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In Australia, some people are automatically disqualified from either running a business or managing a company. If you have been convicted of a particular offence under the Corporations Act or the Business Names Registration Act, you cannot run a business. Similarly, an individual who is an undischarged bankrupt, or has executed a personal insolvency agreement is also ineligible.

Offences Under the Corporations Act

The following offences will automatically disqualify you from managing a corporation in Australia:

  • Involvement in an act that had the capacity to affect the corporation’s financial standing significantly;
  • An act contravening the Corporations Act and is punishable by imprisonment for more than 12 months;
  • An act involving dishonesty and is punishable by imprisonment for at least three months; or
  •  An offence against the law of a foreign country that is punishable by imprisonment for more than 12 months.

If the person doesn’t serve a term of imprisonment, the disqualification ends five years after the day of the conviction. If the person does, however, serve a term of imprisonment, then the term ends five years after the day on which the person is released from prison.

ASIC can also disqualify or ban a person from managing a company for up to five years if:

  • The person has been involved in two or more failed companies (i.e. liquidated) in the past seven years, and
  • A liquidator has lodged a report with ASIC for each of the companies in relation to the companies’ inability to pay its debts.

Offences Under the Business Names Registration Act

A person or entity is disqualified from registering a business name in Australia if:

  • The person or entity involved in the management of the entity is also disqualified from managing corporations under the Corporations Act;
  • The person is convicted of an offence against a law of the Commonwealth, State, Territory or a foreign country that involves dishonesty and is punishable by imprisonment for at least 3 months; and
  • The person is convicted of an offence against the law of a foreign country that is punishable by imprisonment for a period of more than 12 months.

If the person or entity is also disqualified under the Corporations Act, it is the same term as discussed above.

If you are disqualified from registering a business name under the Business Names Registration Act, you may be able to make a written application to the Minister to revoke the disqualification.

Conclusion

It is a serious criminal offence to manage a company when disqualified. If you believe you may be disqualified from running a business in Australia and would like advice, or you would like to make written application to the Minister under the Business Names Registration Act, get in touch with LegalVision’s experienced commercial lawyers.

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