Small just got bigger: 
Raising the threshold for large proprietary company status

Impact on due diligence activities

Copies of financial and sustainability reports filed with ASIC by large proprietary companies are available to the public for a small access fee. This is a useful source of information for prospective bidders to assess the financial condition of potential acquisition targets before making a formal or informal approach.

The changes to the classification thresholds will mean that future financial statements for some private companies which may be attractive buy-out targets will not be available on public record. For smaller private M&A transactions, this may result in earlier approaches being made to targets to facilitate bidder access to necessary financial information required to formulate or refine offers.

This may be seen as positive news for potential targets who will be positioned to strategically manage release of financial information in sales processes. 

Welcome regulatory burden relief

While potential acquirers may not be in favour of this reduction in publicly available information, the broader move to simplify and focus regulatory requirements for Australian companies may be more appreciated.

This change to proprietary company thresholds was first announced with the 2026–27 Federal Budget as part of a set of broader reforms intended to reduce the regulatory compliance burden on smaller scale Australian businesses. The Government estimates that the proposed threshold changes will save over $210 million per year in compliance costs for businesses.

The current regulatory compliance burden placed on Australian business (including private companies) is onerous. The AICD’s 2025 Mandala Partners report found that when benchmarked against the G7, Australia ranks second (after Japan) for its administrative and regulatory burden.³

On this financial reporting point specifically, international practice regarding the public availability of financial reports for privately held companies is mixed, particularly for countries where corporations law is state or province based. However, the United Kingdom is an interesting comparison. There, Companies House facilitates public access to mandatory financial statement filings for all companies. The disclosure and audit requirements are simplified for smaller companies (and even more so for ‘micro’ companies), with the relevant threshold for a ‘small’ company approximately $20 million in revenue and $10 million gross assets, which is significantly lower than the new equivalent thresholds in Australia.  

Further reform to reduce the compliance burden for business

The Federal Government’s FY2026-27 Budget “Whole-of-Government Regulatory Reform Agenda” also indicates that the Government is progressing simplification of the deed of cross guarantee (DOCG) regime which provides additional financial reporting relief in circumstances where consolidated financial statements are prepared by a parent company (among other stringent conditions).⁴ 

The Government is proposing to introduce a simplified statutory process to replace the complex documentation currently required in order to qualify for the relief.

Combined with the changes to the proprietary company thresholds, this is a positive reform initiative for reducing the regulatory burden on Australian business and we look forward to seeing details of the proposed changes to the DOCG procedures in due course. 
 

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1. Corporations Amendment (Proprietary Company Thresholds) Regulations 2026 (Exposure Draft), released 19 October 2026. See the Treasury’s consultation page at  <https://consult.treasury.gov.au/c2026-811281>. 

2. Sections 45A(2) and 45A(3), Corporations Act 2001 (Cth); Regulation 1.0.02B, Corporations Regulations 2001 (Cth).

3. Based on OECD Product Market indicators. See “$160 Billion and Counting: The Cost of Commonwealth Regulatory Complexity” (Report, November 2025) (prepared by Mandala Partners for the Australian Institute of Company Directors), page 8. 

4. See <https://budget.gov.au/content/factsheets/download/factsheet-regulatory-reform.pdf>.