HELP! – My company was just deregistered by the ASIC and I need for it not to be!
Firstly, it’s hard to imagine as a director that you didn’t know that your company was heading for de-registration by the ASIC long before it happened; there are just too many red flags or sign posts before the ASIC takes that drastic step. Either your company has been put on the strike off status list of impending doom by the ASIC……you know the one I am talking about…… the naughty list…..the “I haven’t paid my annual review fees for 12 months or more, or bothered to answer compliance notices regarding my annual returns the ASIC has regularly sent to me” list. Yes that’s the one! Take a look at the ASIC’s Published Notices website created just for this purpose, which includes the inviting, yet perhaps a little disingenuous, “Welcome to ASIC’s publication website”.
So you haven’t paid your annual review fees for a long time or your diligence as a director has been a little less than ideal. It might just be that you knew it was going to happen and didn’t think you would need to keep its registration in good order which happens a lot actually; but, for whatever reason, you didn’t think ahead. While it’s ok to try and play a guessing game as to why the ASIC has de-registered your company that is not what you want to know. What you want to know is what you can do about it: Am I right? To answer this question though you do need to know the affects of de-registration on your company and how it happened. This article is limited to de-registration instigated by the ASIC because the other stuff that might get your company de-registered is a bit involved or a little more complex for this article.
If you need advice regarding de-registration other than by the ASIC please make an appointment to see me in person or by telephone. For now, let’s get our heads around the pesky ASIC de-registration.
So, what are the consequences of deregistration on your company?
When a company is deregistered, no matter how that happened, you need to consider the following important matters:
- Upon de-registration, a company ceases to exist. Any property still owned by the company at the time of de-registration (excluding trust property) is vested in the ASIC. Trust property on the other hand is vested in the Commonwealth on behalf of the ASIC. You cannot deal with the company’s assets or liabilities under any circumstances once deregistration takes place because it is no longer owned by your company.
- Former officeholders, such as directors, lose any right to deal in the company property that has now been vested or has become the property of the ASIC to deal with.
- Any legal proceedings involving the company cannot continue, as the company no longer exists.
These important matters I have set above are precisely why it’s important to finalise any of the company’s ongoing business before de-registration. As you can see from the above, the consequences of deregistration might be catastrophic in certain circumstances. (There are some exceptions of course that allow secured creditors and the Registrar of Titles to deal with a company’s property under State legislation despite de-registration)
What happens to a business name held by a de-registered company?
If a de-registered company holds a business name, the business name cannot be used as the company no longer exists. So a business name doesn’t vest in the ASIC even though technically it’s property belonging to the company. The ASIC cancels the business name upon a company’s de-registration. If you want to use the business name, you will need to reinstate the company and transfer the business name to a new holder. All in all, as you can see, de-registration has the potential to be a devastating event whichever way you look at it.
What about bank accounts of a de-registered company?
Nope…..bank accounts cannot remain open or operational. Any funds in a company’s bank account at the date of de-registration will normally vest in ASIC. If an account registered in the name of a de-registered company is identified it will be immediately frozen by the bank for both deposits and withdrawals. The ASIC recommends that banks contact their clients advising them the company’s account is frozen and provide them with an opportunity to reinstate the company. If the company remains de-registered after that then the account/s will be closed and the funds sent to ASIC’s Unclaimed Monies Unit. Your worst day in business, no doubt, if the first time you find out your company has been de-registered is from your bank.
So how can you reinstate a deregistered company?
Reinstatement, if successful, will restore a company to “Registered status” as if it was never de-registered in the first place.
You can make an application to the ASIC for reinstatement (subject to meeting their fairly strict criteria), or you can ask the court to order the ASIC to reinstate your company if that fails. The most cost effective road to reinstate a company is, of course, an application to the ASIC but this is not always possible if your application doesn’t meet all of their criteria, and unfortunately it’s off to court you must go in that event: A pricey consequence indeed. This is precisely why we, as directors, must be diligent in our company business and dealings.
Applying to ASIC for reinstatement
To apply to ASIC for reinstatement, you:
- must have been a director of the company when the company was deregistered
- cannot be banned or disqualified from being an officeholder; and
- must be able to prove that the company was carrying on business when it was deregistered. This particular element of the criteria causes the most difficulties in a reinstatement application in my experience.
If you applied for voluntary deregistration, you need to prove that it happened because of an oversight made by the company.
If ASIC deregistered the company, you need to prove that it was an error.
You can apply to the court for reinstatement if the ASIC refuses
If the ASIC has refused your reinstatement application or you can’t meet the criteria for the ASIC to reinstate, you can apply to the court to reinstate the company. Individuals that can apply to the court for reinstatement of a company can be creditors or members of a company too, although members can only apply to the court when there are no company directors that can make such an application.
So, if you would like to reinstate your company after de-registration by the ASIC, or need advice regarding reinstatement generally, I can definitely help you through that process. Just give me a call and make an appointment in person or by telephone to discuss your options.