Brisbane-based print consumables distributor, Dynamic Supplies, has been ordered to show ASIC its financial reports dating back to 2002.
The Federal Court in Brisbane has confirmed an ASIC decision to refuse financial reporting relief for the distributor. Since the decision has been handed down, it has lodged its outstanding financial reports.
In September 2008, Dynamic Supplies applied for an exemption from financial reporting requirements to ASIC, but failed to satisfy that they would suffer competitive disadvantage as a result of lodging financial reports, so ASIC refused the relief. ASIC also considered that the potential benefit to users of the financial reports outweighed the claimed detriment that would flow to Dynamic Supplies.
The consumables distributor is a privately owned company with national operations and employs 120 staff. In the 2008/2009 financial year, it has recorded $222 million in revenue.
Under the Corporations Act (the Act) a private company qualifies as a large proprietary company if it satisfies 2 or more size tests – consolidated revenue of $25 million or more; consolidated gross assets of $12.5 million or more; employees of 50 or more. The Act requires all large proprietary companies, unless grandfathered, to lodge their financial reports with ASIC for public inspection.
A large proprietary company can apply for relief from this obligation, but ASIC can only grant relief if it is satisfied that special circumstances exist, and typically this requires the company to show that complying with the statutory obligation would impose unreasonable burdens, such as competitive disadvantage.
From 2002, Dynamic Supplies qualified as a large proprietary company under the Act but failed to lodge financial reports with ASIC.
In November 2008, the distributor appealed ASIC’s decision to the Administrative Appeals Tribunal (AAT). In December 2009, the AAT affirmed ASIC’s decision. In January 2010, Dynamic Supplies appealed to the Federal Court against the AAT decision.
On July 30, 2010, the Federal Court ruled that the AAT had proceeded correctly in reviewing the matter. The Federal Court dismissed the appeal and ordered that Dynamic Supplies pay ASIC’s costs of the appeal.
Dynamic Supplies managing director, Scott McLennan, has not responded to requests for comment at the time of publication.