scheme’s responsible entity is responsible for the

performance of obligations in respect of the scheme; and

(b) the directors and officers of the responsible entity are taken

to be the directors and officers of the scheme; and

(c) the debts incurred in operating the scheme are taken to be the

debts of the scheme.

Application to notified foreign passport funds

(4) For the purposes of applying this Chapter to a notified foreign

passport fund:

(a) the operator of the fund is responsible for the performance of

obligations in respect of the fund; and

(b) the debts incurred in operating the fund are taken to be the

debts of the fund.

285A Overview of obligations of companies limited by guarantee

The following table sets out what is involved in annual financial

reporting for companies limited by guarantee:

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Section 285A

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Annual financial reporting for companies limited by guarantee

Item Nature of company Obligations Sections

1 Small company limited by

guarantee.

No obligation to do any of the

following unless required to

do so under a member

direction or ASIC direction:

• prepare a financial report;

• prepare a directors’ report;

• have financial report audited;

• notify members of reports.

Sections 292,

301 and 316A

2 Company limited by

guarantee with annual

revenue or, if part of a

consolidated entity, annual

consolidated revenue of less

than $1 million.

Must prepare a financial

report.

Must prepare a directors’

report, although less detailed

than that required of other

companies.

Need not have financial report

audited unless a

Commonwealth company, or a

subsidiary of a

Commonwealth company or

Commonwealth authority. If

the company does not have

financial report audited, it

must have financial report

reviewed.

Must give reports to any

member who elects to receive

them.

Sections 292,

298, 300B,

301, 316A

3 Company limited by

guarantee with annual

revenue or, if part of a

consolidated entity, annual

consolidated revenue of $1

million or more.

Must prepare a financial

report.

Must prepare a directors’

report, although less detailed

than that required of other

companies.

Sections 292,

298, 300B,

301, 316A

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Section 285A

32 Corporations Act 2001

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Annual financial reporting for companies limited by guarantee

Item Nature of company Obligations Sections

Must have financial report

audited.

Must give reports to any

member who elects to receive

them.

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Financial reports and audit Chapter 2M

Financial records Part 2M.2

Section 286

Corporations Act 2001 33

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Part 2M.2—Financial records

286 Obligation to keep financial records

(1) A company, registered scheme or disclosing entity must keep

written financial records that:

(a) correctly record and explain its transactions and financial

position and performance; and

(b) would enable true and fair financial statements to be prepared

and audited.

The obligation to keep financial records of transactions extends to

transactions undertaken as trustee.

Note: Section 9 defines financial records.

Period for which records must be retained

(2) The financial records must be retained for 7 years after the

transactions covered by the records are completed.

Fault-based offence

(3) A person commits an offence if the person contravenes

subsection (1) or (2).

Strict liability offence

(4) A person commits an offence of strict liability if the person

contravenes subsection (1) or (2).

287 Language requirements

(1) The financial records may be kept in any language.

(2) An English translation of financial records not kept in English must

be made available within a reasonable time to a person who:

(a) is entitled to inspect the records; and

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Part 2M.2 Financial records

Section 288

34 Corporations Act 2001

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(b) asks for the English translation.

(3) An offence based on subsection (2) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

288 Physical format

(1) If financial records are kept in electronic form, they must be

convertible into hard copy. Hard copy must be made available

within a reasonable time to a person who is entitled to inspect the

records.

(2) An offence based on subsection (1) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

289 Place where records are kept

(1) A company, registered scheme or disclosing entity may decide

where to keep the financial records.

Records kept outside this jurisdiction

(2) If financial records about particular matters are kept outside this

jurisdiction, sufficient written information about those matters

must be kept in this jurisdiction to enable true and fair financial

statements to be prepared. The company, registered scheme or

disclosing entity must give ASIC written notice in the prescribed

form of the place where the information is kept.

(2A) An offence based on subsection (2) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

(3) ASIC may direct a company, registered scheme or disclosing entity

to produce specified financial records that are kept outside this

jurisdiction.

(4) The direction must:

(a) be in writing; and

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Section 290

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(b) specify a place in this jurisdiction where the records are to be

produced (the place must be reasonable in the

circumstances); and

(c) specify a day (at least 14 days after the direction is given) by

which the records are to be produced.

290 Director access

Personal access

(1) A director of a company, registered scheme or disclosing entity has

a right of access to the financial records at all reasonable times.

Court order for inspection on director’s behalf

(2) On application by a director, the Court may authorise a person to

inspect the financial records on the director’s behalf.

(3) A person authorised to inspect records may make copies of the

records unless the Court orders otherwise.

(4) The Court may make any other orders it consider appropriate,

including either or both of the following:

(a) an order limiting the use that a person who inspects the

records may make of information obtained during the

inspection;

(b) an order limiting the right of a person who inspects the

records to make copies in accordance with subsection (3).

291 Signposts to other relevant provisions

The following table sets out other provisions that are relevant to

access to financial records.

Other provisions relevant to access to financial records

1 section 247A

members

A member may apply to the Court for an order to

inspect the records.

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Section 291

36 Corporations Act 2001

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Other provisions relevant to access to financial records

2 section 310

auditor

The auditor has a right of access to the records.

3 section 431

controllers

A controller of a corporation’s property (for example, a receiver or receiver and manager) has a right of

access to the records.

4 sections 28 to 39 of

the ASIC Act

ASIC

ASIC has power to inspect the records. It also has

power under subsection 289(3) of this Act to call for

the production of financial records kept outside this

jurisdiction.

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Financial reporting Part 2M.3

Annual financial reports and directors’ reports Division 1

Section 292

Corporations Act 2001 37

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Part 2M.3—Financial reporting

Division 1—Annual financial reports and directors’ reports

292 Who has to prepare annual financial reports and directors’

reports

(1) A financial report and a directors’ report must be prepared for each

financial year by:

(a) all disclosing entities; and

(b) all public companies; and

(c) all large proprietary companies; and

(d) all registered schemes.

Note: This Chapter only applies to disclosing entities incorporated or formed

in Australia (see subsection 285(2)).

Small proprietary companies

(2) A small proprietary company has to prepare the financial report

and directors’ report only if:

(a) it is directed to do so under section 293 or 294; or

(b) it was controlled by a foreign company for all or part of the

year and it is not consolidated for that period in financial

statements for that year lodged with ASIC by:

(i) a registered foreign company; or

(ii) a company, registered scheme or disclosing entity; or

(c) it has one or more CSF shareholders at any time during the

financial year.

The rest of this Part does not apply to any other small proprietary

company.

Small companies limited by guarantee

(3) Despite subsection (1), a small company limited by guarantee has

to prepare the financial report and directors’ report only if it is

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Division 1 Annual financial reports and directors’ reports

Section 293

38 Corporations Act 2001

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directed to do so under section 294A or 294B. The rest of this Part

does not apply to any other small company limited by guarantee.

293 Small proprietary company—shareholder direction

(1) Shareholders with at least 5% of the votes in a small proprietary

company may give the company a direction to:

(a) prepare a financial report and directors’ report for a financial

year; and

(b) send them to all shareholders.

(2) The direction must be:

(a) signed by the shareholders giving the direction; and

(b) made no later than 12 months after the end of the financial

year concerned.

(3) The direction may specify all or any of the following:

(a) that the financial report does not have to comply with some

or all of the accounting standards;

(b) that a directors’ report or a part of that report need not be

prepared;

(c) that the financial report is to be audited.

294 Small proprietary company—ASIC direction

(1) ASIC may give a small proprietary company a direction to comply

with requirements of this Division and Divisions 3, 4, 5 and 6 for a

financial year.

(1A) An offence based on subsection (1) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

(2) The direction may be general or may specify the particular

requirements that the company is to comply with.

(3) The direction must specify the date by which the documents have

to be prepared, sent or lodged. The date must be a reasonable one

in view of the nature of the direction.

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Section 294A

Corporations Act 2001 39

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(4) The direction must:

(a) be made in writing; and

(b) specify the financial year concerned; and

(c) be made no later than 6 years after the end of that financial

year.

294A Small company limited by guarantee—member direction

(1) Members with at least 5% of the votes in a small company limited

by guarantee may give the company a direction to:

(a) prepare a financial report and directors’ report for a financial

year; and

(b) send them to members who have elected to receive them

under section 316A.

(2) The direction must be:

(a) signed by the members giving the direction; and

(b) made no later than 12 months after the end of the financial

year concerned.

(3) The direction may specify all or any of the following:

(a) that the financial report does not have to comply with some

or all of the accounting standards;

(b) that a directors’ report or a part of that report need not be

prepared;

(c) that the financial report is to be audited or reviewed.

294B Small company limited by guarantee—ASIC direction

(1) ASIC may give a small company limited by guarantee a direction

to comply with the requirements of this Division and Divisions 3,

4, 5 and 6 for a financial year.

(2) An offence based on subsection (1) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

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Division 1 Annual financial reports and directors’ reports

Section 295

40 Corporations Act 2001

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(3) The direction may be general or may specify the particular

requirements that the company is to comply with.

(4) The direction must specify the date by which the documents have

to be prepared, sent or lodged. The date must be a reasonable one

in view of the nature of the direction.

(5) The direction must:

(a) be made in writing; and

(b) specify the financial year concerned; and

(c) be made no later than 6 years after the end of that financial

year.

(6) A direction given under subsection (1) is not a legislative

instrument.

295 Contents of annual financial report

Basic contents

(1) The financial report for a financial year consists of:

(a) the financial statements for the year; and

(b) the notes to the financial statements; and

(c) the directors’ declaration about the statements and notes.

Financial statements

(2) The financial statements for the year are:

(a) unless paragraph (b) applies—the financial statements in

relation to the company, registered scheme or disclosing

entity required by the accounting standards; or

(b) if the accounting standards require the company, registered

scheme or disclosing entity to prepare financial statements in

relation to a consolidated entity—the financial statements in

relation to the consolidated entity required by the accounting

standards.

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Corporations Act 2001 41

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Notes to financial statements

(3) The notes to the financial statements are:

(a) disclosures required by the regulations; and

(b) notes required by the accounting standards; and

(c) any other information necessary to give a true and fair view

(see section 297).

Directors’ declaration

(4) The directors’ declaration is a declaration by the directors:

(c) whether, in the directors’ opinion, there are reasonable

grounds to believe that the company, registered scheme or

disclosing entity will be able to pay its debts as and when

they become due and payable; and

(ca) if the company, registered scheme or disclosing entity has

included in the notes to the financial statements, in

compliance with the accounting standards, an explicit and

unreserved statement of compliance with international

financial reporting standards—that this statement has been

included in the notes to the financial statements; and

(d) whether, in the directors’ opinion, the financial statement and

notes are in accordance with this Act, including:

(i) section 296 (compliance with accounting standards);

and

(ii) section 297 (true and fair view); and

(e) if the company, disclosing entity or registered scheme is

listed—that the directors have been given the declarations

required by section 295A.

Note: See paragraph 285(3)(c) for the reference to the debts of a registered

scheme.

(5) The declaration must:

(a) be made in accordance with a resolution of the directors; and

(b) specify the date on which the declaration is made; and

(c) be signed by a director.

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Division 1 Annual financial reports and directors’ reports

Section 295A

42 Corporations Act 2001

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295A Declaration in relation to listed entity’s financial statements by

chief executive officer and chief financial officer

(1) If the company, disclosing entity or registered scheme is listed, the

directors’ declaration under subsection 295(4) must be made only

after each person who performs:

(a) a chief executive function; or

(b) a chief financial officer function;

in relation to the company, disclosing entity or registered scheme

has given the directors a declaration under subsection (2) of this

section.

(2) The declaration is a declaration whether, in the person’s opinion:

(a) the financial records of the company, disclosing entity or

registered scheme for the financial year have been properly

maintained in accordance with section 286; and

(b) the financial statements, and the notes referred to in

paragraph 295(3)(b), for the financial year comply with the

accounting standards; and

(c) the financial statements and notes for the financial year give

a true and fair view (see section 297); and

(d) any other matters that are prescribed by the regulations for

the purposes of this paragraph in relation to the financial

statements and the notes for the financial year are satisfied.

(3) The declaration must:

(a) be made in writing; and

(b) specify the date on which the declaration is made; and

(c) specify the capacity in which the person is making the

declaration; and

(d) be signed by the person making the declaration.

A person who performs both a chief executive function and a chief

financial officer function may make a single declaration in both

capacities.

(4) A person performs a chief executive function in relation to the

company, disclosing entity or registered scheme if the person is the

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Corporations Act 2001 43

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person who is primarily and directly responsible to the directors for

the general and overall management of the company, disclosing

entity or registered scheme.

(5) If there is no one person who performs a chief executive function

in relation to the company, disclosing entity or registered scheme

under subsection (4), a person performs a chief executive function

in relation to the company, disclosing entity or registered scheme if

the person is one of a number of people who together are primarily

and directly responsible to the directors for the general and overall

management of the company, disclosing entity or registered

scheme.

(6) A person performs a chief financial officer function in relation to

the company, disclosing entity or registered scheme if that person

is the person who is:

(a) primarily responsible for financial matters in relation to the

company, disclosing entity or registered scheme; and

(b) directly responsible for those matters to either:

(i) the directors; or

(ii) the person or persons who perform the chief executive

function in relation to the company.

(7) If there is no one person who performs a chief financial officer

function in relation to the company, disclosing entity or registered

scheme under subsection (6), a person performs a chief financial

officer function in relation to the company, disclosing entity or

registered scheme if the person is one of a number of people who

together are:

(a) primarily responsible for financial matters in relation to the

company, disclosing entity or registered scheme; and

(b) directly responsible for those matters to either:

(i) the directors; or

(ii) the person or persons who perform the chief executive

function in relation to the company.

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Division 1 Annual financial reports and directors’ reports

Section 296

44 Corporations Act 2001

Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19

(8) Nothing in this section derogates from the responsibility that a

director has for ensuring that financial statements comply with this

Act.

296 Compliance with accounting standards and regulations

(1) The financial report for a financial year must comply with the

accounting standards.

Small proprietary companies

(1A) Despite subsection (1), the financial report of a small proprietary

company does not have to comply with particular accounting

standards if:

(a) the report is prepared in response to a shareholder direction

under section 293; and

(b) the direction specifies that the report does not have to comply

with those standards; and

(c) paragraph 292(2)(c) (about having CSF shareholders) does

not apply to the company for the financial year.

Small companies limited by guarantee

(1B) Despite subsection (1), the financial report of a small company

limited by guarantee does not have to comply with particular

accounting standards if:

(a) the report is prepared in response to a member direction

under section 294A; and

(b) the direction specifies that the report does not have to comply

with those standards.

Further requirements

(2) The financial report must comply with any further requirements in

the regulations.

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Section 297

Corporations Act 2001 45

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297 True and fair view

The financial statements and notes for a financial year must give a

true and fair view of:

(a) the financial position and performance of the company,

registered scheme or disclosing entity; and

(b) if consolidated financial statements are required—the

financial position and performance of the consolidated entity.

This section does not affect the obligation under section 296 for a

financial report to comply with accounting standards.

Note: If the financial statements and notes prepared in compliance with the

accounting standards would not give a true and fair view, additional

information must be included in the notes to the financial statements

under paragraph 295(3)(c).

298 Annual directors’ report

(1) The company, registered scheme or disclosing entity must prepare

a directors’ report for each financial year.

(1AA) Except in the case of a company limited by guarantee or a

company covered under subsection (1AC), the report must include:

(a) the general information required by sections 299 (all entities)

and 299A (additional requirements for listed entities); and

(b) the specific information required by sections 300 and 300A;

and

(c) a copy of the auditor’s declaration under section 307C in

relation to the audit for the financial year.

