How To: Company Liquidation and Reinstatement

Company123 offers company registration services, but, as a registered tax and ASIC agent, can also help with matters of voluntary de registration and also reinstatement of companies.

Voluntarily deregistering a company

If your company meets certain criteria, you can apply for voluntary deregistration. This closes your company and removes your obligations as a company officeholder.

Company123 can act as your ASIC agents for the purposes of this process, for which the link can be found on our website.

The following are the important things to consider as part of this process

Paying Outstanding Fees

Company officeholders who wish to apply for voluntary deregistration need to pay any outstanding fees and penalties before they apply for deregistration. The application will not be approved if there is still an outstanding amount on the company's account.

As a company officeholder, you can use a company's corporate key to few the outstanding balance, under Debtor details, or as ASIC agents, we check the balance as part of the deregistration process.

These fees can be paid out to ASIC directly with Bpay or Postbill Pay. To find a company's specific payment details for the purposes of paying outstanding fees, you can search on ASIC's website here.

Timing

In applying for voluntary deregistration, you will need to make sure to apply at least two weeks before your company's annual review fee due date

When a company lodges an application to voluntarily deregister, ASIC publishes a notice of the intended deregistration. If the notice is published before the review fee is due, you won't have to pay the fee.  For example: if your company's annual review fee is due on 1 June and the notice is published on 30 May, the review fee does not need to be paid.

You should apply at least two weeks before the due date; this gives enough time for ASIC to receive your application and publish the notice on their website.

If the notice isn't published before the review fee is due, you will need to pay the fee before you can deregister your company.

Steps to Applying for Voluntary Deregistration

Company123 acts on your behalf as ASIC agents and lodges an Application for voluntary deregistration of a company, or Form 6010.

Before ASIC can accept the application, you need to ensure:

    all members of the company agree to deregister
    the company is not conducting business
    the company's assets are worth less than $1000
    the company has no outstanding liabilities (e.g. unpaid employee entitlements)
    the company is not involved in any legal proceedings and
    the company has paid all fees and penalties payable to ASIC.

If you apply for deregistration and you do not meet all these requirements (e.g. there are unpaid company fees), ASIC will reject your application and application fee will not be refunded.

It is also recommend you complete the following steps before lodging an application:

    check any bank accounts in the company's name are closed, regardless of the balance
    review all company records/registers to ensure all company property is dealt with (e.g. vehicles, land, shares, trade marks, intellectual property, leases, permits)
    all transfers of company property are registered and no property is registered in the company's name
    if the company was a trustee, a new trustee has been appointed and no trust property remains registered in the company's name
    ensure all registered business names held by the company are cancelled or transferred
    ensure any licenses held by the company are cancelled or ceased

What happens once an application is lodged?

If the application is rejected, ASIC will write, advising why there has been a rejection and, in some cases, how to can be overcome.

If the application has been approved, ASIC will write confirming the company's impending deregistration and publish a notice on ASIC's Published Notices website.

It can take up to two weeks (including postage) for ASIC to process applications and publish a notice on their website.

Two months after the notice has been published, the company may be deregistered. In this case, ASIC will send a confirmation notice.

The effects of deregistration

A company may be deregistered after it is closed down (e.g. voluntary deregistration), liquidated (by the members, court or creditors) or struck off the register of companies by ASIC (e.g. for outstanding annual review fees).

Normally once a company is deregistered:

    it ceases to exist as a legal entity and can no longer do anything in its own right
    property the company owned (other than trust property) vests in ASIC
    property held by the company on trust vests in the Commonwealth (represented by ASIC)
    the former officeholders no longer have the right to deal with property registered in the company's name
    any legal proceedings in which the company is a party cannot be continued (in so far as they relate to the deregistered company)
    you cannot start legal proceedings against the company.

Deregistered company property vests in ASIC or the Commonwealth and ASIC is generally the only party legally able to deal with company property after deregistration. However there are some exceptions, e.g. secured parties and Land Titles Office Registrars (who have various powers in relation to land dealings under State/Territory Legislation) can deal with the company's property despite deregistration.

What property does not vest?

Property does not vest in ASIC or the Commonwealth in the following circumstances:

    Companies under external administration or in strike-off are still registered companies and ASIC cannot deal with property in a registered company's name. Information on stopping or deferring deregistration can be found here.

    Business names registered in the name of a company, do not vest in ASIC or the Commonwealth when the company becomes deregistered as they are cancelled by ASIC (according to s50 of the Business Names Registration Act 2011).

    Companies deregistered under s1440 of the Corporations Law (usually subsidiaries of the State Bank of South Australia).

    Building Societies, Friendly Societies and Credit Unions deregistered prior to 1 July 1999. If you are seeking to deal with property belonging to any of these bodies, you will need to contact the Australian Prudential Regulation Authority, APRA, and/or the Commonwealth Treasury Department to ascertain the relevant State authority that has the power to deal with the property.

    Property registered in the name of a deregistered or dissolved association or incorporation. Associations and incorporations are generally not registered under corporation legislation but under specific State/Territory legislation. The vesting of outstanding property of those entities will depend on the provisions of the specific legislation the entity was dissolved under. You will need to contact the relevant Fair Trading or Consumer Affairs Department in your State or Territory.

    Property disclaimed by a liquidator vests in the Crown in right of the State. If you are asserting an interest in such property you need to contact the relevant State Crown Solicitor. (NB. if the disclaimed property is real property in NSW, the relevant contact may be Crown Land NSW.)

Reinstating a deregistered company

Reinstatement will restore a company to registered as if it was never deregistered.

Company123 can apply to ASIC for reinstatement of your company as registered ASIC agents.

