Key Takeaways
- ASIC has issued more than $4 million in infringement notices for FY24 financial reporting breaches, including $792,000 against Canva Group and $594,000 against Mecca companies (source: ASIC 26-090MR, confirmed).
- Large proprietary companies must lodge FY26 financial reports by 31 October 2026. One month away. ASIC’s surveillance is ongoing.
- A proprietary company is “large” if it meets two of three criteria: consolidated revenue of $50 million or more; consolidated gross assets of $25 million or more; or 100 or more employees (Corporations Act 2001 s 45A).
- Directors who allow a company to fail to lodge are personally exposed to prosecution for breach of directors’ duties under ss 180 and 344 of the Corporations Act 2001.
- Paying an ASIC infringement notice is not an admission of guilt, but the penalty is half the maximum court-imposed fine. If ASIC proceeds to court, the maximum increases significantly.
ASIC is not warning companies anymore. It is issuing infringement notices. In 2026, the Australian Securities and Investments Commission issued more than $4 million in penalty notices for FY24 financial reporting breaches, targeting 21 large proprietary companies across retail, hospitality, logistics, and technology. Canva Group paid $792,000. Mecca paid $594,000. Companies operating Zara, H&M, and Sephora brands in Australia paid $596,000. If your company is large for the purposes of the Corporations Act, the FY26 lodgement deadline is 31 October 2026, and ASIC has made its enforcement posture clear.
What Is a “Large” Proprietary Company Under the Corporations Act?
The classification matters because large proprietary companies carry annual financial reporting obligations that small proprietary companies do not. Under s 45A of the Corporations Act 2001 (Cth), a proprietary company is large for a financial year if it satisfies at least two of the following three criteria:
- Consolidated revenue of $50 million or more for the financial year;
- Consolidated gross assets of $25 million or more at the end of the financial year;
- 100 or more employees at the end of the financial year.
Note that these are consolidated figures. If your company is part of a corporate group, the group’s consolidated revenue, assets, and headcount determine the classification, not just the trading entity. Many Queensland companies that consider themselves mid-sized are caught by the consolidation rules, particularly if they have subsidiaries or are controlled by a foreign parent.
Foreign-controlled small proprietary companies are also subject to financial reporting obligations under s 292(2) of the Corporations Act, regardless of size, if a foreign entity holds shares or otherwise controls the company.
What Are the Financial Reporting Obligations?
Large proprietary companies must, under Part 2M.3 of the Corporations Act:
- Prepare an annual financial report (s 292): includes financial statements, notes to financial statements, and a directors’ declaration (s 295).
- Audit the report: audited by a registered company auditor (s 301). This is not optional, and the auditor must be independent.
- Lodge the report with ASIC by the relevant deadline (s 319): for companies with a 30 June financial year, large proprietary companies must lodge within four months, meaning by 31 October.
- Directors’ declaration: directors must sign a declaration that the financial statements comply with accounting standards, give a true and fair view, and that the company can pay its debts as they fall due (s 295(4)). This declaration is personally signed by a director.
The s 295 directors’ declaration is significant. A director who signs a declaration knowing it is false, or reckless as to whether it is accurate, faces personal criminal liability under s 1308. A director who fails to take reasonable steps to ensure the declaration is correct may breach the directors’ duties in s 180 (care and diligence).
What Are the Lodgement Deadlines for FY26?
For companies with a financial year ending 30 June 2026, the ASIC lodgement deadlines are:
| Company type | Lodgement deadline |
|---|---|
| Disclosing entities and registered schemes | 30 September 2026 (already passed) |
| Large proprietary companies and foreign-controlled small proprietary companies | 31 October 2026 |
If your FY26 reports are not yet with your auditors, ASIC’s own published guidance is stark: treat this as a matter of urgency. The lodgement deadline is not flexible, and ASIC has demonstrated it will issue infringement notices without extended warning.