(1AB) In the case of a company limited by guarantee, the report must

include:

(a) the general information required by section 300B; and

(b) a copy of the auditor’s declaration under section 307C in

relation to the audit or review for the financial year.

(1AC) This subsection covers a company if the company has not had its

financial report for the relevant financial year audited because

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Section 298

46 Corporations Act 2001

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subsection 301(2) or (5) exempts it from the requirement to do so

under subsection 301(1).

(1AD) In the case of a company covered under subsection (1AC), the

report must include:

(a) the general information required by section 299; and

(b) the specific information required by section 300.

(1A) If the financial report for a financial year includes additional

information under paragraph 295(3)(c) (information included to

give true and fair view of financial position and performance), the

directors’ report for the financial year must also:

(a) set out the directors’ reasons for forming the opinion that the

inclusion of that additional information was necessary to give

the true and fair view required by section 297; and

(b) specify where that additional information can be found in the

financial report.

(2) The report must:

(a) be made in accordance with a resolution of the directors; and

(b) specify the date on which the report is made; and

(c) be signed by a director.

Small proprietary companies

(3) A small proprietary company does not have to comply with

subsection (1) for a financial year if:

(a) it is preparing financial statements for that year in response to

a shareholder direction under section 293; and

(b) the direction specified that a directors’ report need not be

prepared; and

(c) paragraph 292(2)(c) (about having CSF shareholders) does

not apply to the company for the financial year.

Small companies limited by guarantee

(4) A small company limited by guarantee does not have to comply

with subsection (1) for a financial year if:

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(a) it is preparing the financial statements for that year in

response to a member direction under section 294A; and

(b) the direction specified that a directors’ report need not be

prepared.

299 Annual directors’ report—general information

General information about operations and activities

(1) The directors’ report for a financial year must:

(a) contain a review of operations during the year of the entity

reported on and the results of those operations; and

(b) give details of any significant changes in the entity’s state of

affairs during the year; and

(c) state the entity’s principal activities during the year and any

significant changes in the nature of those activities during the

year; and

(d) give details of any matter or circumstance that has arisen

since the end of the year that has significantly affected, or

may significantly affect:

(i) the entity’s operations in future financial years; or

(ii) the results of those operations in future financial years;

or

(iii) the entity’s state of affairs in future financial years; and

(e) refer to likely developments in the entity’s operations in

future financial years and the expected results of those

operations; and

(f) if the entity’s operations are subject to any particular and

significant environmental regulation under a law of the

Commonwealth or of a State or Territory—give details of the

entity’s performance in relation to environmental regulation.

(2) The entity reported on is:

(a) the company, registered scheme or disclosing entity (if

consolidated financial statements are not required); or

(b) the consolidated entity (if consolidated financial statements

are required).

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Division 1 Annual financial reports and directors’ reports

Section 299A

48 Corporations Act 2001

Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19

Prejudicial information need not be disclosed

(3) The report may omit material that would otherwise be included

under paragraph (1)(e) if it is likely to result in unreasonable

prejudice to:

(a) the company, registered scheme or disclosing entity; or

(b) if consolidated financial statements are required—the

consolidated entity or any entity (including the company,

registered scheme or disclosing entity) that is part of the

consolidated entity.

If material is omitted, the report must say so.

299A Annual directors’ report—additional general requirements for

listed entities

(1) The directors’ report for a financial year for a company, registered

scheme or disclosing entity that is listed must also contain

information that members of the listed entity would reasonably

require to make an informed assessment of:

(a) the operations of the entity reported on; and

(b) the financial position of the entity reported on; and

(c) the business strategies, and prospects for future financial

years, of the entity reported on.

(2) The entity reported on is:

(a) the company, registered scheme or disclosing entity that is

listed (if consolidated financial statements are not required);

or

(b) the consolidated entity (if consolidated financial statements

are required).

(3) The report may omit material that would otherwise be included

under paragraph (1)(c) if it is likely to result in unreasonable

prejudice to:

(a) the company, registered scheme or disclosing entity; or

(b) if consolidated financial statements are required—the

consolidated entity or any entity (including the company,

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registered scheme or disclosing entity) that is part of the

consolidated entity.

If material is omitted, the report must say so.

300 Annual directors’ report—specific information

(1) The directors’ report for a financial year must include details of:

(a) dividends or distributions paid to members during the year;

and

(b) dividends or distributions recommended or declared for

payment to members, but not paid, during the year; and

(c) the name of each person who has been a director of the

company, registered scheme or disclosing entity at any time

during or since the end of the year and the period for which

they were a director; and

(ca) the name of each person who:

(i) is an officer of the company, registered scheme or

disclosing entity at any time during the year; and

(ii) was a partner in an audit firm, or a director of an audit

company, that is an auditor of the company, disclosing

entity or registered scheme for the year; and

(iii) was such a partner or director at a time when the audit

firm or the audit company undertook an audit of the

company, disclosing entity or registered scheme; and

(d) options that are:

(i) granted over unissued shares or unissued interests

during or since the end of the year; and

(ii) granted to any of the directors or any of the 5 most

highly remunerated officers of the company (other than

the directors); and

(iii) granted to them as part of their remuneration;

(see subsections (3), (4) and (5)); and

(e) unissued shares or interests under option as at the day the

report is made (see subsections (3) and (6)); and

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Section 300

50 Corporations Act 2001

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(f) shares or interests issued during or since the end of the year

as a result of the exercise of an option over unissued shares

or interests (see subsections (3) and (7)); and

(g) indemnities given and insurance premiums paid during or

since the end of the year for a person who is or has been an

officer or auditor (see subsections (8) and (9)).

Public companies, listed companies and registered schemes must

include additional information under subsections (10), (11),

(11AA), (11A), (11B), (12) and (13) of this section and

section 300A.

(2) Details do not have to be included in the directors’ report under

this section if they are included in the company’s financial report

for the financial year.

(2A) If subsection (2) is relied on to not include in the directors’ report

for a financial year details that would otherwise be required to be

included in that report under paragraph (11B)(a) or (11C)(b), that

report must specify, in the section headed “Non-audit services”,

where those details may be found in the company’s financial report

for that financial year.

(3) Paragraphs (1)(d), (e) and (f) cover:

(a) options over unissued shares and interests of the company,

registered scheme or disclosing entity; and

(b) if consolidated financial statements are required—options

over unissued shares and interests of any controlled entity

that is a company, registered scheme or disclosing entity.

Options details

(5) The details of an option granted are:

(a) the company, registered scheme or disclosing entity granting

the option; and

(b) the name of the person to whom the option is granted; and

(c) the number and class of shares or interests over which the

option is granted.

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(6) The details of unissued shares or interests under option are:

(a) the company, registered scheme or disclosing entity that will

issue shares or interests when the options are exercised; and

(b) the number and classes of those shares or interests; and

(c) the issue price, or the method of determining the issue price,

of those shares or interests; and

(d) the expiry date of the options; and

(e) any rights that option holders have under the options to

participate in any share issue or interest issue of the

company, registered scheme or disclosing entity or of any

other body corporate or registered scheme.

Shares or interests issued as a result of exercise of option

(7) The details of shares or interests issued as a result of the exercise

of an option are:

(a) the company, registered scheme or disclosing entity issuing

the shares or interests; and

(b) the number of shares or interests issued; and

(c) if the company, registered scheme or disclosing entity has

different classes of shares or interests—the class to which

each of those shares or interests belongs; and

(d) the amount unpaid on each of those shares or interests; and

(e) the amount paid, or agreed to be considered as paid, on each

of those shares or interests.

Indemnities and insurance premiums for officers or auditors

(8) The report for a company must include details of:

(a) any indemnity that is given to a current or former officer or

auditor against a liability and that is covered by

subsection 199A(2) or (3), or any relevant agreement under

which an officer or auditor may be given an indemnity of that

kind; and

(b) any premium that is paid, or agreed to be paid, for insurance

against a current or former officer’s or auditor’s liability for

legal costs.

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Section 300

52 Corporations Act 2001

Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19

Note: Sections 199A and 199B contain general prohibitions against giving

certain indemnities and paying certain insurance premiums. This

subsection requires transactions that are exceptions to these

prohibitions to be reported.

(9) The details required under subsection (8) are:

(a) for an officer—their name or the class of officer to which

they belong or belonged; and

(b) for an auditor—their name; and

(c) the nature of the liability; and

(d) for an indemnity given—the amount the company paid and

any other action the company took to indemnify the officer or

auditor; and

(e) for an agreement to indemnify—the amount that the relevant

agreement requires the company to pay and any other action

the relevant agreement requires the company to take to

indemnify the officer or auditor; and

(f) for an insurance premium—the amount of the premium.

The report need not give details of the nature of the liability

covered by, or the amount of the premium payable under, a

contract of insurance to the extent that disclosure of those details is

prohibited by the insurance contract.

Special rules for public companies

(10) The report for a public company that is not a wholly-owned

subsidiary of another company must also include details of:

(a) each director’s qualifications, experience and special

responsibilities; and

(b) the number of meetings of the board of directors held during

the year and each director’s attendance at those meetings; and

(c) the number of meetings of each board committee held during

the year and each director’s attendance at those meetings; and

(d) the qualifications and experience of each person who is a

company secretary of the company as at the end of the year.

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Special rules for listed companies and schemes

(11) The report for a listed company must also include the following

details for each director:

(a) their relevant interests in shares of the company or a related

body corporate;

(b) their relevant interests in debentures of, or interests in a

registered scheme made available by, the company or a

related body corporate;

(c) their rights or options over shares in, debentures of or

interests in a registered scheme made available by, the

company or a related body corporate;

(d) contracts:

(i) to which the director is a party or under which the

director is entitled to a benefit; and

(ii) that confer a right to call for or deliver shares in, or

debentures of or interests in a registered scheme made

available by the company or a related body corporate;

(e) all directorships of other listed companies held by the

director at any time in the 3 years immediately before the end

of the financial year and the period for which each

directorship has been held.

Note: Directors must also disclose interests of these kinds to a relevant

market operator under section 205G as they are acquired.

(11AA) If an individual plays a significant role in the audit of a listed

company or listed registered scheme for the financial year in

reliance on an approval granted under section 324DAA, the report

for the company or scheme must also include details of, and

reasons for, the approval.

(11A) If a registered company auditor plays a significant role in the audit

of a listed company for the financial year in reliance on a

declaration made under section 342A, the report for the company

must also include details of the declaration.

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Section 300

54 Corporations Act 2001

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Listed companies—non-audit services and auditor independence

(11B) The report for a listed company must also include the following in

relation to each auditor:

(a) details of the amounts paid or payable to the auditor for

non-audit services provided, during the year, by the auditor

(or by another person or firm on the auditor’s behalf);

(b) a statement whether the directors are satisfied that the

provision of non-audit services, during the year, by the

auditor (or by another person or firm on the auditor’s behalf)

is compatible with the general standard of independence for

auditors imposed by this Act;

(c) a statement of the directors’ reasons for being satisfied that

the provision of those non-audit services, during the year, by

the auditor (or by another person or firm on the auditor’s

behalf) did not compromise the auditor independence

requirements of this Act.

These details and statements must be included in the directors’

report under the heading “Non-audit services”. If consolidated

financial statements are required, the details and statements must

relate to amounts paid or payable to the auditor by, and non-audit

services provided to, any entity (including the company, registered

scheme or disclosing entity) that is part of the consolidated entity.

(11C) For the purposes of paragraph (11B)(a), the details of amounts paid

or payable to an auditor for non-audit services provided, during the

year, by the auditor (or by another person or firm on the auditor’s

behalf) are:

(a) the name of the auditor; and

(b) the dollar amount that:

(i) the listed company; or

(ii) if consolidated financial statements are required—any

entity that is part of the consolidated entity;

paid, or is liable to pay, for each of those non-audit services.

(11D) The statements under paragraphs (11B)(b) and (c) must be made in

accordance with:

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(a) advice provided by the listed company’s audit committee if

the company has an audit committee; or

(b) a resolution of the directors of the listed company if

paragraph (a) does not apply.

(11E) For the purposes of subsection (11D), a statement is taken to be

made in accordance with advice provided by the company’s audit

committee only if:

(a) the statement is consistent with that advice and does not

contain any material omission of material included in that

advice; and

(b) the advice is endorsed by a resolution passed by the members

of the audit committee; and

(c) the advice is written advice signed by a member of the audit

committee on behalf of the audit committee and given to the

directors.

Special rules for listed registered schemes

(12) The report for a registered scheme whose interests are quoted on a

prescribed financial market must also include the following details

for each director of the company that is the responsible entity for

the scheme:

(a) their relevant interests in interests in the scheme;

(b) their rights or options over interests in the scheme;

(c) contracts to which the director is a party or under which the

director is entitled to a benefit and that confer a right to call

for or deliver interests in the scheme.

Special rules for registered schemes

(13) The report for a registered scheme must also include details of:

(a) the fees paid to the responsible entity and its associates out of

scheme property during the financial year; and

(b) the number of interests in the scheme held by the responsible

entity or its associates as at the end of the financial year; and

(c) interests in the scheme issued during the financial year; and

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56 Corporations Act 2001

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(d) withdrawals from the scheme during the financial year; and

(e) the value of the scheme’s assets as at the end of the financial

year, and the basis for the valuation; and

(f) the number of interests in the scheme as at the end of the

financial year.

Proceedings on behalf of a company

(14) The report for a company must also include the following details of

any application for leave under section 237 made in respect of the

company:

(a) the applicant’s name; and

(b) a statement whether leave was granted.

(15) The report for a company must also include the following details of

any proceedings that a person has brought or intervened in on

behalf of the company with leave under section 237:

(a) the person’s name;

(b) the names of the parties to the proceedings;

(c) sufficient information to enable members to understand the

nature and status of the proceedings (including the cause of

action and any orders made by the court).

