In Short
If a company is deregistered, it loses its legal personality and can no longer trade, hold property or be involved in legal proceedings. In some circumstances, the company can be reinstated through an application to ASIC or by a court order. Once reinstated, the company is generally treated as if it had never been deregistered.
Tips for Businesses
Before applying to reinstate a company, confirm why it was deregistered and whether you meet the eligibility requirements. Check that the company name is still available and gather any supporting documents early. You should also assess whether the company can meet its debts and ongoing compliance obligations once reinstated.
Summary
This article explains how to reinstate a deregistered company for business owners in Australia. It outlines the reinstatement process through ASIC or the courts and is prepared by LegalVision’s business lawyers, a commercial law firm that specialises in advising clients on corporate and regulatory matters.
The law treats a registered company as its own legal personality. This means that a registered company can own property, operate a business and be a party to legal proceedings. Likewise, a company can also be deregistered, meaning it is stripped of its legal personality and is removed from the Australian Security and Investment Commission (ASIC) register. This article will take you through how to reinstate a deregistered company.
Consequences of Deregistration
Once a company is deregistered, it loses its legal personality and can no longer trade. Accordingly, the company’s directors can no longer make decisions concerning the company or its property as the company ceases to exist.
Additionally, the company’s bank accounts will typically be frozen or closed, and any existing contracts will become unenforceable. Directors and officers are also released from their ongoing duties to the company, though they may still face liability for actions taken before deregistration.
Consequently, legal proceedings involving the company will discontinue, and new proceedings cannot commence. In most cases, any property owned by the company will be vested in ASIC.
How Companies Become Deregistered
There are certain circumstances in which companies will become deregistered. The table below outlines some of these circumstances and the relevant criteria.
Voluntary deregistration | It is possible for a company to deregister voluntarily. However, your company must meet certain requirements to be eligible for this. Indeed, ensure that: + all members agree to the deregistration;+ the company is no longer trading; + company assets are worth less than $1,000; and + the company has no outstanding debts or legal proceedings |
Deregistration of a solvent company | A solvent company that does not meet the relevant criteria for voluntary deregistration may still deregister by winding up the company. |
Deregistration of an insolvent company | An insolvent company will need to consider voluntary administration or liquidation to deregister. |
Deregistration initiated by ASIC | Where a company ceases trading or owes outstanding fees and penalties, ASIC may deregister a company. |
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How to Reinstate a Deregistered Company
When you reinstate your company, it will return to the state it was before the deregistration process. Indeed, there are two ways that you can reinstate a company. This includes either:
- application to ASIC; or
- application to a court.
Who Can Apply to ASIC for Reinstatement
If you are a company director, secretary or member, there are certain circumstances under which you can reinstate a company. Additionally, you must:
- have been a director, secretary or member of the company at the time the company deregistered;
- not be disqualified from managing corporations; and
- provide evidence that the company would be able to pay its debts if reinstated.
In certain circumstances, you may also need to provide evidence as to why the company should not have been deregistered in the first place.
Alternatively, suppose you are a third party wishing to reinstate a company. In that case, you must have commenced legal proceedings against the company before its deregistration and be able to provide sufficient evidence of this.
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How to Apply to ASIC for Reinstatement
If you are applying to ASIC for reinstatement as a company director, secretary or member, there are certain steps you must take.
1. Check the Company Name Is Still Available
First, you must use ASIC’s name availability search to ensure your company name is still available. If it is still available, you can lodge a Form 410 to reserve your name for two months while you undertake the reinstatement process.
If the company name is no longer available, the company will be reinstated as its original name, followed by its Australian Company Number (ACN).
2. Complete the Relevant Forms
Next, you will need to prepare to reinstate the company by completing the relevant forms and paying the correct fees.
Likewise, you can send ASIC an enquiry requesting a detailed estimate of the fees you will need to pay. In preparation for this, you can calculate the costs to reinstate the company using ASIC’s reinstatement calculator. Further, once you submit your enquiry, ASIC will send you the fee statement and Form 581. Importantly, you need to complete this form to reinstate the company.
On the other hand, if you are applying for company reinstatement as a third party, you will only need to check that the company name is still available and complete the Form 581. Along with the Form 581, you must provide supporting evidence of your claim to reinstatement and payment of the reinstatement fee.
Applying to the Court for Reinstatement
Additionally, a person who is aggrieved by a company’s deregistration can apply to the court to order ASIC to reinstate the company. Similarly, a former liquidator can apply to deregister a company. This is an appropriate option only where you cannot meet the reinstatement criteria, or ASIC has refused your reinstatement application.
When Court Applications Are Necessary
In many cases, a court order will be required for reinstatement rather than a simple application to ASIC. The court has discretion to order reinstatement if it is satisfied that reinstatement is “just” in the circumstances.
What the Court Considers
When deciding whether to order reinstatement, the court will typically consider:
- the circumstances in which the company was deregistered (eg, whether it was voluntary or initiated by ASIC);
- whether the reinstated company would be put to good use – the court needs to be satisfied that there is a genuine purpose for reinstatement;
- whether any person is likely to be prejudiced by the reinstatement, including creditors, former directors or the company itself; and
- public interest considerations – whether there are any public policy reasons for or against reinstatement.
Reappointment of Liquidators
If the company was in liquidation at the time of deregistration, the court will typically reappoint the former liquidator upon reinstatement, provided they are willing and able to act. However, this reappointment is not automatic, and the court must make a specific order.
If you wish to appoint a different liquidator, you will need to provide reasons why that person should be preferred over the original liquidator.
What Happens After Reinstatement
Once ASIC reinstates your company, it is treated as if it had never been deregistered. This means the company returns to the exact state it was in immediately before deregistration occurred.
Automatic Restoration of Directors and Property
Anyone who was a director, secretary or other officer of the company immediately before deregistration will automatically resume their position upon reinstatement. Additionally, any property that ASIC held on behalf of the deregistered company will be returned to the company.
If any company property was subject to loans, charges or other claims at the time of deregistration, it will return to the company with those claims still attached.
Ongoing Compliance Requirements
Once reinstated, the company must resume its normal compliance obligations, including paying annual review fees, lodging required documents and maintaining proper company records. You should also review any contracts, bank accounts and business registrations to ensure they are updated to reflect the company’s reinstated status.
Key Takeaways
A deregistered company is stripped of its legal personality and removed from the ASIC register of companies. You can apply to reinstate a company in certain circumstances if you are:
- a former director, secretary or member of the company;
- a third party who commenced legal proceedings against the company prior to its deregistration; or
- aggrieved by the company’s deregistration.
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Frequently Asked Questions
A deregistered company is stripped of its legal personality and removed from the ASIC register of companies. Once you deregister your company, it loses its legal personality and can no longer trade. This means that the company’s directors can no longer make decisions with respect to the company as its property, as the company ceases to exist.
You can apply to reinstate a company in certain circumstances. First, you must check if the company name is still available. Next, if your name is available, you need to complete the relevant forms and provide any supporting evidence. Finally, you must pay any applicable fees.
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