What ASIC’s Enforcement Campaign Means for Queensland Directors
ASIC Commissioner Kate O’Rourke confirmed in mid-2026 that financial reporting compliance is a 2026 ASIC enforcement priority. The campaign has the following characteristics that Queensland directors should understand:
- Data-driven surveillance: ASIC is not waiting for complaints. It is running automated, targeted surveillance of lodgement timelines. Companies that lodge late: or do not lodge at all: are identified systematically.
- Infringement notices are not the end: ASIC has open investigations and has stated enforcement action will continue. Infringement notices are the starting point, not the ceiling. Persistent non-compliance or aggravated cases will be referred for court proceedings, where maximum fines are significantly higher.
- No industry immunity: The 2026 enforcement campaign has targeted technology (Canva), cosmetics and retail (Mecca), fashion retail (Zara/H&M/Sephora brands), and logistics (Mainfreight group). Industry sector is not a protection.
- Director-level consequences: Failure to ensure proper financial reporting is not just a company issue. Directors who permit or cause lodgement failures may breach their duties under s 180 (care and diligence) and s 344 (obligation to take reasonable steps to ensure reports comply with the Act).
What Do the Infringement Notices Actually Mean?
An ASIC infringement notice is issued under s 1317DAC of the Corporations Act. Key mechanics:
- Payment is not an admission: Paying an infringement notice is not an admission of guilt or liability. The company is not regarded as having been convicted of the alleged offence.
- The penalty is half the court maximum: The $198,000 notice issued to each Canva entity represents half the maximum penalty if ASIC proceeds to court. If the matter is litigated, the company faces double the amount, plus legal costs and reputational consequences of a court hearing.
- The notice includes a 28-day response window: A company that receives an infringement notice has 28 days to pay, request an extension, or contest the notice. Failing to respond creates further risk.
- Annual reports cannot be retrospectively corrected to avoid penalty: If a report is lodged late, the late lodgement has already occurred. The infringement notice relates to the lodgement failure, not the content of the report.
Director Personal Liability: The Section 344 Risk
Section 344 of the Corporations Act imposes an obligation on officers of a company to take all reasonable steps to ensure the company complies with its financial reporting requirements. An “officer” for this purpose includes directors and certain senior managers.
Breach of s 344 is a criminal offence. Under s 344(2), an officer of a company commits an offence if the company contravenes ss 283, 286, 288, 292 to 307 or 309 to 316, and the officer fails to take all reasonable steps to comply with or secure compliance with those provisions. The maximum penalty is 200 penalty units (currently $73,000 at $364 per unit, as at 1 July 2026) or 5 years imprisonment, or both.
For Queensland directors, the practical risk profile looks like this: if ASIC escalates from infringement notices to court proceedings against the company, directors who failed to prioritise lodgement compliance: or who were not monitoring the process: face personal prosecution alongside the company. The directors’ declaration (s 295) that one or more directors signed adds a further dimension: that declaration is the director’s personal assurance that the company is solvent and the reports are accurate. A director who signs the declaration without adequate basis faces additional personal exposure.
Common Lodgement Failures and How They Arise
In practice, late lodgement by large proprietary companies arises from the following operational issues:
- Underestimating preparation time: Financial statements for large entities require significant preparation and audit time. Boards that begin the process too late cannot compress the audit timeline without quality risk.
- Auditor availability: Registered company auditors have capacity constraints, particularly for June balance date companies where many clients compete for auditor time simultaneously. Engaging the auditor late in the year creates scheduling risk.
- Group consolidation complexity: Companies with subsidiaries or international operations require consolidated reporting. Currency translation, intercompany eliminations, and subsidiary reporting timelines add complexity that is frequently underestimated.
- Director sign-off delays: The directors’ declaration requires directors to be available and engaged. Boards with offshore or unavailable directors create bottlenecks at the final stage.
- Incorrect classification: Some companies incorrectly classify themselves as small proprietary companies when they have crossed the large proprietary threshold, either through organic growth or acquisition. By the time the error is identified, the lodgement deadline has already passed.