300A Annual directors’ report—specific information to be provided

by listed companies

(1) The directors’ report for a financial year for a company must also

include (in a separate and clearly identified section of the report):

(a) discussion of board policy for determining, or in relation to,

the nature and amount (or value, as appropriate) of

remuneration of the key management personnel for:

(i) the company, if consolidated financial statements are

not required; or

(ii) the consolidated entity, if consolidated financial

statements are required; and

(b) discussion of the relationship between such policy and the

company’s performance; and

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(ba) if an element of the remuneration of a member of the key

management personnel for the company, or if consolidated

financial statements are required, for the consolidated entity

is dependent on the satisfaction of a performance condition:

(i) a detailed summary of the performance condition; and

(ii) an explanation of why the performance condition was

chosen; and

(iii) a summary of the methods used in assessing whether the

performance condition is satisfied and an explanation of

why those methods were chosen; and

(iv) if the performance condition involves a comparison

with factors external to the company:

(A) a summary of the factors to be used in making

the comparison; and

(B) if any of the factors relates to the performance

of another company, of 2 or more other

companies or of an index in which the

securities of a company or companies are

included—the identity of that company, of each

of those companies or of the index; and

(c) the prescribed details in relation to the remuneration of:

(i) if consolidated financial statements are required—each

member of the key management personnel for the

consolidated entity; or

(ii) if consolidated financial statements are not required—

each member of the key management personnel for the

company; and

(d) if an element of the remuneration of a person referred to in

paragraph (c) consists of securities of a body and that

element is not dependent on the satisfaction of a performance

condition—an explanation of why that element of the

remuneration is not dependent on the satisfaction of a

performance condition; and

(e) for each person referred to in paragraph (c):

(i) an explanation of the relative proportions of those

elements of the person’s remuneration that are related to

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performance and those elements of the person’s

remuneration that are not; and

(ii) the value (worked out as at the time they are granted

and in accordance with any applicable accounting

standards) of options that are granted to the person

during the year as part of their remuneration; and

(iii) the value (worked out as at the time they are exercised)

of options that were granted to the person as part of

their remuneration and that are exercised by the person

during the year; and

(iv) if options granted to the person as part of their

remuneration lapse during the financial year—the

number of those options, and the financial year in which

those options were granted; and

(vii) if the person is employed by the company under a

contract—the duration of the contract, the periods of

notice required to terminate the contract and the

termination payments provided for under the contract;

and

(f) such other matters related to the policy or policies referred to

in paragraph (a) as are prescribed by the regulations; and

(g) if:

(i) at the company’s most recent AGM, comments were

made on the remuneration report that was considered at

that AGM; and

(ii) when a resolution that the remuneration report for the

last financial year be adopted was put to the vote at the

company’s most recent AGM, at least 25% of the votes

cast were against adoption of that report;

an explanation of the board’s proposed action in response or,

if the board does not propose any action, the board’s reasons

for inaction; and

(h) if a remuneration consultant made a remuneration

recommendation in relation to any of the key management

personnel for the company or, if consolidated financial

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statements are required, for the consolidated entity, for the

financial year:

(i) the name of the consultant; and

(ii) a statement that the consultant made such a

recommendation; and

(iii) if the consultant provided any other kind of advice to

the company or entity for the financial year—a

statement that the consultant provided that other kind or

those other kinds of advice; and

(iv) the amount and nature of the consideration payable for

the remuneration recommendation; and

(v) the amount and nature of the consideration payable for

any other kind of advice referred to in

subparagraph (iii); and

(vi) information about the arrangements the company made

to ensure that the making of the remuneration

recommendation would be free from undue influence by

the member or members of the key management

personnel to whom the recommendation relates; and

(vii) a statement about whether the board is satisfied that the

remuneration recommendation was made free from

undue influence by the member or members of the key

management personnel to whom the recommendation

relates; and

(viii) if the board is satisfied that the remuneration

recommendation was made free from undue influence

by the member or members of the key management

personnel to whom the recommendation relates—the

board’s reasons for being satisfied of this.

(1AA) Without limiting paragraph (1)(b), the discussion under that

paragraph of the company’s performance must specifically deal

with:

(a) the company’s earnings; and

(b) the consequences of the company’s performance on

shareholder wealth;

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Part 2M.3 Financial reporting

Division 1 Annual financial reports and directors’ reports

Section 300A

60 Corporations Act 2001

Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19

in the financial year to which the report relates and in the previous

4 financial years.

(1AB) In determining, for the purposes of subsection (1AA), the

consequences of the company’s performance on shareholder

wealth in a financial year, have regard to:

(a) dividends paid by the company to its shareholders during that

year; and

(b) changes in the price at which shares in the company are

traded between the beginning and the end of that year; and

(c) any return of capital by the company to its shareholders

during that year that involves:

(i) the cancellation of shares in the company; and

(ii) a payment to the holders of those shares that exceeds the

price at which shares in that class are being traded at the

time when the shares are cancelled; and

(d) any other relevant matter.

(1A) The material referred to in subsection (1) must be included in the

directors’ report under the heading “Remuneration report”.

(1C) Without limiting paragraph (1)(c), the regulations may:

(a) provide that the value of an element of remuneration is to be

determined, for the purposes of this section, in a particular

way or by reference to a particular standard; and

(b) provide that details to be given of an element of remuneration

must relate to the remuneration provided in:

(i) the financial year to which the directors’ report relates;

and

(ii) the earlier financial years specified in the regulations.

(2) This section applies to any listed disclosing entity that is a

company.

(3) This section applies despite anything in the company’s

constitution.

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Section 300B

Corporations Act 2001 61

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(4) For the purposes of this section, if:

(a) consolidated financial statements are required; and

(b) a person is a group executive who is a group executive of 2

or more entities within the consolidated entity;

the person’s remuneration is taken to include all of the person’s

remuneration from those entities (regardless of the capacity in

which the person received the remuneration).

300B Annual directors’ report—companies limited by guarantee

(1) The directors’ report for a financial year for a company limited by

guarantee must:

(a) contain a description of the short and long term objectives of

the entity reported on; and

(b) set out the entity’s strategy for achieving those objectives;

and

(c) state the entity’s principal activities during the year; and

(d) state how those activities assisted in achieving the entity’s

objectives; and

(e) state how the entity measures its performance, including any

key performance indicators used by the entity.

(2) The entity reported on is:

(a) the company (if consolidated financial statements are not

required); or

(b) the consolidated entity (if consolidated financial statements

are required).

(3) The directors’ report for a financial year for a company limited by

guarantee must also include details of:

(a) the name of each person who has been a director of the

company at any time during or since the end of the year and

the period for which the person was a director; and

(b) each director’s qualifications, experience and special

responsibilities; and

(c) the number of meetings of the board of directors held during

the year and each director’s attendance at those meetings; and

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Part 2M.3 Financial reporting

Division 1 Annual financial reports and directors’ reports

Section 301

62 Corporations Act 2001

Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19

(d) for each class of membership in the company—the amount

which a member of that class is liable to contribute if the

company is wound up; and

(e) the total amount that members of the company are liable to

contribute if the company is wound up.

301 Audit of annual financial report

(1) A company, registered scheme or disclosing entity must have the

financial report for a financial year audited in accordance with

Division 3 and obtain an auditor’s report.

Small proprietary companies

(2) A small proprietary company’s financial report for a financial year

does not have to be audited if:

(a) the report is required only because of:

(i) paragraph 292(2)(c) (about having CSF shareholders);

or

(ii) a direction under section 293; or

(iii) both paragraph 292(2)(c) and a direction under

section 293; and

(b) in a case where subparagraph (a)(i) or (iii) applies—as at the

end of the financial year, the company has raised a total less

than the CSF audit threshold from all the CSF offers it has

ever made; and

(c) in a case where subparagraph (a)(ii) or (iii) applies—the

direction did not ask for the financial report to be audited.

Companies limited by guarantee

(3) A company limited by guarantee may have its financial report for a

financial year reviewed, rather than audited, if:

(a) the company is not one of the following:

(i) a Commonwealth company for the purposes of the

Public Governance, Performance and Accountability

Act 2013;

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Corporations Act 2001 63

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(ii) a subsidiary of a Commonwealth company for the

purposes of that Act;

(iii) a subsidiary of a corporate Commonwealth entity for the

purposes of that Act; and

(b) one of the following is true:

(i) the company is not required by the accounting standards

to be included in consolidated financial statements and

the revenue of the company for the financial year is less

than $1 million;

(ii) the company is required by the accounting standards to

be included in consolidated financial statements and the

consolidated revenue of the consolidated entity for the

financial year is less than $1 million.

(4) A small company limited by guarantee’s financial report for a

financial year does not have to be audited or reviewed if:

(a) the report is prepared in response to a member direction

under section 294A; and

(b) the direction does not ask for the audit or review.

(5) A company need not comply with subsection (1) if:

(a) it is covered under section 738ZI at the end of the financial

year mentioned in subsection (1); and

(b) as at the end of that financial year, the company has raised

less than $3 million from all CSF offers that it has made at

any time.

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Chapter 2M Financial reports and audit

Part 2M.3 Financial reporting

Division 2 Half-year financial report and directors’ report

Section 302

64 Corporations Act 2001

Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19

Division 2—Half-year financial report and directors’

report

302 Disclosing entity must prepare half-year financial report and

directors’ report

A disclosing entity must:

(a) prepare a financial report and directors’ report for each

half-year; and

(b) have the financial report audited or reviewed in accordance

with Division 3 and obtain an auditor’s report; and

(c) lodge the financial report, the directors’ report and the

auditor’s report on the financial report with ASIC;

unless the entity is not a disclosing entity when lodgment is due.

Note 1: This Chapter only applies to disclosing entities incorporated or formed

in Australia (see subsection 285(2)).

Note 2: See section 320 for the time for lodgment with ASIC.

Note 3: Subsection 318(4) requires disclosing entities that are borrowers in

relation to debentures to also report to the trustee for debenture

holders.

303 Contents of half-year financial report

Basic contents

(1) The financial report for a half-year consists of:

(a) the financial statements for the half-year; and

(b) the notes to the financial statements; and

(c) the directors’ declaration about the statements and notes.

Financial statements

(2) The financial statements for the half-year are:

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Section 303

Corporations Act 2001 65

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(a) unless paragraph (b) applies—the financial statements in

relation to the disclosing entity required by the accounting

standards; or

(b) if the accounting standards require the disclosing entity to

prepare financial statements in relation to a consolidated

entity—the financial statements in relation to the

consolidated entity required by the accounting standards.

Notes to financial statements

(3) The notes to the financial statements are:

(a) disclosures required by the regulations; and

(b) notes required by the accounting standards; and

(c) any other information necessary to give a true and fair view

(see section 305).

Directors’ declaration

(4) The directors’ declaration is a declaration by the directors:

(c) whether, in the directors’ opinion, there are reasonable

grounds to believe that the disclosing entity will be able to

pay its debts as and when they become due and payable; and

(d) whether, in the directors’ opinion, the financial statement and

notes are in accordance with this Act, including:

(i) section 304 (compliance with accounting standards);

and

(ii) section 305 (true and fair view).

Note: See paragraph 285(3)(c) for the reference to the debts of a disclosing

entity that is a registered scheme.

(5) The declaration must:

(a) be made in accordance with a resolution of the directors; and

(b) specify the day on which the declaration is made; and

(c) be signed by a director.

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Part 2M.3 Financial reporting

Division 2 Half-year financial report and directors’ report

Section 304

66 Corporations Act 2001

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304 Compliance with accounting standards and regulations

The financial report for a half-year must comply with the

accounting standards and any further requirements in the

regulations.

305 True and fair view

The financial statements and notes for a half-year must give a true

and fair view of:

(a) the financial position and performance of the disclosing

entity; or

(b) if consolidated financial statements are required—the

financial position and performance of the consolidated entity.

This section does not affect the obligation under section 304 for

financial reports to comply with accounting standards.

Note: If the financial statements prepared in compliance with the accounting

standards would not give a true and fair view, additional information

must be included in the notes to the financial statements under

paragraph 303(3)(c).

306 Half-year directors’ report

(1) The directors of the disclosing entity must prepare a directors’

report for each half-year that consists of:

(a) a review of the entity’s operations during the half-year and

the results of those operations; and

(b) the name of each person who has been a director of the

disclosing entity at any time during or since the end of the

half-year and the period for which they were a director.

If consolidated financial statements are required, the review under

paragraph (a) must cover the consolidated entity.

(1A) The directors’ report must include a copy of the auditor’s

declaration under section 307C in relation to the audit or review for

the half-year.

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Section 306

Corporations Act 2001 67

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(2) If the financial report for a half-year includes additional

information under paragraph 303(3)(c) (information included to

give true and fair view of financial position and performance), the

directors’ report for the half-year must also:

(a) set out the directors’ reasons for forming the opinion that the

inclusion of that additional information was necessary to give

the true and fair view required by section 305; and

(b) specify where that information can be found in the financial

report.

(3) The report must:

(a) be made in accordance with a resolution of the directors; and

(b) specify the date on which the report is made; and

(c) be signed by a director.

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Division 3 Audit and auditor’s report

Section 307

68 Corporations Act 2001

Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19

Division 3—Audit and auditor’s report

307 Audit

An auditor who conducts an audit of the financial report for a

financial year or half-year must form an opinion about:

(a) whether the financial report is in accordance with this Act,

including:

(i) section 296 or 304 (compliance with accounting

standards); and

(ii) section 297 or 305 (true and fair view); and

(aa) if the financial report includes additional information under

paragraph 295(3)(c) or 303(3)(c) (information included to

give true and fair view of financial position and

performance)—whether the inclusion of that additional

information was necessary to give the true and fair view

required by section 297 or 305; and

(b) whether the auditor has been given all information,

explanation and assistance necessary for the conduct of the

audit; and

(c) whether the company, registered scheme or disclosing entity

has kept financial records sufficient to enable a financial

report to be prepared and audited; and

(d) whether the company, registered scheme or disclosing entity

has kept other records and registers as required by this Act.

307A Audit to be conducted in accordance with auditing standards

(1) If an individual auditor, or an audit company, conducts:

(a) an audit or review of the financial report for a financial year;

or

(b) an audit or review of the financial report for a half-year;

the individual auditor or audit company must conduct the audit or

review in accordance with the auditing standards.

(2) If an audit firm, or an audit company, conducts:

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Corporations Act 2001 69

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(a) an audit or review of the financial report for a financial year;

or

(b) an audit or review of the financial report for a half-year;

the lead auditor for the audit or review must ensure that the audit or

review is conducted in accordance with the auditing standards.

Fault-based offence

(3) A person commits an offence if the person contravenes

subsection (1) or (2).

Strict liability offence

(4) A person commits an offence of strict liability if the person

contravenes subsection (1) or (2).

307B Audit working papers to be retained for 7 years

Contravention by individual auditor or audit company

(1) An auditor contravenes this subsection if:

(a) the auditor is an individual auditor or an audit company; and

(b) the auditor conducts:

(i) an audit or review of the financial report for a financial

year; or

(ii) an audit or review of the financial report for a half-year;

and

(c) the auditor does not retain all audit working papers prepared

by or for, or considered or used by, the auditor in accordance

with the requirements of the auditing standards until:

(i) the end of 7 years after the date of the audit report

prepared in relation to the audit or review to which the

audit working papers relate; or

(ii) an earlier date determined for the audit working papers

by ASIC under subsection (6).

(2) An offence based on subsection (1) is an offence of strict liability.

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Division 3 Audit and auditor’s report

Section 307B

70 Corporations Act 2001

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Note: For strict liability see section 6.1 of the Criminal Code.

Contravention by member of audit firm

(3) A person (the defendant) contravenes this subsection if:

(a) an audit firm conducts:

(i) an audit or review of the financial report for a financial

year; or

(ii) an audit or review of the financial report for a half-year;

and

(b) the audit firm fails, at a particular time, to retain all audit

working papers prepared by or for, or considered or used by,

the audit firm in accordance with the requirements of the

auditing standards until:

(i) the end of 7 years after the date of the audit report

prepared in relation to the audit or review to which the

documents relate; or

(ii) the earlier date determined by ASIC for the audit

working papers under subsection (6); and

(c) the defendant is a member of the firm at that time.

(4) An offence based on subsection (3) is an offence of strict liability.

Note 1: For strict liability see section 6.1 of the Criminal Code.

Note 2: Subsection (5) provides a defence.

(5) A member of an audit firm does not commit an offence at a

particular time because of a contravention of subsection (3) if the

member either:

(a) does not know at that time of the circumstances that

constitute the contravention of subsection (3); or

(b) knows of those circumstances at that time but takes all

reasonable steps to correct the contravention as soon as

possible after the member becomes aware of those

circumstances.

Note: A defendant bears an evidential burden in relation to the matters in

this subsection, see subsection 13.3(3) of the Criminal Code.

