Question

From a regulatory theory perspective explain the differences in disclosure requirements for US companies and Australian companies.

Answer 1

Disclosure Requirements in the U.S Companies

The disclosure requirements for U.S. companies are governed by the laws of the state in which each such company is formed. State laws vary as to their specifics, but the level of disclosure required is generally very similar.

The US Companies which are guided by the regulatory framework have their documents with the Secretary of State of the state in which they choose to be incorporated . The formation documents inludes

1.Certificate of Incorporation or Articles of Incorporation for a corporation

2.Certificate of Formation or Limited Partnership for other entities.

The formation documents includes the basic guidelines regarding the company name ,address information, such as the company's name and an address for its service of process .
The other provisions which are included are

A director and officer indemnification and certain corporate governance procedures, but these are not mandatory. The charter is in fact a contract between the shareholders and company which can be only be amended by the shareholders approval.

Furthermore, there can be events such as mergers, consolidations, conversions to a different form of entity, dissolutions, and winding-ups all require a filing with the Secretary of State in order to make the event effective under state law.

Disclosure Requirements in the AustralianCompanies

Reporting Obligations for Public Companies can be of three types

1.Not Disclosing entity or a company limited by gurantee

2.Not a Diclosing Entity

3.Limited by Gurantee.

1.In this case the companies must prepare annual financial reports in accordance with the Corporations Act 2001

The financial Reports must be

• Audited
• Lodged with ASIC within four months of a financial year
• The reports should be send to the members at their earliest of four months of year end or 21 days before the next AGM.

Companies that are not a disclosing entity is not required to comply with the corporation act are met and it is not

• a Borrowing Corporation
• the gurantor of such a borrower or
• a Financial service license

and it is

• is a wholly owned entity
• undertook a deed of cross gurantee with every other company

The audited accounts are not compulsory in case of these companies .

Limited by Gurantee :It should be directed by the regulations of ASIC and must be having the following obligations

• It must be having annual financial Reports
• Directors report with specific disclosures set in the corporation act which are prepared and audited as per the corporation guidelines.The company must notify the members of the annual financial report.