Deregistering a company is entirely possible in Australia, but what are the necessary steps to achieve it? Most company owners or Chief Executive Officers (CEOs) may no longer conduct any business. Hence, they may wish to deregister their company for a number of reasons. Here are some common instances why CEOs deregister their company:
- Ceasing business or trading operations
- Inactivity for an extended period of time
- Insolvency (the inability to pay one’s debts)
- Merging with another company/business
The Australian Securities and Investments Commission (ASIC) is an independent government agency that acts as Australia’s corporate regulator. It is responsible for administering and enforcing laws related to corporate and financial markets in Australia. This includes the Corporations Act 2001, which governs the operations of companies in Australia.
This means that the ASIC is also responsible for guiding people for deregistering a company that they own. In fact, this government agency offers voluntary deregistering. However, people who want to choose this option should first meet certain requirements. Read on to know more.
Voluntary Deregistering a Company
Before applying for voluntary deregistering
The owner must have:
- Closed the company’s bank accounts
- Dealt with the company’s property. This means selling the remaining property of the company
- Cancelled or transferred any registered business names
- Cancelled any other licences held by the company. For instance, business owners must cancel their Australian Financial Services Licence.
Applying for voluntary deregistering
The owner must have:
- Paid off any outstanding outstanding fees in ASIC and penalties
- Members and employees of his/her company to agree to deregister the company
- The company not conduct business any longer
- Cancel any Australian Financial Services License (AFSL) or Australian Credit License (ACL) that the company holds.
The company must:
- Not be conducting any business
- Have assets under $1000
- Have up-to-date company tax and superannuation obligations
- Not currently be involved in legal proceedings
What happens if the company’s annual review fee is approaching? If this is the case, owners must make sure their deregistration application is received and processed by ASIC at least two weeks before the due date.
Filing for 6010 application form
A 6010 application form is a form used in Australia to apply for a range of services that the ASIC offers. The form is used to apply for changes to a company’s registration details, such as changes to the company’s name, address, or directors.
Additionally, the form can also be used to apply for deregistering a company. This involves removing the company’s registration from the Companies Register. The application fee costs $44 for voluntary deregistration.
Can ASIC Deregister a Company?
Yes. Here are steps that ASIC will take when they will deregister a company themselves:
1. Firstly, ASIC will send a letter to the company’s directors or liquidators to advise the pending deregistration.
2. Secondly, ASIC will update the concerned company’s status on ASIC’s register to indicate its deregistration.
3. Thirdly, ASIC will post a notice on ASIC’s Published Notices. The notice will advise that the concerned company will be deregistered in 2 months.
4. Finally, ASIC will deregister the company once the 2 month timeframe has elapsed. They will also send a notice to the directors or liquidators to confirm the deregistration.
Note: Owners do not have to pay the fee for the following year, if ASIC releases the notice before the due date of the annual review fee.
Effects of Deregistration
Deregistering a company means it is no longer operational and cannot do anything on its own. Company officers’ obligations to the deregistered company end upon deregistration. However, the company would be required to keep its books for three years after deregistration. More effects of deregistration include:
- The property the company owned vests in ASIC
- The property held by the company vests in the Commonwealth
- Former officeholders no longer have the right to deal with property registered in the company’s name
- The deregistered company ceasing to exist as a legal entity
- Any legal proceedings that the deregistered company is a part of can no longer be continued
- The owner of the deregistered company cannot initiate legal proceedings against the company
- The Australian Taxation Office (ATO) will also stop interacting with the deregistered company which include payments of refunds.
Note: ASIC may still reject a deregistration and advise the applicant of the reasons behind the rejection.
Liquidating or Deregistering a Company
Several factors will influence whether a company will voluntarily deregister or consider liquidation instead. Liquidation is the formal process of selling off company assets in order to repay creditors and dissolve a business. Voluntary deregistration is appropriate for smaller businesses with few assets and/or liabilities.
This is true since these small businesses can manage their assets and liabilities without the help of a liquidator. Therefore, it is common for directors to seek professional legal advice before making any decision. But why is this so? There are many risks associated when a company owner chooses to deregister their company. Such risks may include:
- Legal obligations: Deregistering a company does not relieve the owners or directors of their ongoing legal obligations under the Corporations Act 2001. This may include outstanding tax debts or employee entitlements.
- Reputation: Deregistration may affect the reputation of the company and its owners. This is true especially if the deregistration is related to insolvency or failure to meet regulatory requirements.
- Future liabilities: The owners and directors may still be personally liable for the company’s actions, even after deregistration. This means that they may still be sued for debts or other outstanding liabilities incurred by the company.
- Future business operations: Deregistration may affect the owners’ ability to conduct business in the future. They may need to register a new company to continue operating if they want to conduct business again.
- Loss of assets: The company’s assets may become the property of the ASIC upon deregistration. Hence, the owners may be unable to retrieve them easily.
- Ongoing regulatory requirements: The owners may still need to comply with reporting and regulatory requirements. This may include lodging annual returns and maintaining an accurate register of directors and shareholders, even after deregistering a company.
Importance of Seeking Legal Assistance
It is important to seek legal advice when a director or owner wants to deregister their company. This is because the process of deregistration involves complex legal and regulatory requirements. Moreover, this process can have significant consequences for the owners, directors, and other stakeholders.
JB Solicitors is a law firm that can help owners/directors choose the best options in deregistering their company. Our team’s experience in legal matters surrounding liquidation and deregistration can help protect an owners/director’s best interests even after ending a company.
Contact us today if you need help deregistering a company.