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Section 307B

Corporations Act 2001 71

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Earlier retention date for audit working papers

(6) ASIC may, on application by a person, determine, in writing, an

earlier date for the audit working papers for the purposes of

paragraphs (1)(c) and (3)(b) if:

(a) the auditor is an individual auditor and the auditor:

(i) dies; or

(ii) ceases to be a registered company auditor; or

(b) the auditor is an audit firm and the firm is dissolved

(otherwise than simply as part of a reconstitution of the firm

because of the death, retirement or withdrawal of a member

or members or because of the admission of a new member or

members); or

(c) the auditor is an audit company and the company:

(i) is wound up; or

(ii) ceases to be an authorised audit company.

(7) In deciding whether to make a determination under subsection (6),

ASIC must have regard to:

(a) whether ASIC is inquiring into or investigating any matters

in respect of:

(i) the auditor; or

(ii) the audited body for the audit to which the documents

relate; and

(b) whether the professional accounting bodies have any

investigations or disciplinary action pending in relation to the

auditor; and

(c) whether civil or criminal proceedings in relation to:

(i) the conduct of the audit; or

(ii) the contents of the financial report to which the audit

working papers relate;

have been, or are about to be, commenced; and

(d) any other relevant matter.

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Section 307C

72 Corporations Act 2001

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Audit working papers kept in electronic form

(8) For the purposes of this section, if audit working papers are in

electronic form they are taken to be retained only if they are

convertible into hard copy.

307C Auditor’s independence declaration

Contravention by individual auditor

(1) If an individual auditor conducts:

(a) an audit or review of the financial report for a financial year;

or

(b) an audit or review of the financial report for a half-year;

the individual auditor must give the directors of the company,

registered scheme or disclosing entity:

(c) a written declaration that, to the best of the individual

auditor’s knowledge and belief, there have been:

(i) no contraventions of the auditor independence

requirements of this Act in relation to the audit or

review; and

(ii) no contraventions of any applicable code of professional

conduct in relation to the audit or review; or

(d) a written declaration that, to the best of the individual

auditor’s knowledge and belief, the only contraventions of:

(i) the auditor independence requirements of this Act in

relation to the audit or review; or

(ii) any applicable code of professional conduct in relation

to the audit or review;

are those contraventions details of which are set out in the

declaration.

(2) An offence based on subsection (1) is an offence of strict liability.

Note: For strict liability see section 6.1 of the Criminal Code.

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Section 307C

Corporations Act 2001 73

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Contravention by lead auditor

(3) If an audit firm or audit company conducts:

(a) an audit or review of the financial report for a financial year;

or

(b) an audit or review of the financial report for a half-year;

the lead auditor for the audit must give the directors of the

company, registered scheme or disclosing entity:

(c) a written declaration that, to the best of the lead auditor’s

knowledge and belief, there have been:

(i) no contraventions of the auditor independence

requirements of this Act in relation to the audit or

review; and

(ii) no contraventions of any applicable code of professional

conduct in relation to the audit or review; or

(d) a written declaration that, to the best of the lead auditor’s

knowledge and belief, the only contraventions of:

(i) the auditor independence requirements of this Act in

relation to the audit or review; or

(ii) any applicable code of professional conduct in relation

to the audit or review;

are those contraventions details of which are set out in the

declaration.

(4) An offence based on subsection (3) is an offence of strict liability.

Note: For strict liability see section 6.1 of the Criminal Code.

(5) The declaration under subsection (1) or (3):

(a) either:

(i) must be given when the audit report is given to the

directors of the company, registered scheme or

disclosing entity; or

(ii) must satisfy the conditions in subsection (5A); and

(b) must be signed by the person making the declaration.

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Division 3 Audit and auditor’s report

Section 307C

74 Corporations Act 2001

Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19

(5A) A declaration under subsection (1) or (3) in relation to a financial

report for a financial year or half-year satisfies the conditions in

this subsection if:

(a) the declaration is given to the directors of the company,

registered scheme or disclosing entity before the directors

pass a resolution under subsection 298(2) or 306(3) (as the

case requires) in relation to the directors’ report for the

financial year or half-year; and

(b) a director signs the directors’ report within 7 days after the

declaration is given to the directors; and

(c) the auditor’s report on the financial report is made within 7

days after the directors’ report is signed; and

(d) the auditor’s report includes either of the following

statements:

(i) a statement to the effect that the declaration would be in

the same terms if it had been given to the directors at the

time the auditor’s report was made;

(ii) a statement to the effect that circumstances have

changed since the declaration was given to the directors,

and setting out how the declaration would differ if it had

been given to the directors at the time the auditor’s

report was made.

(5B) An individual auditor or a lead auditor is not required to give a

declaration under subsection (1) or (3) in respect of a contravention

if:

(a) the contravention was a contravention by a person of

subsection 324CE(2), 324CF(2) or 324CG(2); and

(b) the person does not commit an offence because of

subsection 324CE(4), 324CF(4) or 324CG(4).

Self-incrimination

(6) An individual is not excused from giving a declaration under

subsection (1) or (3) on the ground that giving the declaration

might tend to incriminate the individual or expose the individual to

a penalty.

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Use/derivative use indemnity

(7) However, neither:

(a) the information included in the declaration; nor

(b) any information, document or thing obtained as a direct or

indirect consequence of including the information in the

declaration;

is admissible in evidence against the individual in any criminal

proceedings, or in any proceedings that would expose the person to

a penalty, other than:

(c) proceedings for an offence against section 1308 or 1309 in

relation to the declaration; or

(d) proceedings for an offence against section 137.1 or 137.2 of

the Criminal Code (false or misleading information or

documents) in relation to the declaration.

308 Auditor’s report on annual financial report

(1) An auditor who audits the financial report for a financial year must

report to members on whether the auditor is of the opinion that the

financial report is in accordance with this Act, including:

(a) section 296 (compliance with accounting standards); and

(b) section 297 (true and fair view).

If not of that opinion, the auditor’s report must say why.

(2) If the auditor is of the opinion that the financial report does not

comply with an accounting standard, the auditor’s report must, to

the extent it is practicable to do so, quantify the effect that

non-compliance has on the financial report. If it is not practicable

to quantify the effect fully, the report must say why.

(3) The auditor’s report must describe:

(a) any defect or irregularity in the financial report; and

(b) any deficiency, failure or shortcoming in respect of the

matters referred to in paragraph 307(b), (c) or (d).

(3AA) An auditor who reviews the financial report for a company limited

by guarantee must report to members on whether the auditor

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Section 309

76 Corporations Act 2001

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became aware of any matter in the course of the review that makes

the auditor believe that the financial report does not comply with

Division 1.

(3AB) A report under subsection (3AA) must:

(a) describe any matter referred to in subsection (3AA); and

(b) say why that matter makes the auditor believe that the

financial report does not comply with Division 1.

(3A) The auditor’s report must include any statements or disclosures

required by the auditing standards.

(3B) If the financial report includes additional information under

paragraph 295(3)(c) (information included to give true and fair

view of financial position and performance), the auditor’s report

must also include a statement of the auditor’s opinion on whether

the inclusion of that additional information was necessary to give

the true and fair view required by section 297.

(3C) If the directors’ report for the financial year includes a

remuneration report, the auditor must also report to members on

whether the auditor is of the opinion that the remuneration report

complies with section 300A. If not of that opinion, the auditor’s

report must say why.

(4) A report under subsection (1) or (3AA) must specify the date on

which it is made.

(5) An offence based on subsection (1), (3), (3AA), (3AB), (3A), (3C)

or (4) is an offence of strict liability.

Note: For strict liability see section 6.1 of the Criminal Code.

309 Auditor’s report on half-year financial report

Audit of financial report

(1) An auditor who audits the financial report for a half-year must

report to members on whether the auditor is of the opinion that the

financial report is in accordance with this Act, including:

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(a) section 304 (compliance with accounting standards); and

(b) section 305 (true and fair view).

If not of that opinion, the auditor’s report must say why.

(2) If the auditor is of the opinion that the financial report does not

comply with an accounting standard, the auditor’s report must, to

the extent that it is practicable to do so, quantify the effect that

non-compliance has on the financial report. If it is not practicable

to quantify the effect fully, the report must say why.

(3) The auditor’s report must describe:

(a) any defect or irregularity in the financial report; and

(b) any deficiency, failure or shortcoming in respect of the

matters referred to in paragraph 307(b), (c) or (d).

Review of financial report

(4) An auditor who reviews the financial report for a half-year must

report to members on whether the auditor became aware of any

matter in the course of the review that makes the auditor believe

that the financial report does not comply with Division 2.

(5) A report under subsection (4) must:

(a) describe any matter referred to in subsection (4); and

(b) say why that matter makes the auditor believe that the

financial report does not comply with Division 2.

(5A) The auditor’s report must include any statements or disclosures

required by the auditing standards.

(5B) If the financial report includes additional information under

paragraph 303(3)(c) (information included to give true and fair

view of financial position and performance), the auditor’s report

must also include a statement of the auditor’s opinion on whether

the inclusion of that additional information was necessary to give

the true and fair view required by section 305.

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Section 310

78 Corporations Act 2001

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Report to specify day made

(6) A report under subsection (1) or (4) must specify the date on which

it is made.

(7) An offence based on subsection (1), (3), (4), (5), (5A) or (6) is an

offence of strict liability.

Note: For strict liability see section 6.1 of the Criminal Code.

310 Auditor’s power to obtain information

The auditor:

(a) has a right of access at all reasonable times to the books of

the company, registered scheme or disclosing entity; and

(b) may require any officer to give the auditor information,

explanations or other assistance for the purposes of the audit

or review.

A request under paragraph (b) must be a reasonable one.

311 Reporting to ASIC

Contravention by individual auditor

(1) An individual auditor conducting an audit contravenes this

subsection if:

(a) the auditor is aware of circumstances that:

(i) the auditor has reasonable grounds to suspect amount to

a contravention of this Act; or

(ii) amount to an attempt, in relation to the audit, by any

person to unduly influence, coerce, manipulate or

mislead a person involved in the conduct of the audit

(see subsection (6)); or

(iii) amount to an attempt, by any person, to otherwise

interfere with the proper conduct of the audit; and

(b) if subparagraph (a)(i) applies:

(i) the contravention is a significant one; or

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(ii) the contravention is not a significant one and the auditor

believes that the contravention has not been or will not

be adequately dealt with by commenting on it in the

auditor’s report or bringing it to the attention of the

directors; and

(c) the auditor does not notify ASIC in writing of those

circumstances as soon as practicable, and in any case within

28 days, after the auditor becomes aware of those

circumstances.

Contravention by audit company

(2) An audit company conducting an audit contravenes this subsection

if:

(a) the lead auditor for the audit is aware of circumstances that:

(i) the lead auditor has reasonable grounds to suspect

amount to a contravention of this Act; or

(ii) amount to an attempt, in relation to the audit, by any

person to unduly influence, coerce, manipulate or

mislead a person involved in the conduct of the audit

(see subsection (6)); or

(iii) amount to an attempt, by any person, to otherwise

interfere with the proper conduct of the audit; and

(b) if subparagraph (a)(i) applies:

(i) the contravention is a significant one; or

(ii) the contravention is not a significant one and the lead

auditor believes that the contravention has not been or

will not be adequately dealt with by commenting on it in

the auditor’s report or bringing it to the attention of the

directors; and

(c) the lead auditor does not notify ASIC in writing of those

circumstances as soon as practicable, and in any case within

28 days, after the lead auditor becomes aware of those

circumstances.

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Section 311

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Contravention by lead auditor

(3) A person contravenes this subsection if:

(a) the person is the lead auditor for an audit; and

(b) the person is aware of circumstances that:

(i) the person has reasonable grounds to suspect amount to

a contravention of this Act; or

(ii) amount to an attempt, in relation to the audit, by any

person to unduly influence, coerce, manipulate or

mislead a person involved in the conduct of the audit

(see subsection (6)); or

(iii) amount to an attempt, by any person, to otherwise

interfere with the proper conduct of the audit; and

(c) if subparagraph (b)(i) applies:

(i) the contravention is a significant one; or

(ii) the contravention is not a significant one and the person

believes that the contravention has not been or will not

be adequately dealt with by commenting on it in the

auditor’s report or bringing it to the attention of the

directors; and

(d) the person does not notify ASIC in writing of those

circumstances as soon as practicable, and in any case within

28 days, after the person becomes aware of those

circumstances.

Significant contraventions

(4) In determining for the purposes of this section whether a

contravention of this Act is a significant one, have regard to:

(a) the level of penalty provided for in relation to the

contravention; and

(b) the effect that the contravention has, or may have, on:

(i) the overall financial position of the company, registered

scheme or disclosing entity; or

(ii) the adequacy of the information available about the

overall financial position of the company, registered

scheme or disclosing entity; and

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(c) any other relevant matter.

(5) Without limiting paragraph (4)(a), a penalty provided for in

relation to a contravention of a provision of Part 2M.2 or 2M.3, or

section 324DAA, 324DAB or 324DAC, includes a penalty

imposed on a director, because of the operation of section 344, for

failing to take reasonable steps to comply with, or to secure

compliance with, that provision.

Person involved in an audit

(6) In this section:

person involved in the conduct of an audit means:

(a) the auditor; or

(b) the lead auditor for the audit; or

(c) the review auditor for the audit; or

(d) a professional member of the audit team for the audit; or

(e) any other person involved in the conduct of the audit.

312 Assisting auditor

(1) An officer of a company, registered scheme or disclosing entity

must:

(a) allow the auditor access to the books of the company, scheme

or entity; and

(b) give the auditor any information, explanation or assistance

required under section 310.

Note: Books include registers and documents generally (not only the

accounting “books”): see the definition of books in section 9.

(2) An offence based on subsection (1) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

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Section 313

82 Corporations Act 2001

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313 Special provisions on audit of debenture issuers and guarantors

Auditor to give trustee for debenture holders copies of reports,

certificates etc.

(1) The auditor of a borrower in relation to debentures must give the

trustee for debenture holders:

(a) a copy of any report, certificate or other document that the

auditor must give the borrower or its members under this

Act, the debentures or the trust deed; and

(b) a copy of any document that accompanies it.

The copies must be given within 7 days after the auditor gives the

originals to the borrower or its members.

Auditor to report on matters prejudicial to debenture holders’

interests

(2) The auditor of a borrower, or guarantor, in relation to debentures

must give the borrower or guarantor a written report about any

matter that:

(a) the auditor became aware of in conducting the audit or

review; and

(b) in the auditor’s opinion, is or is likely to be prejudicial to the

interests of debenture holders; and

(c) in the auditor’s opinion, is relevant to the exercise of the

powers of the trustee for debenture holders, or the

performance of the trustee’s duties, under this Act or the trust

deed.

The auditor must give a copy of the report to the trustee for

debenture holders. The report and the copy must be given within 7

days after the auditor becomes aware of the matter.

(3) An offence based on subsection (1) or (2) is an offence of strict

liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

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Division 4—Annual financial reporting to members

314 Annual financial reporting by companies, registered schemes

and disclosing entities to members

(1) A company, registered scheme or disclosing entity must report to

members for a financial year by providing either of the following

in accordance with subsection (1AA), (1AE) or (1AF):

(a) all of the following reports (that are required to be prepared):

(i) the financial report for the year;

(ii) the directors’ report for the year (see sections 298 to

300A);

(iii) the auditor’s report on the financial report;

(b) a concise report for the year that complies with

subsection (2).

(1AAA) This section does not apply to a company limited by guarantee.

Note: The requirement for annual financial reporting to members for those

companies is in section 316A.

