Australia’s corporate regulatory environment is undergoing notable change as the Australian Securities and Investments Commission (ASIC) intensifies its focus on large private companies.
Lockton, a global insurance broker, has observed that ASIC’s recent actions signal a shift in the regulatory approach, with the commission warning of enforcement measures for companies that fail to meet financial reporting obligations.
A recent investigation involving a major beauty retailer, one of the largest privately owned businesses in the country, highlights this trend.
According to an ASIC spokesperson cited by The Australian Financial Review, this investigation is part of a broader effort to enforce compliance among private entities.
Lockton’s analysis suggests that the implications for directors, officers, and boards are significant, particularly in terms of legal liability and insurance coverage.
Recent changes to ASIC’s data publication policies further reflect this evolving regulatory landscape.
Following industry consultation, ASIC announced it will begin publishing internal dispute resolution (IDR) data at the firm level, providing more granular insight into how financial services firms – including insurers – handle customer complaints.
However, reportable situations (RS) data will only be released in aggregate form for the time being, as the commission considers the ongoing development of the RS reporting framework.
Lockton’s commentary underscores the need for private company directors to treat their financial reporting obligations with the same level of diligence as those in listed companies. The firm notes that both insurers and the regulator are closely monitoring compliance.
Large proprietary companies in Australia, defined by thresholds such as annual revenue of $50 million, assets over $25 million, or more than 100 employees, are required to submit annual financial reports to ASIC under the Corporations Act 2001.
The recent case involving the beauty retailer, which experienced delays in lodging its financial statements, has drawn attention to the risks associated with non-compliance.
The use of complex corporate structures to manage profits and dividends has also prompted further regulatory interest.
ASIC has indicated it will employ a range of enforcement tools, including civil penalties that can reach substantial amounts, public enforcement actions, regulatory investigations, and requirements for auditor reporting. This approach signals a move toward greater transparency and increased legal exposure for executives at large private companies.
Lockton said the heightened regulatory environment is prompting insurers to reassess their approach to directors & officers (D&O) liability insurance for private companies.
Insurers may introduce exclusions for claims related to late or non-lodgement of financial reports, misleading disclosures, or breaches of statutory obligations. These exclusions can shift liability risk back to company directors, especially in cases of repeated non-compliance.
Insurers are also requesting more detailed information about corporate structures, intercompany transactions, and related-party dealings.
Where a company’s structure is particularly complex or opaque, insurers may respond by increasing premiums, declining coverage, or requiring additional warranties and disclosures.
In addition, insolvency exclusions and solvency declarations are becoming more common, particularly where there are concerns about the accuracy of financial reporting.
To address these changes, Lockton recommends that directors and officers of large private companies:
ASIC’s evolving approach means that private companies are now subject to levels of scrutiny more commonly associated with public companies.
Directors and officers must recognise that non-compliance with reporting obligations is no longer a private matter, but one that carries regulatory, reputational, and insurance-related consequences.
Proactive transparency and compliance are becoming essential for securing and maintaining favourable D&O insurance terms. Failure to adapt to these changes may leave company boards exposed to increased personal and financial risk.
