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COMPANIES ACT UPDATE: CHANGES TO FILING REQUIREMENTS FOR SMALL COMPANIES

Are you a shareholder in a company with fewer than 10 shareholders? Due to recent changes to the Companies Act that came into force on 1 April 2014, you no longer have the obligation to prepare general purpose financial statements (even if you are trading in business). 

This changes the way small companies (and larger ones) complete their annual filing requirements with the Companies Office. 

There is also now an exemption for small companies from the obligation to prepare an annual report or be audited unless the shareholders decide to "opt in" to these requirements.  This can easily be arranged by the shareholders representing 5% or more of the voting rights in the company giving written notice to the company before the "opting in period" expires.  If a notice is received in relation to a compliance requirement, it will only apply in relation to that accounting period of the company. 

The opposite applies for companies with 10 or more shareholders.  The above requirements automatically apply for them, unless the shareholders representing not less than 95% of the voting rights pass a resolution to "opt out" of the compliance requirements.  Only shareholders holding voting rights are counted in determining if a company has 10 or more shareholders.

Joint holders of shares (e.g. trustees of a family trust) are counted as a single shareholder for determining the number of shareholders in your company.

Whatever decision the shareholders make, it should be made in consultation with your legal and accounting advisors.

Written by Lisa Kristensen at 09:00

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