ASIC Form 396 Requires Notice When Companies Cease Relying on Audit Relief Instrument 2016/784

Key Takeaways

• ASIC has published Form 396, which proprietary companies must lodge when they intend to stop, or have stopped, relying on the audit relief in ASIC Corporations (Audit Relief) Instrument 2016/784 or Class Order [CO 98/1417].
• Missing the lodgement window permanently bars a company from re-applying the relief in future financial years, so compliance teams need to track the deadline closely.
• The form carries no lodgement fee, but the consequences of late lodgement are significant.

Deep Dive

ASIC has published Form 396, which proprietary companies must lodge when they intend to stop, or have stopped, relying on the audit relief in ASIC Corporations (Audit Relief) Instrument 2016/784 or Class Order [CO 98/1417]. Missing the lodgement window permanently bars a company from re-applying the relief in future financial years, so compliance teams need to track the deadline closely. The form carries no lodgement fee, but the consequences of late lodgement are significant.

The form recognizes three grounds for cessation, and the company selects one. First, the directors and/or shareholders have resolved not to apply the relief for a specified financial year. Second, the company has ceased to be controlled by a foreign company, with the date recorded. Third, the company can no longer take advantage of the relief for a given financial year. A director or secretary must sign the form, certifying that the information is true and complete. Lodgement is free, and the form becomes part of the public register.

The key timeline is the lodgement window. The form must be lodged from 3 months before the start of the financial year in which the relief ceased to apply until 4 months after the end of that financial year. If a company misses this window, it cannot re-apply the relief under Instrument 2016/784 in any future financial year. A company that later wants to re-apply the relief must pass new directors' and shareholders' resolutions and lodge Form 382 (Notification of resolutions for audit relief – proprietary companies).

Recommended actions for compliance professionals:
- Identify all Australian proprietary company entities in the group that rely on the relief.
- Add triggers to the entity governance calendar for changes in foreign control, loss of eligibility, and board decisions to discontinue reliance.
- Assign ownership for preparing, signing, and lodging the form.
- Align the lodgement with statutory audit planning, so that auditor appointment and audit work start in time for the affected financial year.
- Retain evidence of resolutions, eligibility assessments, and lodgement confirmations.
- Review Regulatory Guide 115 for the conditions of the relief.

The main risk is a missed deadline, which causes permanent loss of the relief option and potential misalignment with audit and financial reporting obligations. Other risks include relying on the relief after eligibility has lapsed, which could mean non-compliance with sections 340 and 341, and inaccurate certification by a signing officer. The overall impact is low for well-governed groups but material for entities with limited corporate secretarial oversight, particularly after ownership changes or restructures.

Source: Australian Securities and Investments Commission