“The Rudd Government is mindful of the regulatory burden facing Australian companies,” the Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen MP said.

“This package of reforms will deliver much needed relief from red-tape for Australian companies.

“The reforms will reduce unnecessary reporting obligations on companies and implement a number of other important refinements to our corporate regulatory framework.”

The key measures to reduce red-tape include:

• Significantly reducing the regulatory burden on companies limited by guarantee (which typically have a not-for-profit purpose), by introducing a three tiered differential reporting framework
• Streamlining parent-entity reporting
• Providing greater flexibility for companies to pay dividends, by replacing the profits test with a solvency-type test
• Allowing companies to more easily change their year-end date to minimise the burden on companies and their auditors during peak reporting periods.

The reforms will also implement refinements to the regulatory framework, including:

• Improving disclosure of non-financial information in the directors’ report
• Protecting solicitors’ representation letters from disclosure to enable auditors to properly verify a company’s contingent liabilities
• Refining the statement of compliance with international financial reporting standards contained in the directors’ declaration
• Clarifying the circumstances in which a company can cancel its share capital.

“These are important reforms that will ensure that Australia’s financial reporting framework remains strong and ahead of world’s best practice,” Bowen said.

“I strongly encourage interested parties to participate in the consultation process.”