Is your company affected by ASIC’s cost recovery framework? The answer is yes!

Posted by on 12/09/2017

The Australian Securities & Investments Commission (ASIC)’s industry funding legislation came into effect on 1 July 2017 and the new cost recovery framework has been finalised, incorporating changes following industry consultation. This will see ASIC regulated entities receive an annual invoice for ASIC’s regulatory services delivered in the prior year.

ASIC has asked Governance Institute and other key parties to assist in ensuring that all regulated entities are aware of the introduction of ASIC annual levies. The new cost recovery framework also applies to companies limited by guarantee and other ASIC incorporated companies, registered as charities with the Australian Charities and Not-for-profits Commission. From July 2018 these entities will also be required to access the new ASIC portal and will be liable for an annual flat levy.

The framework, outlined in Report 535 ASIC cost recovery arrangements: 2017–18, identifies industry sectors and provides a methodology for how the levies will be calculated. There are two main components to the funding model: annual levies to cover the costs of ongoing regulatory activities and fees-for-service.

The cost of ongoing regulatory activities will be recovered through levies, either on the basis of a flat levy or on the basis of size or number of transactions. The model allocates levies to each subsector based on ASIC’s actual reported regulatory effort for the previous year. Levies will be calculated after the business activity has occurred and ASIC has finalised its regulatory costs. Individual entity levies will be allocated based on their actual reported business activity metrics or for some subsectors as a flat levy where there is no relevant activity metric. ASIC will continue to work on the fee-for-service component of the model in the coming year.

The Table below sets out the cost recovery arrangements for the corporate sector:

Corporate subsectors Levy metric Minimum levy Threshold for graduated levy
Listed public companies Market capitalisation $4,000 $5 million
Unlisted public companies Flat levy N/A N/A
Small proprietary limited companies Flat levy to be charged via an increase in the annual review fee for proprietary companies N/A N/A
Large proprietary limited companies Flat levy. To ensure proprietary companies are not overcharged, the actual levy will be reduced by the increase in the annual review fee for proprietary companies    
Registered liquidators Number of new and ongoing external administration appointments and notifiable events $2,500 No threshold
Auditors of disclosing entities Audit fee revenue None No threshold
Registered company auditors Flat levy N/A N/A

 

  • October 2017 — Cost Recovery Implementation Statement (CRIS) is published, which includes levy cost pools for each subsector for the 2017–2018 financial year
  • March 2018 — Indicative levies for 2017–2018 are published
  • June 2018 — Indicative levies for 2018–2019 are published
  • July 2018 — Portal opens to stakeholders to enter 2017–2018 data
  • October 2018 — CRIS published, which includes levy cost pools for each subsector for the 2018–2019 financial year
  • January 2019 — First invoices sent to stakeholders for the 2017–2018 financial year.

Further information is available at the ASIC Industry Funding page.

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