(1AA) A company, registered scheme or disclosing entity may provide the

reports, or the concise report, for a financial year by doing all of

the following:

(a) sending, to each member who has made the election referred

to in paragraph (1AB)(a):

(i) a hard copy of the reports, or the concise report; or

(ii) if the member has elected to receive the reports, or the

concise report, as an electronic copy in accordance

paragraph (1AB)(c)—an electronic copy of the reports,

or the concise reports;

(b) making a copy of the reports, or the concise report, readily

accessible on a website;

(c) directly notifying, in writing, all members who did not make

the election referred to in paragraph (1AB)(a) that the copy is

accessible on the website, and specifying the direct address

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Section 314

84 Corporations Act 2001

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on the website where the reports, or the concise report, may

be accessed.

Note: A direct address may be specified, for example, by specifying the

URL of the reports or the concise report.

(1AB) For the purposes of paragraph (1AA)(a), a company, registered

scheme or disclosing entity must, on at least one occasion, directly

notify in writing each member that:

(a) the member may elect to receive, free of charge, a copy of

the reports for each financial year, or a copy of the concise

report for each financial year; and

(b) if the member does not so elect—the member may access the

reports, or the concise report, on a specified website; and

(c) if the member does so elect and the company, scheme or

entity offers to send the report either as a hard copy or an

electronic copy—the member may elect to receive the copy

as either a hard copy or an electronic copy.

(1AC) An election made under subsection (1AB) is a standing election for

each later financial year until the member changes his, her or its

election.

Note: The member may request, under section 316, the company, registered

scheme or disclosing entity not to send them material under this

section.

(1AD) A member may, for the purposes of paragraph (1AA)(c) or

subsection (1AB), be notified by electronic means only if the

member has previously nominated that means as one by which the

member may be notified.

(1AE) A company, registered scheme or disclosing entity may provide the

reports, or the concise report, by sending each member:

(a) a hard copy of the reports, or the concise report; or

(b) an electronic copy of the reports, or the concise report, if the

member has nominated that means as one by which the

member may be sent the reports or the concise report.

(1AF) If a company:

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(a) is a public company that is covered under section 738ZI at

the end of the financial year mentioned in subsection (1); or

(b) is a small proprietary company that has one or more CSF

shareholders at any time during the financial year mentioned

in subsection (1);

it may provide the reports, or the concise report, for that financial

year by making a copy of the reports, or the concise report, readily

accessible on a website. The company also need not comply with

subsection (1AB).

(1A) An offence based on subsection (1) or (1AB) is an offence of strict

liability.

Concise report

(2) A concise report for a financial year consists of:

(a) a concise financial report for the year drawn up in accordance

with accounting standards made for the purposes of this

paragraph; and

(b) the directors’ report for the year (see sections 298-300A); and

(c) a statement by the auditor:

(i) that the financial report has been audited; and

(ii) whether, in the auditor’s opinion, the concise financial

report complies with the accounting standards made for

the purposes of paragraph (a); and

(d) a copy of any qualification in, and of any statements included

in the emphasis of matter section of, the auditor’s report on

the financial report; and

(e) a statement that the report is a concise report and that the full

financial report and auditor’s report will be sent to the

member free of charge if the member asks for them.

(2A) If paragraph (1AF)(a) or (b) applies to the company for the

financial year mentioned in subsection (1), apply subsection (2) to

the company in relation to that financial year with the following

modifications:

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Section 314A

86 Corporations Act 2001

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(a) insert the words “if the company’s financial report for the

year is required to be audited—” at the start of each of

paragraphs (2)(c) and (d);

(b) omit the words “and that the full financial report and

auditor’s report will be sent to the member free of charge if

the member asks for them” in paragraph (2)(e).

(3) If the accounting standards made for the purposes of

paragraph (2)(a) require a discussion and analysis to be included in

a concise financial report:

(a) the auditor must report on whether the discussion and

analysis complies with the requirements that the accounting

standards lay down for the discussion and analysis; and

(b) the auditor does not otherwise need to audit the statements

made in the discussion and analysis.

314A Annual financial reporting by notified foreign passport funds

to Australian members

(1) A notified foreign passport fund must report to Australian

members of the fund for each financial year for the fund by

providing Australian members with each of the following:

(a) a copy of a report for the fund for the year, prepared in

accordance with the financial reporting requirements

applying to the fund under the Passport Rules for the home

economy for the fund;

(b) a copy of each auditor’s report that relates to the report

mentioned in paragraph (a).

Note: Under the Passport Rules for this jurisdiction, the operator of a

notified foreign passport fund must ensure that the financial report for

the fund is audited and an audit report prepared.

(2) A notified foreign passport fund may provide the reports for a

financial year by doing all of the following:

(a) sending, to each Australian member of the fund who has

made the election referred to in paragraph (3)(a):

(i) a hard copy of the reports; or

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(ii) if the member has elected to receive the reports as an

electronic copy in accordance paragraph (3)(c)—an

electronic copy of the reports;

(b) making a copy of the reports readily accessible, in English,

on a website;

(c) directly notifying, in writing, all members who did not make

the election referred to in paragraph (3)(a) that the copy is

accessible on the website, and specifying the direct address

on the website where the reports may be accessed.

Note: A direct address may be specified, for example, by specifying the

URL of the reports.

(3) For the purposes of paragraph (2)(a), a notified foreign passport

fund must, on at least one occasion, directly notify in writing each

Australian member of the fund that:

(a) the member may elect to receive, free of charge, a copy of

the reports for each financial year for the fund; and

(b) if the member does not so elect—the member may access the

report on a specified website; and

(c) if the member elects to receive reports under paragraph (a)

and the fund offers to send reports either as a hard copy or an

electronic copy—the member may elect to receive the copy

as either a hard copy or an electronic copy; and

(d) if the member elects to receive reports under paragraph (a),

the member may elect to receive the reports in English, or in

an official language of the home economy of the fund.

(4) An election made under subsection (3) is a standing election for

each later financial year for the fund until the member changes his,

her or its election.

(5) An Australian member of the fund may, for the purposes of

paragraph (2)(c) or subsection (3), be notified by electronic means

only if the member has previously nominated that means as one by

which the member may be notified.

(6) A notified foreign passport fund may provide the reports by

sending each Australian member of the fund:

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(a) a hard copy of the reports; or

(b) an electronic copy of the reports if the member has

nominated that means as one by which the member may be

sent the reports.

(7) A notified foreign passport fund must provide the reports in the

following language:

(a) if the member elects under paragraph 314A(3)(d) to receive

reports in English or in an official language of the home

economy of the fund—in the language elected by the

member;

(b) otherwise—in English.

(8) Subsection (1) does not apply in relation to an Australian member

of the fund for a financial year if the member has elected under

subsection 316AA(1) not to receive the report for the year.

(9) An offence based on subsection (1), (3) or (7) is an offence of strict

liability.

315 Deadline for reporting to members

Public companies and disclosing entities that are not registered

schemes

(1) A public company, or a disclosing entity that is not a registered

scheme, must report to members under section 314 by the earlier

of:

(a) 21 days before the next AGM after the end of the financial

year; or

(b) 4 months after the end of the financial year.

Note: For the deadline for holding an AGM, see section 250N.

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Small proprietary companies (shareholder direction under

section 293)

(2) If a shareholder direction is given to a small proprietary company

under section 293 after the end of the financial year, the company

must report to members under section 314 by the later of:

(a) 2 months after the date on which the direction is given; and

(b) 4 months after the end of the financial year.

Registered schemes

(3) A registered scheme must report to members under section 314

within 3 months after the end of the financial year.

Notified foreign passport funds

(3A) A notified foreign passport fund must report to Australian

members of the fund under section 314A within 3 months after the

end of the financial year for the fund.

Other proprietary companies

(4) A proprietary company that is not covered by subsection (1) or (2)

must report to members under section 314 within 4 months after

the end of the financial year.

(5) For the purposes of this section, a company, registered scheme or

disclosing entity that reports in accordance with

subsection 314(1AA) is taken to report at the time that the

company, scheme or entity has fully complied with the

requirements of that subsection.

(6) For the purposes of this section, a notified foreign passport fund

that reports in accordance with subsection 314A(2) is taken to

report at the time the fund has fully complied with the

requirements of that subsection.

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Section 316

90 Corporations Act 2001

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316 Choices for members of companies, registered schemes or

disclosing entities

(1) A member may request the company, registered scheme or

disclosing entity:

(a) not to send them the material required by section 314; or

(b) to send them a full financial report and the directors’ report

and auditor’s report.

A request may be a standing request or for a particular financial

year. The member is not entitled to a report for a financial year

earlier than the one before the financial year in which the request is

made.

(2) The time for complying with a request under paragraph (1)(b) is:

(a) 7 days after the request is received; or

(b) the deadline for reporting under section 315;

whichever is later.

(3) A full financial report, directors’ report and auditor’s report are to

be sent free of charge unless the member has already received a

copy of them free of charge.

(4) An offence based on subsection (2) or (3) is an offence of strict

liability.

(5) This section does not apply in relation to a company limited by

guarantee.

316AA Choices for Australian members of notified foreign passport

funds

(1) An Australian member of a notified foreign passport fund may

request the fund not to send the member one or more of the reports

required under subsection 314A(1).

(2) A request under subsection (1) may be a standing request or for a

particular financial year for the fund.

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316A Annual financial reporting to members of companies limited

by guarantee

(1) A member of a company limited by guarantee may, by notice in

writing to the company, elect to receive a hard copy or an

electronic copy of the following reports:

(a) the financial reports;

(b) the directors’ reports;

(c) the auditor’s reports.

(2) If a member makes an election in a financial year, the election:

(a) is made by the member for that financial year; and

(b) is a standing election made by the member for each later

financial year until the member changes the election.

(3) If the company prepares a financial report or a directors’ report for

a financial year, or obtains an auditor’s report on the financial

report, the company must send a copy of the report, free of charge,

to each member who has made an election for that financial year,

in accordance with the election, by the earlier of:

(a) 21 days before the next AGM after the end of the financial

year; and

(b) 4 months after the end of the financial year.

Note: For the deadline for holding an AGM, see section 250N.

(4) If a member direction is given to a small company limited by

guarantee under section 294A after the end of a financial year,

subsection (3) does not apply and the company must send a copy of

the reports that the company prepares or obtains as a result of the

direction to each member who has made an election for that

financial year, in accordance with the election, by the later of:

(a) 2 months after the date on which the direction was given; and

(b) 4 months after the end of the financial year.

(5) An offence based on subsection (3) or (4) is an offence of strict

liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

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Section 317

92 Corporations Act 2001

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317 Consideration of reports at AGM

(1) The directors of a public company that is required to hold an AGM

must lay before the AGM:

(a) the financial report; and

(b) the directors’ report; and

(c) the auditor’s report;

for the last financial year that ended before the AGM.

Note 1: If the company’s first AGM is held before the end of its first financial

year, there will be no reports to lay before the meeting.

Note 2: A public company that has only 1 member is not required to hold an

AGM (see section 250N).

Note 3: Section 250RA imposes on the auditor of a listed public company an

obligation to attend or be represented at the AGM.

(1A) Subsection (1) does not apply to a small company limited by

guarantee in relation to a report if the company is not required

under a member direction made under section 294A or an ASIC

direction made under section 294B to prepare or obtain the report.

(2) An offence based on subsection (1) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

318 Additional reporting by debenture issuers

(1) A company or disclosing entity that was a borrower in relation to

debentures at the end of a financial year must give a copy of the

annual financial report, directors’ report and auditor’s report to the

trustee for debenture holders by the deadline for the financial year

set by section 315.

(2) A debenture holder may ask the company or disclosing entity that

issued the debenture for copies of:

(a) the last reports provided to members under section 314; or

(b) the full financial report and the directors’ report and auditor’s

report for the last financial year.

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(3) The company or entity must give the debenture holder the copies

as soon as practicable after the request and free of charge.

(4) A disclosing entity that was a borrower in relation to debentures at

the end of a half-year must give a copy of the half-year financial

report, directors’ report and auditor’s report to the trustee for

debenture holders within 75 days after the end of the half-year.

(5) An offence based on subsection (1), (3) or (4) is an offence of strict

liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

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Division 5 Lodging reports with ASIC

Section 319

94 Corporations Act 2001

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Division 5—Lodging reports with ASIC

319 Lodgment of annual reports with ASIC

(1) A company, registered scheme or disclosing entity that has to

prepare or obtain a report for a financial year under Division 1

must lodge the report with ASIC. This obligation extends to a

concise report provided to members under section 314.

(1AA) A notified foreign passport fund must lodge each of the following

with ASIC for each financial year for the fund:

(a) a copy of a report for the fund for the year, prepared in

accordance with the financial reporting requirements

applying to the fund under the Passport Rules for the home

economy for the fund;

(b) a copy of each auditor’s report that relates to the report

mentioned in paragraph (a).

(1A) An offence based on subsection (1) or (1AA) is an offence of strict

liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

(2) Subsection (1) does not apply to:

(a) a small proprietary company that prepares a report in

response to:

(i) a shareholder direction under section 293; or

(ii) an ASIC direction under section 294;

if paragraph 292(2)(c) (about having CSF shareholders) does

not also apply to the company for the financial year; and

(b) a small company limited by guarantee that prepares a report

in response to a member direction under section 294A or an

ASIC direction under section 294B.

(3) The time for lodgment is:

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(a) within 3 months after the end of the financial year for a

disclosing entity, registered scheme or notified foreign

passport fund; and

(b) within 4 months after the end of the financial year for anyone

else.

320 Lodgment of half-year reports with ASIC

(1) A disclosing entity that has to prepare or obtain a report for a

half-year under Division 2 must lodge the report with ASIC within

75 days after the end of the half-year.

(2) An offence based on subsection (1) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

321 ASIC power to require lodgment

(1) ASIC may give a company, registered scheme or disclosing entity

a direction to lodge with ASIC a copy of reports prepared or

obtained by it under Division 1 or 2.

(1AA) ASIC may give a notified foreign passport fund a direction to

lodge with ASIC:

(a) a copy of a report for the fund for a financial year, prepared

in accordance with the financial reporting requirements

applying to the fund under the Passport Rules for the home

economy for the fund; and

(b) a copy of each auditor’s report that relates to the report

mentioned in paragraph (a).

(1A) An offence based on subsection (1) or (1AA) is an offence of strict

liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

(2) The direction must:

(a) be made in writing; and

(b) specify the period or periods concerned; and

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Division 5 Lodging reports with ASIC

Section 322

96 Corporations Act 2001

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(c) be made no later than 6 years after the end of the period or

periods; and

(d) specify the date by which the documents have to be lodged.

The date specified under paragraph (d) must be at least 14 days

after the date on which the direction is given.

322 Relodgment if financial statements or directors’ reports

amended after lodgment

Financial reports and directors’ reports lodged by companies,

registered schemes or disclosing entities

(1) If a financial report or directors’ report is amended after it is

lodged with ASIC, the company, registered scheme or disclosing

entity must:

(a) lodge the amended report with ASIC within 14 days after the

amendment; and

(b) give a copy of the amended report free of charge to any

member who asks for it.

Reports on financial matters lodged by notified foreign passport

funds

(1A) If a report lodged with ASIC by a notified foreign passport fund is

amended after it is lodged with ASIC, the notified foreign passport

fund must:

(a) lodge the amended report with ASIC within 14 days after the

amendment; and

(b) give a copy of the amended report free of charge to any

Australian member who asks for it.

Notifying members if there is a material amendment

(2) If the amendment is a material one, the company, registered

scheme, notified foreign passport fund or disclosing entity must

also notify members as soon as practicable of:

(a) the nature of the amendment; and

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(b) their right to obtain a copy of the amended report under

subsection (1) or (1A).

