Angas Securities Limited and Australian Securities and Investments Commission

Angas Securities Limited sought relief from the Australian Securities and Investments Commission (ASIC) regarding its obligation to obtain and provide an audited financial report for the half-year ending 31 December 2017. The application was made under section 340 of the Corporations Act 2001 (Cth) on the basis that compliance would impose an unreasonable burden. The Administrative Appeals Tribunal (AAT) was required to determine whether Angas should be relieved from these auditing requirements.

The AAT considered several legal issues, including the purpose of financial reporting and audit requirements, which are designed to ensure management accountability and provide reliable financial information for informed economic decisions. The Tribunal also examined whether there was a causal connection between compliance and the detriment relied upon by Angas, and whether the cost of compliance constituted an unreasonable burden. Furthermore, the AAT assessed the broader range of users who rely on half-year financial statements beyond just investors, and the increased importance of independent review when a company is in a difficult financial position. The views of the trustee, representing debenture holders, were also given significant weight.

In its reasoning, the Tribunal found that the benefits of compliance with the audit requirements significantly outweighed the burdens imposed on Angas. It was held that the cost of an audit, estimated at approximately $500,000, was not a serious economic detriment when considered against Angas's running costs and projected future expenses. The AAT concluded that compliance with the auditing requirements did not impose an unreasonable burden on Angas, nor would it be inappropriate in the circumstances. The Tribunal was not satisfied that the conditions for granting relief under section 340(1) were met.

Consequently, the AAT affirmed ASIC's decision to refuse the request for relief. Angas was therefore not relieved from its obligation to comply with the auditing requirements for its half-year financial report ending 31 December 2017.