ASIC today released updated regulatory guidance for insolvent or financially distressed companies and registered schemes.

ASIC’s updated Regulatory Guide 174 Relief for externally administered companies and registered schemes being wound up (RG 174) follows consultation launched in August 2014 (refer: 14-211MR).

ASIC has issued a new legislative instrument which provides companies with a liquidator appointed with an exemption from financial reporting and, if the company is also a public company, with AGM relief in certain circumstances. Companies in other forms of external administration with an uncertain future are permitted to delay preparing their financial reports under ASIC’s relief. ASIC’s new instrument also provides exemption relief from financial reporting to insolvent registered managed investment schemes.

ASIC Commissioner John Price said, ‘Our policy seeks to strike the appropriate balance between the information needs of members and other users of financial reports with the financial burden imposed on distressed entities by financial reporting costs.’

To provide information to members of insolvent registered managed investment schemes, ASIC’s instrument requires those in charge of the winding up to periodically report to members and creditors by making certain information available. For externally administered companies, the law already requires that members and creditors have access to certain public information that is prepared periodically by the external administrator and lodged with ASIC.

In addition, ASIC’s instrument ensures that members of externally administered companies and registered managed investment schemes being wound up can obtain information by requiring the external administrator of the company or person having responsibility for winding up the registered managed investment scheme to have arrangements in place to answer any reasonable questions asked by a member without charge.