Offence

(3) An offence based on subsection (1), (1A) or (2) is an offence of

strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

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Part 2M.3 Financial reporting

Division 6 Special provisions about consolidated financial statements

Section 323

98 Corporations Act 2001

Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19

Division 6—Special provisions about consolidated financial

statements

323 Directors and officers of controlled entity to give information

(1) If a company, registered scheme or disclosing entity has to prepare

consolidated financial statements, a director or officer of a

controlled entity must give the company, registered scheme or

disclosing entity all information requested that is necessary to

prepare the consolidated financial statements and the notes to those

statements.

(2) An offence based on subsection (1) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

323A Auditor’s power to obtain information from controlled entity

(1) An auditor who audits or reviews a financial report that includes

consolidated financial statements:

(a) has a right of access at all reasonable times to the books of

any controlled entity; and

(b) may require any officer of the entity to give the auditor

information, explanations or other assistance for the purposes

of the audit or review.

A request under paragraph (b) must be a reasonable one.

(2) The information, explanations or other assistance required under

paragraph (1)(b) is to be given at the expense of the company,

registered scheme or disclosing entity whose financial report is

being audited or reviewed.

323B Controlled entity to assist auditor

(1) If a company, registered scheme or disclosing entity has to prepare

a financial report that includes consolidated financial statements,

an officer or auditor of a controlled entity must:

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Section 323C

Corporations Act 2001 99

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(a) allow the auditor for the company, scheme or entity access to

the controlled entity’s books; and

(b) give the auditor any information, explanation or assistance

required under section 323A.

(2) An offence based on subsection (1) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

323C Application of Division to entity that has ceased to be

controlled

Sections 323, 323A and 323B apply to the preparation or audit of a

financial report that covers a controlled entity even if the entity is

no longer controlled by the company, registered scheme or

disclosing entity whose financial report is being prepared or

audited.

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Part 2M.3 Financial reporting

Division 7 Financial years and half-years

Section 323D

100 Corporations Act 2001

Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19

Division 7—Financial years and half-years

323D Financial years and half-years for companies, registered

schemes and disclosing entities

First financial year

(1) The first financial year for a company, registered scheme or

disclosing entity starts on the day on which it is registered or

incorporated. It lasts for 12 months or the period (not longer than

18 months) determined by the directors.

Financial years after first year

(2) Subject to subsections (2A) and (4), subsequent financial years

must:

(a) start at the end of the previous financial year; and

(b) be 12 months long.

The directors may determine that the financial year is to be shorter

or longer (but not by more than 7 days).

(2A) A subsequent financial year may last for a period of less than 12

months determined by the directors if:

(a) the subsequent financial year starts at the end of the previous

financial year; and

(b) there has not been a period during the previous 5 financial

years in which there was a financial year of less than 12

months in reliance on this subsection; and

(c) the change to the subsequent financial year is made in good

faith in the best interests of the company, registered scheme

or disclosing entity.

Note: For the purposes of paragraph (b), financial years that, in reliance on

subsection (2) or (4), were less than 12 months are disregarded.

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Section 323DAA

Corporations Act 2001 101

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Synchronisation of financial years where consolidated financial

statements are required

(3) A company, registered scheme or disclosing entity that has to

prepare consolidated financial statements must do whatever is

necessary to ensure that the financial years of the consolidated

entities are synchronised with its own financial years. It must

achieve this synchronisation by the end of 12 months after the

situation that calls for consolidation arises.

(3A) An offence based on subsection (3) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

(4) To facilitate this synchronisation, the financial year for a controlled

entity may be extended or shortened. The extended financial year

cannot be longer than 18 months.

Half-years

(5) A half-year for a company, registered scheme or disclosing entity

is the first 6 months of a financial year. The directors may

determine that the half-year is to be shorter or longer (but not by

more than 7 days).

323DAA Financial years for notified foreign passport funds

A financial year for a notified foreign passport fund means:

(a) a period of 12 months in relation to which the operator of the

fund must, under the Passport Rules for the home economy

for the fund, prepare a report in accordance with the financial

reporting requirements applying to the fund under those

Passport Rules; or

(b) if, under the law of the home economy for the fund, an

exception allows a report in accordance with the financial

reporting requirements applying to the fund under the

Passport Rules for the home economy for the fund to be

prepared for a shorter or longer period—that period.

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Division 8 Disclosure by listed companies of information filed overseas

Section 323DA

102 Corporations Act 2001

Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19

Division 8—Disclosure by listed companies of information

filed overseas

323DA Listed companies to disclose information filed overseas

(1) A company that discloses information to, or as required by:

(a) the Securities and Exchange Commission of the United

States of America; or

(b) the New York Stock Exchange; or

(c) a financial market in a foreign country if that financial

market is prescribed by regulations made for the purposes of

this paragraph;

must disclose that information in English to each relevant market

operator, if the company is listed on the next business day after

doing so.

(3) This section applies despite anything in the company’s

constitution.

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Entities that may be appointed as an auditor for a company or registered scheme

Division 1

Section 324AA

Corporations Act 2001 103

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Part 2M.4—Appointment and removal of auditors

Division 1—Entities that may be appointed as an auditor

for a company or registered scheme

324AA Individual auditors, audit firms and authorised audit

companies

Subject to this Part, the following may be appointed as auditor for

a company or a registered scheme for the purposes of this Act:

(a) an individual;

(b) a firm;

(c) a company.

The company or registered scheme may have more than one

auditor.

324AB Effect of appointing firm as auditor—general

(1) The appointment of a firm as auditor of a company or registered

scheme is taken to be an appointment of all persons who, at the

date of the appointment, are:

(a) members of the firm; and

(b) registered company auditors.

This is so whether or not those persons are resident in Australia.

(2) The appointment of the members of a firm as auditors of a

company or registered scheme that is taken by subsection (1) to

have been made because of the appointment of the firm as auditor

of the company or scheme is not affected by the dissolution of the

firm. This subsection has effect subject to section 324AC.

(3) A report or notice that purports to be made or given by a firm

appointed as auditor of a company or registered scheme is not

taken to be duly made or given unless it is signed by a member of

the firm who is a registered company auditor both:

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Division 1 Entities that may be appointed as an auditor for a company or registered

scheme

Section 324AC

104 Corporations Act 2001

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(a) in the firm name; and

(b) in his or her own name.

(4) A notice required or permitted to be given to an audit firm under

the Corporations legislation may be given to the firm by giving the

notice to a member of the firm.

(5) For the purposes of criminal proceedings under this Act against a

member of an audit firm, an act or omission by:

(a) a member of the firm; or

(b) an employee or agent of the audit firm;

acting within the actual or apparent scope of his or her

employment, or within his or her actual or apparent authority, is

also to be attributed to the audit firm.

324AC Effect of appointing firm as auditor—reconstitution of firm

Reconstitution of firm

(1) This section deals with the situation in which:

(a) a firm is appointed as auditor of a company or registered

scheme; and

(b) the firm is reconstituted because of either or both of the

following:

(i) the death, retirement or withdrawal of a member or

members; or

(ii) the admission of a new member or new members.

Retiring or withdrawing member

(2) A person who:

(a) is taken under subsection 324AB(1) to be an auditor of the

company; and

(b) retires or withdraws from the firm as previously constituted

as mentioned in subparagraph (1)(b)(i) of this section;

is taken to resign as auditor of the company as from the day of his

or her retirement or withdrawal.

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Division 1

Section 324AD

Corporations Act 2001 105

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(3) Section 329 does not apply to the resignation that is taken to occur

under subsection (2) unless:

(a) the person who is taken to have resigned was the only

member of the firm who was a registered company auditor;

and

(b) there is no member of the firm who is a registered company

auditor after that person retires or withdraws from the firm.

New member

(4) A person who:

(a) is a registered company auditor; and

(b) is admitted to the firm as mentioned in

subparagraph (1)(b)(ii);

is taken to have been appointed as an auditor of the company or

registered scheme as from the day of his or her admission to the

firm.

Appointments of continuing members not affected

(5) The reconstitution of the firm does not affect the appointment of

the continuing members of the firm who are registered company

auditors as auditors of the company or registered scheme.

(6) Nothing in this section affects the operation of section 324BB.

324AD Effect of appointing company as auditor

(1) A report or notice that purports to be made or given by an audit

company appointed as auditor of a company or registered scheme

is not taken to be duly made or given unless it is signed by a

director of the audit company (or the lead auditor or review auditor

for the audit) both:

(a) in the audit company’s name; and

(b) in his or her own name.

(2) For the purposes of criminal proceedings under this Act against a

director of an audit company, an act or omission by:

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Division 1 Entities that may be appointed as an auditor for a company or registered

scheme

Section 324AE

106 Corporations Act 2001

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(a) an officer of the audit company; or

(b) an employee or agent of the audit company;

acting within the actual or apparent scope of his or her

employment, or within his or her actual or apparent authority, is

also to be attributed to the audit company.

324AE Professional members of the audit team

If an individual auditor, audit firm or audit company conducts an

audit of a company or registered scheme, the professional

members of the audit team are:

(a) any registered company auditor who participates in the

conduct of the audit; and

(b) any other person who participates in the conduct of the audit

and, in the course of doing so, exercises professional

judgment in relation to the application of or compliance with:

(i) accounting standards; or

(ii) auditing standards; or

(iii) the provisions of this Act dealing with financial

reporting and the conduct of audits; and

(c) any other person who is in a position to directly influence the

outcome of the audit because of the role they play in the

design, planning, management, supervision or oversight of

the audit; and

(d) any person who recommends or decides what the lead auditor

is to be paid in connection with the performance of the audit;

and

(e) any person who provides, or takes part in providing, quality

control for the audit.

324AF Lead and review auditors

Lead auditor

(1) If an audit firm or audit company conducts an audit of a company

or registered scheme, the lead auditor for the audit is the registered

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Section 324AF

Corporations Act 2001 107

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company auditor who is primarily responsible to the audit firm or

the audit company for the conduct of the audit.

Review auditor

(2) If an individual auditor, audit firm or audit company conducts an

audit of a company or registered scheme, the review auditor for the

audit is the registered company auditor (if any) who is primarily

responsible to the individual auditor, the audit firm or the audit

company for reviewing the conduct of the audit.

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Division 2 Registration requirements

Section 324BA

108 Corporations Act 2001

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Division 2—Registration requirements

324BA Registration requirements for appointment of individual as

auditor

Subject to section 324BD, an individual contravenes this section if:

(a) the individual:

(i) consents to be appointed as auditor of a company or

registered scheme; or

(ii) acts as auditor of a company or registered scheme; or

(iii) prepares a report required by this Act to be prepared by

a registered company auditor or by an auditor of a

company or registered scheme; and

(b) the person is not a registered company auditor.

324BB Registration requirements for appointment of firm as

auditor

Contraventions by members of firm

(1) A person (the defendant) contravenes this subsection if:

(a) at a particular time, a firm:

(i) consents to be appointed as auditor of a company or

registered scheme; or

(ii) acts as auditor of a company or registered scheme; or

(iii) prepares a report required by this Act to be prepared by

a registered company auditor or by an auditor of a

company or registered scheme; and

(b) at that time, the firm:

(i) does not satisfy subsection (5); or

(ii) does not satisfy subsection (6); and

(c) the defendant is a member of the firm at that time; and

(d) the defendant is aware of the circumstances referred to in

paragraphs (a) and (b) at that time.

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Section 324BB

Corporations Act 2001 109

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(2) A person (the defendant) contravenes this subsection if:

(a) at a particular time, a firm:

(i) consents to be appointed as auditor of a company or

registered scheme; or

(ii) acts as auditor of a company or registered scheme; or

(iii) prepares a report required by this Act to be prepared by

a registered company auditor or by an auditor of a

company or registered scheme; and

(b) at that time, the firm:

(i) does not satisfy subsection (5); or

(ii) does not satisfy subsection (6); and

(c) the defendant is a member of the firm at that time.

(3) For the purposes of an offence based on subsection (2), strict

liability applies to the physical elements of the offence specified in

paragraphs (2)(a) and (b).

Note 1: For strict liability, see section 6.1 of the Criminal Code.

Note 2: Subsection (4) provides a defence.

(4) A member of an audit firm does not commit an offence at a

particular time because of a contravention of subsection (2) if the

member either:

(a) does not know at that time of the circumstances that

constitute the contravention of subsection (2); or

(b) does know of those circumstances at that time but takes all

reasonable steps to correct the contravention as soon as

possible after the member becomes aware of those

circumstances.

Note: A defendant bears an evidential burden in relation to the matters in

this subsection, see subsection 13.3(3) of the Criminal Code.

Registered company auditor requirement

(5) The firm satisfies this subsection if at least 1 member of the firm is

a registered company auditor who is ordinarily resident in

Australia.

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Division 2 Registration requirements

Section 324BC

110 Corporations Act 2001

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Business name or members names requirement

(6) The firm satisfies this subsection if:

(a) the business name under which the firm is carrying on

business is registered on the Business Names Register; or

(b) a return in the prescribed form has been lodged showing, in

relation to each member of the firm, the member’s full name

and address as at the time when the firm so consents, acts or

prepares a report.

324BC Registration requirements for appointment of company as

auditor

Contravention by company

(1) A company contravenes this subsection if:

(a) the company:

(i) consents to be appointed as auditor of a company or

registered scheme; or

(ii) acts as auditor of a company or registered scheme; or

(iii) prepares a report required by this Act to be prepared by

a registered company auditor or by an auditor of a

company or registered scheme; and

(b) the company is not an authorised audit company.

Contraventions by directors of company

(2) A person (the defendant) contravenes this subsection if:

(a) at a particular time, a company:

(i) consents to be appointed as auditor of a company or

registered scheme; or

(ii) acts as auditor of a company or registered scheme; or

(iii) prepares a report required by this Act to be prepared by

a registered company auditor or by an auditor of a

company or registered scheme; and

(b) at that time, the company is not an authorised audit company;

and

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(c) the defendant is a director of the company at that time; and

(d) the defendant is aware of the circumstances referred to in

paragraphs (a) and (b) at that time.

(3) A person (the defendant) contravenes this subsection if:

(a) at a particular time, a company:

(i) consents to be appointed as auditor of a company or

registered scheme; or

(ii) acts as auditor of a company or registered scheme; or

(iii) prepares a report required by this Act to be prepared by

a registered company auditor or by an auditor of a

company or registered scheme; and

(b) at that time, the company is not an authorised audit company;

and

(c) the defendant is a director of the company at that time.

(4) For the purposes of an offence based on subsection (3), strict

liability applies to the physical elements of the offence specified in

paragraphs (3)(a) and (b).

Note 1: For strict liability, see section 6.1 of the Criminal Code.

Note 2: Subsection (5) provides a defence.

(5) A director of a company does not commit an offence at a particular

time because of a contravention of subsection (3) if the director

either:

(a) does not know at that time of the circumstances that

constitute the contravention of subsection (3); or

(b) knows of those circumstances at that time but takes all

reasonable steps to correct the contravention of

subsection (3) as soon as possible after the director becomes

aware of those circumstances.

Note: A defendant bears an evidential burden in relation to the matters in

this subsection, see subsection 13.3(3) of the Criminal Code.

