Many Australian Stock Exchange (ASX) listed companies face the increasing burden of complying with complex and ever-changing accounting standards. One way to achieve a better outcome is to change your balance date to a time other than 30 June.
Section 323D (2A) of the Corporations Act enables a company to elect to change its balance date by adopting a financial year which lasts less than 12 months. For example, after finishing your current 30 June year end, you could elect to change your next financial period to another end date – such as October. This would initially mean your first year after the change will be shortened to only 4 months duration; however, each subsequent year will then be of 12 months duration.
To change your balance date, all you need to do is write to the Australian Securities & Investments Commission (ASIC) to notify them of the change (you don’t need formal approval from ASIC to make the change).
By changing your balance date, you and your company stand to gain as a result of:
- Greater opportunity to promote your company – and thereby its share price – as there will be substantially fewer companies lodging their annual reports with the ASX at the same time
- Increased opportunity to discuss the audit process with your audit firm and your specific timing or logistical requirements
- Greater assistance from your audit firm due to the firm having fewer demands for their time Potential reduction in professional fees as audit work can be conducted out of peak audit season.
A change of balance date may affect the timing of your company’s annual general meeting (AGM), which for public companies normally have to be held within 5 months after the end of each financial year (s.250N of the Act). The initial change to a shorter balance date in the first year will result in two AGMs being held in order to meet this timing requirement. You will also be required to lodge your company’s annual report within 3 months after the end of your accounting period (as per the ASX Listing Rule 4.5).