Six Steps Queensland Directors Should Take Before 31 October 2026
- Confirm your classification: Apply the s 45A test to your FY26 figures. If you meet any two of the three thresholds, you are a large proprietary company for FY26.
- Check your auditor engagement: Confirm you have an engaged, independent registered company auditor and that the audit is on track for completion before 31 October.
- Confirm the directors’ declaration signatories: Identify which directors will sign the s 295 declaration. Ensure they understand what they are declaring and are available before lodgement.
- Review the financial statements for accounting standards compliance: The financial report must comply with Australian Accounting Standards (AASB). Non-compliance with standards is both a lodgement issue and a separate compliance risk.
- Lodge with ASIC through the ASIC Connect portal: Large proprietary companies lodge via ASIC Connect. Ensure the person responsible for lodgement has the necessary access and that the lodgement is confirmed (not just submitted).
- Seek legal advice if you cannot meet the deadline: If lodgement before 31 October is not achievable, seek legal advice immediately. There may be options available, but acting early maximises those options.
If ASIC has already made contact or issued an infringement notice, seek legal advice before paying or responding. Paying an infringement notice precludes certain procedural rights, and an experienced commercial lawyer can assess whether contesting the notice is appropriate in the circumstances.
How Boss Lawyers Can Help
Mark Harley and the team at Boss Lawyers regularly act for directors and companies navigating ASIC enforcement, regulatory compliance obligations, and director liability matters. If you are a director of a large proprietary company and have questions about your FY26 lodgement obligations, your exposure under ss 180 and 344, or how to respond to an ASIC infringement notice, contact Boss Lawyers to arrange a consultation.
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Frequently Asked Questions
What happens if a large proprietary company does not lodge its financial report by the ASIC deadline?
ASIC may issue an infringement notice, refer the matter for prosecution, or both. In 2026, ASIC has issued infringement notices ranging from $198,000 per entity to $594,000 across corporate groups. If the matter proceeds to court, the maximum penalty under s 319 of the Corporations Act is higher than the infringement notice amount, and the company may also face reputational consequences from the public nature of court proceedings.
Can a director be personally prosecuted for a company’s failure to lodge financial reports?
Yes. Section 344 of the Corporations Act requires officers (including directors) to take all reasonable steps to ensure the company complies with its financial reporting obligations. Breach of s 344 is a criminal offence. The maximum penalty is 200 penalty units (currently $73,000) or 5 years imprisonment. Directors must actively monitor the lodgement process, not assume the finance team or auditors have it under control.
Is paying an ASIC infringement notice an admission of guilt?
No. The Corporations Act expressly provides that payment of an infringement notice is not an admission of guilt or liability, and the company is not regarded as having been convicted of the alleged offence. However, paying the notice resolves the immediate matter: it does not prevent ASIC from pursuing further action for ongoing non-compliance, and does not restore the company’s lodgement record. A lawyer can advise on whether paying or contesting the notice is more appropriate in your circumstances.
When is the deadline for large proprietary companies to lodge FY26 financial reports?
For companies with a financial year ending 30 June 2026, large proprietary companies and foreign-controlled small proprietary companies must lodge their financial reports with ASIC by 31 October 2026. This is four months from the end of the financial year, as required by s 319 of the Corporations Act 2001.
What is the directors’ declaration and why does it matter?
Section 295 of the Corporations Act requires a director to sign a declaration that the company’s financial statements comply with Australian Accounting Standards, give a true and fair view of the company’s financial position and performance, and that the company can pay its debts as they fall due (solvency declaration). If a director signs the declaration knowing it is false or without adequate basis, the director faces personal liability under s 1308 and potential breach of directors’ duties under s 180. The declaration is not a formality: it is a personal representation with legal consequences.
This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances.
Mark Harley is the Principal Solicitor of Boss Lawyers Pty Ltd, a commercial litigation and insolvency law practice based in Brisbane, Queensland. Boss Lawyers regularly acts for directors, creditors, and businesses navigating regulatory compliance, insolvency, and director liability matters.
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