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Division 2 Registration requirements

Section 324BD

112 Corporations Act 2001

Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19

324BD Exception from registration requirement for proprietary

company

(1) An individual who is not a registered company auditor may be

appointed as auditor of a proprietary company if:

(a) ASIC is satisfied that it is impracticable for a proprietary

company to obtain the services of:

(i) an individual who could be appointed as auditor

consistently with section 324BA; or

(ii) a firm that could be appointed as auditor consistently

with section 324BB; or

(iii) a company that could be appointed consistently with

section 324BC;

because of the place where the company carries on business;

and

(b) ASIC is satisfied that the individual is suitably qualified or

experienced; and

(c) ASIC approves the individual for the purposes of this Act in

relation to the audit of the company’s financial reports.

The appointment is subject to such terms and conditions as are

specified in the approval under paragraph (c).

(2) If an individual is appointed in accordance with subsection (1):

(a) the individual is taken to be a registered company auditor in

relation to the auditing of any of the company’s financial

reports; and

(b) the provisions of this Act apply, with the necessary

modifications, in relation to the individual accordingly.

Paragraph (a) has effect subject to the terms and conditions of the

approval under subsection (1).

(3) If an individual approved by ASIC under subsection (1) is acting as

auditor of a company, ASIC may at any time, by notice in writing

given to the company:

(a) amend, revoke or vary the terms and conditions of its

approval; or

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Section 324BE

Corporations Act 2001 113

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(b) terminate the appointment of that individual as auditor of the

company.

(4) A notice under subsection (3) terminating the appointment of an

individual as auditor of a company takes effect as if, on the date on

which the notice is received by the company, the company had

received from the individual notice of the individual’s resignation

as auditor taking effect from that date.

324BE Exception from registration requirement—reviewing

financial reports of companies limited by guarantee

(1) An individual is taken to be a registered company auditor for the

purposes of a review of a financial report of a company limited by

guarantee if the individual:

(a) is a member of a professional accounting body; and

(b) has a designation, in respect of that membership, prescribed

by the regulations for the purposes of this paragraph.

(2) The provisions of this Act apply, with the necessary modifications,

in relation to the individual accordingly.

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Division 3 Auditor independence

Section 324CA

114 Corporations Act 2001

Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19

Division 3—Auditor independence

Subdivision A—General requirement

324CA General requirement for auditor independence—auditors

Contravention by individual auditor or audit company

(1) An individual auditor or audit company contravenes this subsection

if:

(a) the individual auditor or audit company engages in audit

activity in relation to an audited body at a particular time;

and

(b) a conflict of interest situation exists in relation to the audited

body at that time; and

(c) at that time:

(i) in the case of an individual auditor—the individual

auditor is aware that the conflict of interest situation

exists; or

(ii) in the case of an audit company—the audit company is

aware that the conflict of interest situation exists; and

(d) the individual auditor or audit company does not, as soon as

possible after the individual auditor or the audit company

becomes aware that the conflict of interest situation exists,

take all reasonable steps to ensure that the conflict of interest

situation ceases to exist.

Note: For conflict of interest situation, see section 324CD.

Individual auditor or audit company to notify ASIC

(1A) An individual auditor or audit company contravenes this subsection

if:

(a) the individual auditor or audit company is the auditor of an

audited body; and

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(b) a conflict of interest situation exists in relation to the audited

body while the individual auditor or audit company is the

auditor of the audited body; and

(c) on a particular day (the start day):

(i) in the case of an individual auditor—the individual

auditor becomes aware that the conflict of interest

situation exists; or

(ii) in the case of an audit company—the audit company

becomes aware that the conflict of interest situation

exists; and

(d) at the end of the period of 7 days from the start day:

(i) the conflict of interest situation remains in existence;

and

(ii) the individual auditor or audit company has not

informed ASIC in writing that the conflict of interest

situation exists.

Note 1: For conflict of interest situation, see section 324CD.

Note 2: If the audited body is a public company or a registered scheme, the

audit appointment will be terminated at the end of the period of 21

days (or a longer period that has been approved by ASIC) from the

day a notice under this subsection is given if the notice is not followed

up by a notice under:

(a) subsection 327B(2A) or (2C) (public company); or

(b) subsection 328E(3) or (5) (public company with crowd-sourced funding); or

(c) subsection 331AAA(2A) or (2C) (registered scheme).

(1B) A person is not excused from informing ASIC under

subsection (1A) that a conflict of interest situation exists on the

ground that the information might tend to incriminate the person or

expose the person to a penalty.

(1C) However, if the person is a natural person:

(a) the information; and

(b) the giving of the information;

are not admissible in evidence against the person in a criminal

proceeding, or any other proceeding for the recovery of a penalty,

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Section 324CA

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other than proceedings for an offence based on the information

given being false or misleading.

(1D) If the individual auditor or audit company gives ASIC a notice

under paragraph (1A)(d), ASIC must, as soon as practicable after

the notice has been received, give a copy of the notice to the

audited body.

Conflict of interest situation of which individual auditor or audit

company is not aware

(2) An individual auditor or audit company contravenes this subsection

if:

(a) the individual auditor or audit company engages in audit

activity in relation to an audited body at a particular time;

and

(b) a conflict of interest situation exists in relation to the audited

body at the time; and

(c) at that time:

(i) in the case of an individual auditor—the individual

auditor is not aware that the conflict of interest situation

exists; or

(ii) in the case of an audit company—the audit company is

not aware that the conflict of interest situation exists;

and

(d) the individual auditor or the audit company would have been

aware of the existence of the conflict of interest situation at

that time if the individual auditor or audit company had had

in place a quality control system reasonably capable of

making the individual auditor or audit company aware of the

existence of such a conflict of interest situation.

Note: For conflict of interest situation, see section 324CD.

(3) For the purposes of an offence based on subsection (2), strict

liability applies to the physical element of the offence specified in

paragraph (2)(b).

Note 1: For strict liability, see section 6.1 of the Criminal Code.

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Section 324CA

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Note 2: Subsections (4) and (5) provide defences.

(4) An individual auditor does not commit an offence because of a

contravention of subsection (2) in relation to audit activity engaged

in by the auditor at a particular time if the individual auditor has

reasonable grounds to believe that the individual auditor had in

place at that time a quality control system that provided reasonable

assurance (taking into account the size and nature of the audit

practice of the individual auditor) that the individual auditor and

the individual auditor’s employees complied with the requirements

of this Subdivision.

Note: A defendant bears an evidential burden in relation to the matters in

this subsection, see subsection 13.3(3) of the Criminal Code.

(5) An audit company does not commit an offence because of a

contravention of subsection (2) in relation to audit activity engaged

in by the audit company at a particular time if the audit company

has reasonable grounds to believe that the audit company had in

place at that time a quality control system that provided reasonable

assurance (taking into account the size and nature of the audit

practice of the audit company) that the audit company and the audit

company’s employees complied with the requirements of this

Subdivision.

Note: A defendant bears an evidential burden in relation to the matters in

this subsection, see subsection 13.3(3) of the Criminal Code.

Relationship between obligations under this section and other

obligations

(6) The obligations imposed by this section are in addition to, and do

not derogate from, any obligation imposed by:

(a) another provision of this Act; or

(b) a code of professional conduct.

Note: Paragraph (a)—see, for example, the specific obligations imposed by

Subdivision B.

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Section 324CB

118 Corporations Act 2001

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324CB General requirement for auditor independence—member of

audit firm

Contravention by member of audit firm

(1) A person (the defendant) contravenes this subsection if:

(a) an audit firm engages in audit activity in relation to an

audited body at a particular time; and

(b) a conflict of interest situation exists in relation to the audited

body at that time; and

(c) the defendant is a member of the audit firm at that time; and

(d) the defendant is or becomes aware of the circumstances

referred to in paragraphs (a) and (b); and

(e) the defendant does not, as soon as possible after the

defendant becomes aware of those circumstances, take

reasonable steps to ensure that the conflict of interest

situation ceases to exist.

Note: For conflict of interest situation, see section 324CD.

Member of audit firm to notify ASIC

(1A) A person (the defendant) contravenes this subsection if:

(a) an audit firm is the auditor of an audited body; and

(b) a conflict of interest situation exists in relation to the audited

body while the audit firm is the auditor of the audited body;

and

(c) the defendant is a member of the audit firm at a time when

the conflict of interest situation exists; and

(d) on a particular day (the start day), the defendant becomes

aware of the circumstances referred to in paragraphs (a) and

(b); and

(e) at the end of the period of 7 days from the start day:

(i) the conflict of interest situation remains in existence;

and

(ii) ASIC has not been informed in writing by the

defendant, by another member of the audit firm or by

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Section 324CB

Corporations Act 2001 119

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someone else on behalf of the audit firm that the conflict

of interest situation exists.

Note 1: For conflict of interest situation, see section 324CD.

Note 2: If the audited body is a public company or a registered scheme, the

audit appointment will be terminated at the end of the period of 21

days (or a longer period that has been approved by ASIC) from the

day a notice under this subsection is given if the notice is not followed

up by a notice under:

(a) subsection 327B(2B) (public company); or

(b) subsection 328E(4) (public company with crowd-sourced funding); or

(c) subsection 331AAA(2B) (registered scheme).

(1B) A person is not excused from informing ASIC under

subsection (1A) that a conflict of interest situation exists on the

ground that the information might tend to incriminate the person or

expose the person to a penalty.

(1C) However:

(a) the information; and

(b) the giving of the information;

are not admissible in evidence against the person in a criminal

proceeding, or any other proceeding for the recovery of a penalty,

other than proceedings for an offence based on the information

given being false or misleading.

(1D) If ASIC is given a notice under paragraph (1A)(e), ASIC must, as

soon as practicable after the notice is received, give a copy of the

notice to the audited body.

Conflict of interest situation of which another member of audit firm

is aware

(2) A person contravenes this subsection if:

(a) an audit firm engages in audit activity in relation to an

audited body at a particular time; and

(b) a conflict of interest situation exists in relation to the audited

body at the time; and

(c) the person is a member of the audit firm at that time; and

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Section 324CB

120 Corporations Act 2001

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(d) at that time, another member of the audit firm is aware that

the conflict of interest situation exists; and

(e) the audit firm does not, as soon as possible after the member

referred to in paragraph (d) becomes aware that the conflict

of interest situation exists, take all reasonable steps to ensure

that the conflict of interest situation ceases to exist.

Note: For conflict of interest situation, see section 324CD.

(3) For the purposes of an offence based on subsection (2), strict

liability applies to the physical elements of the offence specified in

paragraphs (2)(a), (b), (d) and (e).

Note 1: For strict liability, see section 6.1 of the Criminal Code.

Note 2: Subsection (6) provides a defence.

Conflict of interest situation of which members are not aware

(4) A person contravenes this subsection if:

(a) an audit firm engages in audit activity in relation to an

audited body at a particular time; and

(b) a conflict of interest situation exists in relation to the audited

body at the time; and

(c) the person is a member of the audit firm at that time; and

(d) at that time none of the members of the audit firm is aware

that the conflict of interest situation exists; and

(e) a member of the audit firm would have been aware of the

existence of the conflict of interest situation if the audit firm

had in place a quality control system reasonably capable of

making the audit firm aware of the existence of such a

conflict of interest situation.

Note: For conflict of interest situation, see section 324CD.

(5) For the purposes of an offence based on subsection (4), strict

liability applies to the physical elements of the offence specified in

paragraphs (4)(a), (b), (d) and (e).

Note 1: For strict liability, see section 6.1 of the Criminal Code.

Note 2: Subsection (6) provides a defence.

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Section 324CC

Corporations Act 2001 121

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Defence

(6) A person does not commit an offence because of a contravention of

subsection (2) or (4) in relation to audit activity engaged in by an

audit firm at a particular time if the person has reasonable grounds

to believe that the audit firm had in place at that time a quality

control system that provided reasonable assurance (taking into

account the size and nature of the audit practice of the audit firm)

that the audit firm and its employees complied with the

requirements of this Subdivision.

Note: A defendant bears an evidential burden in relation to the matters in

this subsection, see subsection 13.3(3) of the Criminal Code.

Relationship between obligations under this section and other

obligations

(7) The obligations imposed by this section are in addition to, and do

not derogate from, any obligation imposed by:

(a) another provision of this Act; or

(b) a code of professional conduct.

Note: Paragraph (a)—see, for example, the specific obligations imposed by

Subdivision B.

324CC General requirement for auditor independence—director of

audit company

Contravention by director of audit company

(1) A person (the defendant) contravenes this subsection if:

(a) an audit company engages in audit activity in relation to an

audited body at a particular time; and

(b) a conflict of interest situation exists in relation to the audited

body at that time; and

(c) the defendant is a director of the audit company at that time;

and

(d) the defendant is or becomes aware of the circumstances

referred to in paragraphs (a) and (b); and

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(e) the defendant does not, as soon as possible after the

defendant becomes aware of those circumstances, take

reasonable steps to ensure that the conflict of interest

situation ceases to exist.

Note 1: For conflict of interest situation, see section 324CD.

Note 2: The audit company itself will commit an offence based on the

contravention of subsection 324AA(1).

Director of audit company to notify ASIC

(1A) A person (the defendant) contravenes this subsection if:

(a) an audit company is the auditor of an audited body; and

(b) a conflict of interest situation exists in relation to the audited

body while the audit company is the auditor of the audited

body; and

(c) the defendant is a director of the audit company at a time

when the conflict of interest situation exists; and

(d) on a particular day (the start day), the defendant becomes

aware of the circumstances referred to in paragraphs (a) and

(b); and

(e) at the end of the period of 7 days from the start day:

(i) the conflict of interest situation remains in existence;

and

(ii) ASIC has not been informed in writing by the

defendant, by another director of the audit company or

by the audit company that the conflict of interest

situation exists.

Note 1: For conflict of interest situation, see section 324CD.

Note 2: If the audited body is a public company or a registered scheme, the

audit appointment will be terminated at the end of the period of 21

days (or a longer period that has been approved by ASIC) from the

day a notice under this subsection is given if the notice is not followed

up by a notice under:

(a) subsection 327B(2C) (public company); or

(b) subsection 328E(5) (public company with crowd-sourced funding); or

(c) subsection 331AAA(2C) (registered scheme).

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Section 324CC

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(1B) A person is not excused from informing ASIC under

subsection (1A) that a conflict of interest situation exists on the

ground that the information might tend to incriminate the person or

expose the person to a penalty.

(1C) However, if the person is a natural person:

(a) the information; and

(b) the giving of the information;

are not admissible in evidence against the person in a criminal

proceeding, or any other proceeding for the recovery of a penalty,

other than proceedings for an offence based on the information

given being false or misleading.

(1D) If ASIC is given a notice under paragraph (1A)(e), ASIC must, as

soon as practicable after the notice is received, give a copy of the

notice to the audited body.

Conflict of interest situation of which another director of audit

company aware

(2) A person contravenes this subsection if:

(a) an audit company engages in audit activity in relation to an

audited body at a particular time; and

(b) a conflict of interest situation exists in relation to the audited

body at the time; and

(c) the person is a director of the audit company at that time; and

(d) at that time, another director of the audit company is aware

that the conflict of interest situation exists; and

(e) the audit company does not, as soon as possible after the

director referred to in paragraph (d) becomes aware that the

conflict of interest situation exists, take all reasonable steps

to ensure that the conflict of interest situation ceases to exist.

Note 1: For conflict of interest situation, see section 324CD.

Note 2: The company itself will commit an offence based on the contravention

of subsection 324AA(1).

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Section 324CC

124 Corporations Act 2001

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(3) For the purposes of an offence based on subsection (2), strict

liability applies to the physical elements of the offence specified in

paragraphs (2)(a), (b), (d) and (e).

Note 1: For strict liability, see section 6.1 of the Criminal Code.

