Corporate insurance groups, holding companies, and their brokers face a narrowing window on two converging regulatory fronts: a key financial reporting relief instrument for wholly-owned entities expires on October 1, 2026, and the Australian Securities and Investments Commission (ASIC) has simultaneously made enforcement of financial reporting obligations a stated priority – issuing more than $2.2 million in infringement notices to 12 large proprietary companies in a single December 2024 enforcement action alone.
The ASIC opened public consultation on August 3, 2026, on its proposal to remake ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 for five years. The instrument provides financial reporting relief to wholly-owned companies where the holding entity lodges a consolidated financial report, subject to conditions that include executing a deed of cross guarantee. Without that relief, each subsidiary in a corporate group must independently prepare, audit, and lodge its own financial statements under Chapter 2M of the Corporations Act 2001.
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The remake is not happening in isolation. ASIC has sharpened its focus on financial reporting compliance, and non-compliance is now attracting material penalties. In 2025, an ASIC investigation found poor compliance by grandfathered companies, where more than half of entities investigated had not lodged financial reports on time, and nor had auditors made notifications of lodgement breaches. ASIC subsequently launched a broader surveillance exercise focused on non-lodgement by large proprietary companies. Of the 217 companies ASIC engaged with, it alleges that 70% – 151 companies – were non-compliant for failing to lodge a financial report for one or more of the FY23 and/or FY24 years. ASIC commissioner Kate O’Rourke said: “Companies should be lodging their financial reports in a timely manner. Regular and consistent reporting instils confidence and integrity in our financial system.”
Legal firm Allens noted in July 2026 that a common source of non-compliance involves entities wrongly relying on group-level reporting relief instruments – or assuming they are in place – when they are not properly maintained. That observation applies directly to the deed of cross guarantee, which requires annual director resolutions, timely ASIC lodgements, and strict adherence to the prescribed deed form. Failure on any single condition removes the relief for that financial year.
The deed of cross guarantee makes the group of companies that are parties to that deed akin to a single legal entity in many respects – creditors and potential creditors can then focus on the consolidated position for those entities rather than the individual financial statements of the wholly-owned subsidiaries that are parties to the deed. Relief under this instrument is based on similar relief available to corporate groups since the 1980s.
For brokers placing management liability, directors and officers (D&O), or professional indemnity cover for corporate group clients, the deed carries direct risk-assessment significance. When a company joins a deed of cross guarantee, it accepts mutual liability with other group members – every subsidiary in the closed group becomes jointly exposed to the liabilities of the whole. That shared exposure shapes how D&O and management liability policies are structured and how coverage triggers around directors' compliance duties are interpreted.
The Insurance Council of Australia (ICA) has documented the broader compliance cost context. Its November 2025 report found that annual compliance costs for the general insurance sector total between $2.5 billion and $3.5 billion – equivalent to 4% to 6% of gross written premium – with governance and reporting obligations identified as one of the largest cost drivers. In a November 2025 letter to the Council of Financial Regulators, ICA CEO Andrew Hall called for features of a law reform review to include adopting long-term relief orders issued by ASIC for insurers into primary legislation – a position that aligns directly with the government’s stated plan to replace the deed of cross guarantee mechanism through statute.
ASIC Instrument 2016/785 is due to sunset on October 1, 2026, and is proposed to be repealed shortly before that date. The relief provided in the instrument will continue to apply for financial years ending before January 1, 2027, with the draft new instrument applying to financial years ending on or after that date. ASIC has confirmed that the proposed conditions of relief in the draft instrument remain consistent to ensure that companies do not need to take any action solely because the instrument is being remade, with savings provisions preserving the effect of deeds already executed. Groups operating under existing, properly maintained arrangements do not need to act solely because of the remake. However, given ASIC’s current enforcement posture, any group that cannot confirm its deed is in good standing should treat this transition as a prompt for review.
The five-year extension is a bridging measure. As part of the 2026/27 Federal Budget, the Australian government announced legislation to simplify reporting relief for group entities without reducing protections – replacing complex deeds of cross guarantee with a simplified statutory process. The government projects 14 financial sector legislative reforms in this package will reduce regulatory burden by $780 million per year. Chartered Accountants Australia and New Zealand commented in May 2026 that “if designed carefully, this change has the potential to materially reduce legal and administrative complexity for groups, while improving transparency and confidence in how relief operates.”
The timeline for that legislation has not been confirmed. ASIC’s consultation – published as CS 61 – invites submissions on compliance costs and savings to [email protected] by 5pm AEST on August 28, 2026.
