When you deregister your company, it no longer exists and will not be able to enter into agreements or undertake activities. There are a number of methods to deregistering a company. This article will consider each method and explain how to deregister or reinstate a company.
How Do You Deregister a Company?
A company can be deregistered in several ways:
- voluntary deregistration;
- following a winding up (of either a solvent or an insolvent company); or
- by the Australian Securities and Investments Commission (ASIC).
Voluntary deregistration occurs when the members of the company agree to deregister. However, your company must meet a number of conditions, including that the company:
- is not conducting business;
- assets are worth less than $1,000;
- has no outstanding liabilities;
- is not involved in legal proceedings; and
- has paid all fees and penalties payable to ASIC.
To apply for voluntary deregistration, you will need to lodge an application for voluntary deregistration of a company (ASIC form 6010). You can complete this form online. Along with the application, you must pay the $39 application fee.
If ASIC approves your application, they will notify you of approval and publish a notice on ASIC’s website. Importantly, you must apply for deregistration at least two weeks before your company’s annual review fee due date. Failure to give ASIC enough notice may mean that ASIC will not receive the application in time for publication. You will have to pay the annual review fee before deregistration can occur.
After two months of the publication of the notice of deregistration, you may deregister your company. When this occurs, you will receive a confirmation notice to advise you of deregistration.
Winding Up a Solvent Company
A company is legally solvent when it is able to pay debts as they fall due. If a company is solvent, and it does not meet the above requirements for voluntary deregistration, the company’s members can elect to wind up the company.
Winding up of a solvent company means that:
- your company has ceased all affairs;
- your company has paid all its outstanding debts; and
- you have appointed a liquidator to manage the company’s assets.
The liquidator must complete specified steps. The liquidator must also submit a number of forms and statements. Once the liquidator finalises the winding up process, they will deregister the company. The company will be deregistered three months after the final forms are lodged.
Winding Up An Insolvent Company
Where a company is insolvent (it is not able to pay its debts as they fall due), the company must either begin the voluntary administration process or liquidation. Importantly, if your company is insolvent, it cannot continue trading. Trading while insolvent incurs penalties or criminal charges under the Corporations Act.
ASIC has the power to deregister a company if it has cause to believe your company has ceased trading or the company has outstanding fees and penalties owed to ASIC. Circumstances where this may arise include where the company has not:
- paid its annual review fee within 12 months of the due date;
- responded to a compliance notice; or
- lodged any documents in 18 months and ASIC believes it to no longer be in business.
Consequences and Effects of Deregistration
When you deregister your company, it ceases to exist as a legal entity. This means that it can no longer do anything as a company in its own right. Any property that the company owned will vest in ASIC (or in the Commonwealth where property is trust property).
Any legal proceedings cannot commence or continue. Legal proceedings are considered ended when you deregister a company. If you want to commence legal proceedings, the company will need to be reinstated.
If the company or a third party wants to stop deregistration, they may be able to do so depending on the circumstances.
However, if ASIC initiated the deregistration, the company will need to pay all overdue fees, lodge required documents and advise ASIC that the company is still in business.
In the case where your company applies for voluntary deregistration but then decides otherwise, it must explain to ASIC why deregistration should not continue.
If a third party wants to stop ASIC from deregistering your company, they will need to advise ASIC why they want to stop deregistration. They must also provide evidence to support their claims. The third party may do this in instances where they may have commenced legal proceedings against the company or intend to commence legal proceedings against the company in the near future. In these circumstances, ASIC may delay deregistration until the court has dealt with the proceedings.
However, if a company is on the path of deregistration, the third party would need to consider if the company had any assets to enforce a judgment.
Reinstating a Deregistered Company
If you deregister your company, you can still reinstate it, which restores the company to registered status. It will be as if the deregistration never occurred. This can occur by an application directly to ASIC, or by a court-ordered application.
In circumstances where the company intends to apply to ASIC for reinstatement, the relevant individual making the application must have been a director at the time of the company’s deregistration. Importantly, that individual must be able to prove that the company was carrying on business when deregistration occurred.
If the company’s deregistration was voluntary, the director must be able to demonstrate that the deregistration was the result of a company oversight. However, if ASIC deregistered your company, the director must be able to prove that it was an error. If you are unable to prove these requirements, you must seek a court order to reinstate your company.
The court may order ASIC to reinstate a company where the company makes a successful application to the court. The circumstances under which a court application may be sought include where:
- a person is disadvantaged as a result of the company’s deregistration; or
- company members need to reinstate the company because there are no company directors eligible to apply.
Applying to ASIC for Reinstatement
To apply to ASIC to reinstate your company, you must follow a number of steps. An important first step is confirming that your company name is still available by searching the ASIC database for company name availability. If another party has taken the name, your ACN will become your company name. If another party has not taken the name, you can reserve the name to ensure that it will be available upon reinstatement.
Your next step will be to request a detailed estimate of fees for reinstatement from ASIC. ASIC will send you an email outlining the relevant fees along with an application for reinstatement form. Once you have lodged the application and ASIC has received payment, ASIC will reinstate the company within 28 days.
Applying to the Court to Order ASIC to Reinstate a Company
To obtain a court order for ASIC to reinstate a company, you must apply for a court order through the Federal Court or the Supreme Court in your relevant state or territory. If the court orders a reinstatement, you will need to send the court order to ASIC, who will then reinstate the company within five business days.
There are a number of reasons why a company may be deregistered, including where it ceases business activities (either actual or presumed) or at the end of a winding-up process by a liquidator. Depending on the circumstances, your company deregistration may be voluntary, through a liquidator, or by ASIC. Each of the methods of deregistration has different requirements and steps, depending on the circumstances.
Once a company is deregistered, it ceases to exist and is no longer is a legal entity. Company deregistration can have big consequences and it should be carefully considered.
If you need advice on how to deregister or reinstate a company, get in touch with LegalVision’s insolvency lawyers on 1300 544 755 or fill out the form on this page.
Was this article helpful?
We appreciate your feedback – your submission has been successfully received.