Note 2: Subsection (6) provides a defence.

Conflict of interest situation of which directors of audit company

not aware

(4) A person contravenes this subsection if:

(a) an audit company engages in audit activity in relation to an

audited body at a particular time; and

(b) a conflict of interest situation exists in relation to the audited

body at the time; and

(c) the person is a director of the audit company at that time; and

(d) at that time none of the directors of the audit company is

aware that the conflict of interest situation exists; and

(e) a director of the audit company would have been aware of the

existence of the conflict of interest situation if the audit

company had in place a quality control system reasonably

capable of making the audit company aware of the existence

of such a conflict of interest situation.

Note 1: For conflict of interest situation, see section 324CD.

Note 2: The company itself will commit an offence based on the contravention

of subsection 324AA(2).

(5) For the purposes of an offence based on subsection (4), strict

liability applies to the physical elements of the offence specified in

paragraphs (4)(a), (b), (d) and (e).

Note 1: For strict liability, see section 6.1 of the Criminal Code.

Note 2: Subsection (6) provides a defence.

Defence

(6) A person does not commit an offence because of a contravention of

subsection (2) or (4) in relation to audit activity engaged in by an

audit company at a particular time if the person has reasonable

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Section 324CD

Corporations Act 2001 125

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grounds to believe that the audit company had in place at that time

a quality control system that provided reasonable assurance (taking

into account the size and nature of the audit practice of the audit

company) that the audit company and its employees complied with

the requirements of this Subdivision.

Note: A defendant bears an evidential burden in relation to the matters in

this subsection, see subsection 13.3(3) of the Criminal Code.

Relationship between obligations under this section and other

obligations

(7) The obligations imposed by this section are in addition to, and do

not derogate from, any obligation imposed by:

(a) another provision of this Act; or

(b) a code of professional conduct.

Note: Paragraph (a)—see, for example, the specific obligations imposed by

Subdivision B.

324CD Conflict of interest situation

(1) For the purposes of sections 324CA, 324CB and 324CC, a conflict

of interest situation exists in relation to an audited body at a

particular time if, because of circumstances that exist at that time:

(a) the auditor, or a professional member of the audit team, is not

capable of exercising objective and impartial judgment in

relation to the conduct of the audit of the audited body; or

(b) a reasonable person, with full knowledge of all relevant facts

and circumstances, would conclude that the auditor, or a

professional member of the audit team, is not capable of

exercising objective and impartial judgment in relation to the

conduct of the audit of the audited body.

(2) Without limiting subsection (1), have regard to circumstances

arising from any relationship that exists, has existed, or is likely to

exist, between:

(a) the individual auditor; or

(b) the audit firm or any current or former member of the firm;

or

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(c) the audit company, any current or former director of the audit

company or any person currently or formerly involved in the

management of the audit company;

and any of the persons and bodies set out in the following table:

Relevant relationships

Item If the audited body

is…

have regard to any relationship

with…

1 a company the company; or

a current or former director of the

company; or

a person currently or formerly

involved in the management of the

company.

2 a disclosing entity the entity; or

a current or former director of the

entity; or

a person currently or formerly

involved in the management of the

entity.

3 a registered scheme the responsible entity for the

registered scheme; or

a current or former director of the

responsible entity; or

a person currently or formerly

involved in the management of the

scheme; or

a person currently or formerly

involved in the management of the

responsible entity.

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Section 324CE

Corporations Act 2001 127

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Subdivision B—Specific requirements

324CE Auditor independence—specific requirements for individual

auditor

Specific independence requirements for individual auditor

(1) An individual auditor contravenes this subsection if:

(a) the individual auditor engages in audit activity at a particular

time; and

(b) a relevant item of the table in subsection 324CH(1) applies at

that time to a person or entity covered by subsection (5) of

this section; and

(c) the individual auditor is or becomes aware of the

circumstances referred to in paragraph (b); and

(d) the individual auditor does not, as soon as possible after the

individual auditor becomes aware of those circumstances,

take all reasonable steps to ensure that the individual auditor

does not continue to engage in audit activity in those

circumstances.

Individual auditor to notify ASIC

(1A) An individual auditor contravenes this subsection if:

(a) the individual auditor is the auditor of an audited body; and

(b) a relevant item of the table in subsection 324CH(1) applies to

a person or entity covered by subsection (5) of this section

while the individual auditor is the auditor of the audited

body; and

(c) on a particular day (the start day), the individual auditor

becomes aware of the circumstances referred to in

paragraph (b); and

(d) at the end of the period of 7 days from the start day:

(i) those circumstances remain in existence; and

(ii) the individual auditor has not informed ASIC in writing

of those circumstances.

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Section 324CE

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Note: If the audited body is a public company or a registered scheme, the

audit appointment will be terminated at the end of the period of 21

days (or a longer period that has been approved by ASIC) from the

day a notice under this subsection is given if the notice is not followed

up by a notice under:

(a) subsection 327B(2A) (public company); or

(b) subsection 328E(3) (public company with crowd-sourced funding); or

(c) subsection 331AAA(2A) (registered scheme).

(1B) A person is not excused from informing ASIC under

subsection (1A) that the circumstances referred to in

paragraph (1A)(b) exist on the ground that the information might

tend to incriminate the person or expose the person to a penalty.

(1C) However:

(a) the information; and

(b) the giving of the information;

are not admissible in evidence against the person in a criminal

proceeding, or any other proceeding for the recovery of a penalty,

other than proceedings for an offence based on the information

given being false or misleading.

(1D) If the individual auditor gives ASIC a notice under

paragraph (1A)(d), ASIC must, as soon as practicable after the

notice has been received, give a copy of the notice to the audited

body.

Strict liability contravention of specific independence requirements

by individual auditor

(2) An individual auditor contravenes this subsection if:

(a) the individual auditor engages in audit activity at a particular

time; and

(b) a relevant item of the table in subsection 324CH(1) applies at

that time to a person or entity covered by subsection (5) of

this section.

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Section 324CE

Corporations Act 2001 129

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(3) For the purposes of an offence based on subsection (2), strict

liability applies to the physical elements of the offence specified in

paragraph (2)(b).

Note 1: For strict liability, see section 6.1 of the Criminal Code.

Note 2: Subsection (4) provides a defence.

(4) An individual auditor does not commit an offence because of a

contravention of subsection (2) in relation to audit activity engaged

in by the individual auditor at a particular time if the individual

auditor has reasonable grounds to believe that the individual

auditor had in place at that time a quality control system that

provided reasonable assurance (taking into account the size and

nature of the audit practice of the individual auditor) that the

individual auditor and the individual auditor’s employees complied

with the requirements of this Subdivision.

Note: A defendant bears an evidential burden in relation to the matters in

this subsection, see subsection 13.3(3) of the Criminal Code.

People and entities covered

(5) The following table sets out:

(a) the persons and entities covered by this subsection in relation

to audit activity engaged in by an individual auditor; and

(b) the items of the table in subsection 324CH(1) that are the

relevant items for each of those persons and entities:

Individual auditor

Item For this person or entity... the relevant items

of the table in

subsection 324CH(1

) are...

1 the individual auditor 1 to 19

2 a service company or trust acting for, or

on behalf of, the individual auditor, or

another entity performing a similar

function

1 to 19

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Individual auditor

Item For this person or entity... the relevant items

of the table in

subsection 324CH(1

) are...

3 a professional member of the audit team

conducting the audit of the audited body

1 to 6

8 to 19

4 an immediate family member of a

professional member of the audit team

conducting the audit of the audited body

1 and 2

10 to 19

5 a person who is a non-audit services

provider and who does not satisfy the

maximum hours test in subsection (6)

10 to 12

6 an immediate family member of a person

who is a non-audit services provider and

who does not satisfy the maximum hours

test in subsection (6)

10 to 12

7 an entity that the auditor (or a service

company or trust acting for, or on behalf

of, the individual auditor, or another

entity performing a similar function)

controls

15

8 a body corporate in which the auditor (or

a service company or trust acting for, or

on behalf of, the individual auditor, or

another entity performing a similar

function) has a substantial holding

15

9 a person who:

(a) is a former professional employee of

the auditor; and

(b) does not satisfy the independence test

in subsection (7)

1 and 2

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Section 324CE

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Individual auditor

Item For this person or entity... the relevant items

of the table in

subsection 324CH(1

) are...

10 an individual who:

(a) is the former owner of the individual

auditor’s business; and

(b) does not satisfy the independence test

in subsection (7)

1 and 2

Maximum hours test

(6) A non-audit services provider satisfies the maximum hours test in

this subsection if:

(a) the number of hours for which the person provides services

(other than services related to the conduct of an audit) to the

audited body on behalf of the auditor during the period to

which the audit relates does not exceed 10 hours; and

(b) the number of hours for which the person provides services

(other than services related to the conduct of an audit) to the

audited body on behalf of the auditor during the 12 months

immediately before the beginning of the period to which the

audit relates does not exceed 10 hours.

In a prosecution for an offence based on subsection (1) or (2), the

prosecution must prove that the non-audit services provider did not

satisfy the maximum hours test in this subsection.

Independence test

(7) A person satisfies the independence test in this subsection in

relation to an individual auditor if the person:

(a) does not influence the operations or financial policies of the

accounting and audit practice conducted by the auditor; and

(b) does not participate, or appear to participate, in the business

or professional activities of the accounting and audit practice

conducted by the auditor; and

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(c) does not have any rights against the auditor in relation to the

accounting and audit practice conducted by the auditor in

relation to the termination of the person’s former

employment by the auditor; and

(d) has no financial arrangements with the auditor in relation to

the accounting and audit practice conducted by the auditor,

other than:

(i) an arrangement providing for regular payments of a

fixed pre-determined dollar amount which is not

dependent, directly or indirectly, on the revenues,

profits or earnings of the auditor; or

(ii) an arrangement providing for regular payments of a

dollar amount where the method of calculating the

dollar amount is fixed and is not dependent, directly or

indirectly, on the revenues, profits or earnings of the

auditor; and

(e) without limiting paragraph (d), has no financial arrangement

with the auditor to receive a commission or similar payment

in relation to business generated by the person for the

accounting and audit practice conducted by the auditor.

In a prosecution for an offence based on subsection (1) or (2), the

prosecution must prove that the person did not satisfy the

independence test in this subsection in relation to the individual

auditor.

(8) In applying subsection (7), disregard any rights that the person has

against the auditor by way of an indemnity for, or contribution in

relation to, liabilities incurred by the person when the person was

an employee of the auditor or the owner of the auditor’s business.

324CF Auditor independence—specific requirements for audit firm

Contraventions by members of audit firm

(1) A person (the defendant) contravenes this subsection if:

(a) an audit firm engages in audit activity at a particular time;

and

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(b) a relevant item of the table in subsection 324CH(1) applies at

that time to a person or entity covered by subsection (5) of

this section; and

(c) the defendant is a member of the audit firm at that time; and

(d) the defendant is or becomes aware of the circumstances

referred to in paragraphs (a) and (b); and

(e) the defendant does not, as soon as possible after the

defendant becomes aware of those circumstances, take all

reasonable steps to ensure that the audit firm does not

continue to engage in audit activity in those circumstances.

Member of audit firm to notify ASIC

(1A) A person (the defendant) contravenes this subsection if:

(a) an audit firm is the auditor of an audited body; and

(b) a relevant item of the table in subsection 324CH(1) applies to

a person or entity covered by subsection (5) of this section

while the audit firm is the auditor of the audited body; and

(c) the defendant is a member of the audit firm at a time when

the circumstances referred to in paragraph (b) exist; and

(d) on a particular day (the start day), the defendant becomes

aware of the circumstances referred to in paragraphs (a) and

(b); and

(e) at the end of the period of 7 days from the start day:

(i) the circumstances referred to in paragraph (b) remain in

existence; and

(ii) ASIC has not been informed in writing of those

circumstances by the defendant, by another member of

the audit firm or by someone else on behalf of the audit

firm.

Note: If the audited body is a public company or a registered scheme, the

audit appointment will be terminated at the end of the period of 21

days (or a longer period that has been approved by ASIC) from the

day a notice under this subsection is given if the notice is not followed

up by a notice under:

(a) subsection 327B(2B) (public company); or

(b) subsection 328E(4) (public company with crowd-sourced funding); or

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(c) subsection 331AAA(2B) (registered scheme).

(1B) A person is not excused from informing ASIC under

subsection (1A) that the circumstances referred to in

paragraph (1A)(b) exist on the ground that the information might

tend to incriminate the person or expose the person to a penalty.

(1C) However:

(a) the information; and

(b) the giving of the information;

are not admissible in evidence against the person in a criminal

proceeding, or any other proceeding for the recovery of a penalty,

other than proceedings for an offence based on the information

given being false or misleading.

(1D) If ASIC is given a notice under paragraph (1A)(e), ASIC must, as

soon as practicable after the notice is received, give a copy of the

notice to the audited body.

Contravention of independence requirements by members of audit

firm

(2) A person (the defendant) contravenes this subsection if:

(a) an audit firm engages in audit activity at a particular time;

and

(b) a relevant item of the table in subsection 324CH(1) applies at

that time to a person or entity covered by subsection (5) of

this section; and

(c) the defendant is a member of the audit firm at that time.

(3) For the purposes of an offence based on subsection (2), strict

liability applies to the physical elements of the offence specified in

paragraphs (2)(a) and (b).

Note 1: For strict liability, see section 6.1 of the Criminal Code.

Note 2: Subsection (4) provides a defence.

(4) A person does not commit an offence because of a contravention of

subsection (2) in relation to audit activity engaged in by an audit

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firm at a particular time if the person has reasonable grounds to

believe that the audit firm had in place at that time a quality control

system that provided reasonable assurance (taking into account the

size and nature of the audit practice of the audit firm) that the audit

firm and its employees complied with the requirements of this

Subdivision.

Note: A defendant bears an evidential burden in relation to the matters in

this subsection, see subsection 13.3(3) of the Criminal Code.

People and entities covered

(5) The following table sets out:

(a) the persons and entities covered by this subsection in relation

to audit activity engaged in by an audit firm; and

(b) the items of the table in subsection 324CH(1) that are the

relevant items for each of those persons and entities:

Audit firm

Item For this person or entity... the relevant items of

the table in

subsection 324CH(1)

are...

1 the firm 4

7

10 to 19

2 a service company or trust acting for, or

on behalf of, the firm, or another entity

performing a similar function

4

7

10 to 19

3 a member of the firm 1 to 7

9

15

4 a professional member of the audit team

conducting the audit of the audited body

1 to 6

8 to 19

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Audit firm

Item For this person or entity... the relevant items of

the table in

subsection 324CH(1)

are...

5 an immediate family member of a

professional member of the audit team

conducting the audit of the audited body

1 and 2

10 to 19

6 a person who:

(a) is a non-audit services provider; and

(b) does not satisfy the maximum hours

test in subsection (6)

10 to 12

7 an immediate family member of a

person who:

(a) is a non-audit services provider; and

(b) does not satisfy the maximum hours

test in subsection (6)

10 to 12

8 an entity that the firm (or a service

company or trust acting for, or on behalf

of, the firm, or another entity

performing a similar function) controls

15

9 a body corporate in which the firm (or a

service company or trust acting for, or

on behalf of, the firm, or another entity

performing a similar function) has a

substantial holding

15

10 an entity that a member of the firm

controls or a body corporate in which a

member of the firm has a substantial

holding

15

11 a person who:

(a) is a former member of the firm; and

(b) does not satisfy the independence

test in subsection (7)

1 and 2

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