Changing a company financial year

This information sheet outlines:

  • the legislative requirements for a financial year of a company, registered scheme or disclosing entity
  • exceptions to the required length of a financial year
  • how to notify ASIC of a change to a financial year, and
  • how to apply for an extension of time to hold your AGM.

What are the legislative requirements for a financial year?

Section 323D of the Corporations Act 2001 (Corporations Act) requires the first financial year for a company, registered scheme or disclosing entity (an entity) to start on the day of its registration. The first financial year may last for 12 months or a period, no longer than 18 months, determined by the directors (subsection 323D(1) of the Corporations Act).

Each subsequent financial year must:

  • start at the end of a previous financial year; and
  • be 12 months long (subsection 323D(2) of the Act).

Exceptions to the 12 Month Rule

1. Shorter or longer by 7 days

The directors may make the financial year shorter or longer than 12 months by no more than 7 days, to accommodate entities with week-based internal reporting (s323D(2)).

You do not need our permission to make this change, but you do need to notify us.

2. Shorter than 12 months

An entity may have a financial year which lasts for less than 12 months (s323D(2A)), provided that:

  • during the previous five financial years, each financial year has been of 12 months duration, and
  • the change in length of the subsequent financial year is made in good faith, in the best interests of the entity. You do not need our permission to make this change, but you do need to notify us.

3. Synchronisation with consolidated entities

If a company, registered scheme or disclosing entity has to prepare consolidated financial statements, you must do ensure that the financial years of its consolidated entities are synchronised with its own financial years (s323D(3)).

To facilitate the synchronisation, the financial year of a consolidated entity may be extended or shortened. An extended financial year cannot be longer than 18 months (s323D(4)).

Under subsection 323D(4), entities that have to prepare consolidated financial statements have the power to synchronise. This power is only available if the accounting standards require the preparation of consolidated financial statements. It is to be used once-only, in the 12 months after the need to consolidate arises; it is not otherwise available.

Because this option is available through the Corporations Act, you do not need to seek our permission to change the financial year of your consolidated entities. You do need to notify us.

4. Synchronisation with foreign parent

Class Order [CO 98/96]Synchronisation of financial year with foreign parent company may allow a foreign controlled company to have a financial year of up to 18 months, in order to synchronise its financial year with that of its foreign parent. See Policy Statement 58 Reporting requirements: Registered foreign companies and Australian companies with foreign company shareholders (RG 58).

For the relief set out in the class order to apply, the conditions of the class order must be met. It is not necessary to seek permission from us to change the financial year under the class order. The onus is on the foreign controlled company itself to determine whether it can meet the conditions of the class order and obtain the relief.

5. Relief under section 340 of the Corporations Act

Where none of the other exceptions are applicable, a company, registered scheme or disclosing entity can apply to ASIC under section 340 for relief from the requirements of s323D(2).

In accordance with s342 you would generally have to demonstrate to us that complying with the requirement for the company or scheme’s financial year to be a period of 12 months would impose unreasonable burdens.

When preparing your application, you should refer to Regulatory Guide 43 Financial reports and audit relief (RG 43) and to Regulatory Guide 51 Applications for relief (RG 51).  Applications should comply with the requirements of the Corporations Act.

Send your application to:

Australian Securities and Investments Commission

Corporate Finance, Financial Reporting

GPO Box 9827
Capital city of the relevant state or territory (in which your entity has its principal place of business).

How do I notify ASIC of a change of financial year?

You need to notify us in writing of any change to the company or registered scheme's financial year. This will allow us to amend the public register to reflect the new financial year for each affected entity.

Notification should include:

  • the start and end dates of the old financial year
  • the start and end dates of the new financial year, and
  • the exception under which your entity has changed, or is changing, its financial year.

I require an extension of time to hold our AGM - what should I do?

For a public company, a change of financial year will affect the timing of the company’s annual general meeting (AGM). You must hold an AGM within 18 months of a public company's registration. Subsequent AGMs must be held at least once in each calendar year and within 5 months after the end of each financial year (s250N).

If these timing requirements cannot be met due to a change in the company’s financial year (or for other reasons), the company needs to apply to ASIC for an extension of time to hold its AGM (s250P).

You can apply, using Form 2501 Application for extension of time to hold annual general meeting before the latest possible date on which the AGM is due to be held. A lodgement fee applies. You should refer to Regulatory Guide 44 Annual general meeting - extension of time (RG 44).

Where can I get further information?

Contact ASIC's infoline on 1300 300 630 or make an enquiry. Click here for copies of regulatory guides referred to in this information sheet.

Important notice

Please note that this information sheet is a summary giving you basic information about a particular topic. It does not cover the whole of the relevant law regarding that topic, and it is not a substitute for professional advice.

You should also note that because this information sheet avoids legal language wherever possible, it might include some generalisations about the application of the law. Some provisions of the law referred to have exceptions or important qualifications. In most cases your particular circumstances must be taken into account when determining how the law applies to you.

This is Information Sheet 17 (INFO 17). Information sheets provide concise guidance on a specific process or compliance issue or an overview of detailed guidance.

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Last updated: 05/10/2014 12:43