ASIC Corporations (Directors' Report Relief) Instrument 2016/188

ASIC Corporations (Directors' Report Relief) Instrument 2016/188 is a legislative instrument made under subsection 341(1) of the Corporations Act 2001. It creates reporting relief for certain entities by allowing some information that would otherwise need to be included in a directors' report to appear somewhere else instead.

In practical terms, the instrument is about presentation and placement of disclosure. It can let an entity move eligible information out of the directors' report and into either the financial report or a separate accompanying document. That can reduce repetition across annual reporting documents, but only if the entity follows the instrument's conditions exactly.

The relief is not a general exemption from reporting. If information is required by the Act, the instrument does not erase that requirement. It only provides a different permitted location for some of that information, and only for entities and provisions covered by the instrument.

The instrument defines an entity as a company, registered scheme or disclosing entity. That means the relief is potentially relevant to a broad range of reporting organisations, but only where they are otherwise subject to the relevant reporting obligations under the Corporations Act.

The instrument also gives separate half-year relief to a disclosing entity in relation to section 306. So if your organisation is a disclosing entity preparing half-year reporting, this instrument may be relevant even if your immediate focus is not the annual directors' report.

If your business does not have a directors' report obligation under the relevant provisions of the Act, this instrument is unlikely to be useful. The starting point is always to identify the exact reporting obligation that applies to your entity for the relevant financial year or half-year.

The instrument is precise about the provisions it affects. For annual reporting, it says an entity does not have to comply with paragraph 298(1AA)(c), paragraph 298(1AB)(b), subsection 298(1A), sections 299 to 300, other than subsections 300(11B) and 300(11C), and section 300B, to the extent those provisions require certain information to be included in the directors' report, or in the financial report under subsection 300(2), for a financial year.

For half-year reporting, the instrument says a disclosing entity does not have to comply with section 306 to the extent that section requires certain information to be included in the directors' report for a half-year.

The instrument also gives relief from Part 2M.3 to the extent that Part would otherwise prevent information required to be included in the directors' report from being included in the financial report for the relevant period. That is the mechanism that supports shifting some directors' report content into the financial report.

The instrument does not let every item of directors' report information be moved into the financial report. Its Part 2M.3 relief expressly does not apply to information required by subsection 298(1A), sections 299 and 299A, and subsection 306(2) of the Act.

This distinction matters. The instrument gives relief from having to include certain information in the directors' report, but the separate permission to place information in the financial report has stated exclusions. So a business should not assume that because a disclosure can be omitted from the directors' report, it can automatically be inserted into the financial report instead. In some cases, the information may need to be placed in an accompanying document rather than the financial report.

The instrument also preserves subsections 300(11B) and 300(11C) from the annual reporting relief. Those subsections are expressly excluded from the sections 299 to 300 relief described in the instrument.

Before relying on the instrument, map each disclosure item against the exact Act provision that creates it. That is the safest way to work out whether the item can be moved, where it can be moved to, and what still must remain in the report itself.

The relief is only available if all of the instrument's conditions are met. These conditions are not optional. If one is missed, the entity should not assume it has validly relied on the instrument.

First, all information that is left out of the directors' report or financial report must be included in a separate accompanying document. The instrument calls this omitted material the excluded information.

Second, the directors' report must incorporate that omitted information by reference and include a prominent cross-reference to the page or pages of the financial report or accompanying document where the information appears. A vague note is not enough. The cross-reference needs to direct the reader clearly to the right location.

Third, the entity must not distribute or make available the directors' report and financial report without the accompanying document. The entity must also take reasonable steps to ensure no other person distributes or makes those reports available without the accompanying document.

Fourth, the accompanying document must be lodged with ASIC as if it were part of the report required to be lodged under section 319 or 320 for the relevant period.

Fifth, if any of the excluded information is relevant to a concise report for the purposes of section 314, that information must be included in or accompany the concise report and be lodged with ASIC under section 319.

For most businesses, the practical value of this instrument is in report design and workflow. It can help where the same disclosure would otherwise be repeated in the directors' report, the financial report and shareholder-facing materials. But the relief only works if the reporting team treats the directors' report, financial report and any accompanying document as one coordinated compliance package.

A sensible process is to start with a disclosure matrix. List each item that would ordinarily appear in the directors' report, identify the exact Corporations Act provision behind it, and then decide whether the instrument covers that provision. Next, decide whether the information will stay in the directors' report, move to the financial report, or sit in an accompanying document. Then check whether any carve-out prevents use of the financial report as the destination.

Distribution controls matter as much as drafting. If your annual report is published online, emailed to members, printed for meetings, or sent through a registry or external provider, your process should ensure the accompanying document always travels with the report set. The instrument also requires reasonable steps to stop others from distributing the reports without that document, so businesses should think about instructions to service providers and internal publication controls.

If your business prepares a concise report, do not overlook the extra condition dealing with section 314. The omitted information must still be included in or accompany that concise report and be lodged with ASIC.

Before relying on this relief for a reporting period, a business should confirm a few practical points. The first is entity status. Are you acting as a company, registered scheme or disclosing entity for the relevant obligation? The second is provision matching. Which exact section, subsection or paragraph of the Corporations Act requires the disclosure?

The third is destination. Is the information being moved into the financial report, or into an accompanying document? If it is going into the financial report, check whether the instrument's carve-outs prevent that. The fourth is cross-referencing. Does the directors' report point clearly and prominently to the exact page or pages where the omitted information appears? The fifth is distribution and lodgement. Can your systems ensure the accompanying document is always sent, published and lodged as required?

These checks are especially important because the instrument is technical and operates by exception. It is useful relief, but only for businesses that can apply it carefully and consistently.

The instrument was registered on 25 August 2016 and, under its commencement clause, commenced on the day after registration. The register currently shows it as in force.

Because this page is focused on the instrument itself, businesses should still check the current register entry before relying on it for a live reporting cycle. Legislative instruments can be amended, repealed or replaced, and reporting obligations under the Corporations Act can also change over time.

This page summarises the text of ASIC Corporations (Directors' Report Relief) Instrument 2016/188 as published on the Federal Register of Legislation. It should be read together with the current text of the Corporations Act 2001 provisions referred to in the instrument, because the relief operates by reference to those provisions.

If you are preparing a live annual or half-year report, check the current register entry and the current Act text before finalising your reporting approach.