Don’t lodge late, or incur the regulator’s wrath

In the first half of 2021 ASIC prosecuted 10 companies for failing to lodge financial reports on time, or at all.

ASIC obtained guilty findings against the ten companies, as well as sanctions including good behaviour bonds, criminal convictions, and fines ranging from $3,000 to $13,500.

The corporate cop’s recent prosecutions are a timely reminder for companies large and small of the need to comply with financial reporting obligations and the serious risk of not doing so.  Most Australian companies have financial years ending on 30 June.  Depending on the type of entity, financial reports are generally required to be lodged with ASIC within 3 or 4 months after financial year end.  This means that, for many companies, a deadline of either 30 September or 31 October looms large.

That means you need to be on top of your financial reporting over the next two months. Importantly, if there has been a past transgression, or it appears that your company will not be able to comply in respect of last financial year, there are steps that can be taken to address this.  We have advised and are assisting clients to navigate these very issues right now.

ASIC has shown an increased appetite to pursue criminal prosecutions for breaches like these and this should be expected to continue despite the change of Enforcement leadership and rhetoric from the regulator.  The 10 prosecutions were part of ASIC’s 180 ‘small business’ enforcement matters concluded between 1 January and 30 June 2021, which also involved:

• 123 convictions for failing to assist liquidators;
• 3 other convictions resulting in custodial sentences;
• 16 persons were disqualified from being a company officer in connection with illegal phoenix activity; and
• 27 Australian credit licences were cancelled.

If your company or clients need advice on how to mitigate or manage the risk of late or missed ASIC lodgements, the financial services regulatory experts at Mackay Chapman are here to help.

Further information can be found in ASIC’s media release on the prosecutions: https://asic.gov.au/about-asic/news-centre/find-a-media-release/2021-releases/21-200mr-asic-prosecutes-ten-companies-for-failing-to-lodge-financial-reports/  

Anthony Jensen, Senior Associate, Mackay Chapman

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