Additionally, you can also apply to the court for an order that ASIC reinstate a company

The Reinstatement Process: Applying to ASIC

To apply to ASIC for reinstatement of a company as a director, secretary or member, you:

    must have been a director, secretary or member of the company at the time of deregistration,
    must be able to confirm that upon reinstatement the company will be able to pay its debts as and when they fall due,
    cannot be disqualified from managing corporations, and
    provide supporting documentation as to why the company should not have been deregistered (where required).

If you applied for voluntary deregistration, you will need to prove that the declaration made on the application for voluntary deregistration was incorrect at the time the company was deregistered. If ASIC deregistered the company, you may need to prove that it was an error.

To apply to ASIC for reinstatement of a company as a third party, you must:

    have started legal proceedings against the company before its deregistration, and
    be able to provide copies of court documentation to evidence the legal proceedings.

First, you must establish whether ASIC is able to reinstate a company's registration. This can be done by reading The Regulatory Guide 83 or RG 83.

Once you have established your company meets the criteria, the next steps involved include:

Step 1: Checking if the company name is still available

You can use ASIC's search function here to see if the company name is still available.

If the company name is no longer available, ASIC will reinstate the company with its name as the Australian Company number (ACN) followed by the legal elements (e.g. ACN 901 901 901 Pty Ltd.).

If the name is still available, you may wish to reserve it to ensure it's still available when the company is reinstated. To reserve the name, you need to lodge a Form 410 Application for reservation of a name (Form 410). This reserves the name for two months.

Company123 can assist in the lodgement of such forms, in our role as ASIC agents.

Step 2: Calculating the Reinstatement Fees

This can be done using ASIC's website or Company123's form, which will provide an estimate.

Step 3: Pay the outstanding fees to ASIC

As part of our role in the process, Company123 would send an online query, requesting a detailed estimate of the fees to be paid.

Within 28 days, ASIC sends an email outlining the fees that need to be paid, as well as a Form 581 Application for ASIC Reinstatement (Form 581).

Payment is included in our fee.

Step 4: Complete the 581 Form and Send to ASIC

To Send the application, we provide:

    the Form 581, and
    full payment of fees requested in the step above.

Persons acting on behalf of a former officeholder or member must have the application completed and signed by that officeholder or member.

Once ASIC has received full payment and an application has been lodged with ASIC it may take up to 28 days for a decision to be made.

You may need to take this timeframe into consideration as the company won't be able to conduct business until it has been reinstated.

If your application does not meet our requirements, it will be returned to you. There could be delays while ASIC seeks more information.

Applying to the court for an order that ASIC reinstate a company

A person who is aggrieved by the deregistration of a company or a former liquidator of a company can apply to the court for an order that ASIC reinstate a company. These applications must be made to a superior court such as the Supreme Court, the Federal Court or the Family Court.

You can also apply to the court if ASIC has refused your reinstatement application or if you can't meet the criteria. We recommend seeking your own legal advice before applying for a court order.

Effects of Deregistration

A company may be deregistered after it is closed down (e.g. voluntary deregistration), liquidated (by the members, court or creditors) or struck off the register of companies by ASIC (e.g. for outstanding annual review fees).

Normally once a company is deregistered:

    it ceases to exist as a legal entity and can no longer do anything in its own right
    property the company owned (other than trust property) vests in ASIC
    property held by the company on trust vests in the Commonwealth (represented by ASIC)
    the former officeholders no longer have the right to deal with property registered in the company's name
    any legal proceedings in which the company is a party cannot be continued (in so far as they relate to the deregistered company)
    you cannot start legal proceedings against the company.

Deregistered company property vests in ASIC or the Commonwealth and ASIC is generally the only party legally able to deal with company property after deregistration. However there are some exceptions, e.g. secured parties and Land Titles Office Registrars (who have various powers in relation to land dealings under State/Territory Legislation) can deal with the company's property despite deregistration.

Other types of deregistration

Winding up a solvent company

If a company is solvent, but does not meet the requirements for voluntary deregistration (e.g. has assets worth more than $1000), the company's members can 'wind up' the company. This involves resolving outstanding affairs including:

    ceasing or selling operations
    payment of outstanding debts and
    appointing a liquidator to manage any assets.

The steps involved include:

Step 1-Company directors must make a declaration of solvency

To begin winding up a solvent company, a majority of the directors must make a Declaration of solvency (Form 520). This means they believe the company will be able to pay all its existing debts in full within 12 months of the commencement of the winding up.

Form 520 must be made and lodged with ASIC. This must be done before the date on which the notice of meeting, as listed in step 2, is sent to members to consider the resolution to wind up the company.

It is an offence under the Corporations Act 2001 to make a false declaration of solvency. Penalties can apply.

Step 2- Company members must pass a special resolution

After the solvency declaration has been lodged, the company members must pass a special resolution to wind up the company.

All members must have at least 21 days notice (in writing) of the meeting to vote on the special resolution, although this can be reduced by agreement. At the meeting, at least 75% of company members must be in favour of the resolution for it to pass. The company must also appoint a liquidator or liquidators, and the winding up begins from the date the special resolution is passed.

The company must lodge Form 205 (Notification of resolution) setting out the text of the resolution that was passed and the liquidator must lodge Form 505 (Notification of appointment or cessation of an external administrator) to advise of their appointment.

Step 3-Notice of the special resolution must be published on the Published notices website

Notice of the resolution to wind up the company must be published on ASIC's Published notices website by the end of the next business day after the liquidator is appointed. It is required to sign up to the website and pay the appropriate fee before a notice can be published.

Step 4-Liquidator winds up company's affairs

The liquidator can then begin winding up the company. They must lodge with ASIC a detailed list of receipts and payments for the administration (Form 5602 Annual Administration Return) annually on the anniversary of their appointment.

If the liquidation commenced before 1 September 2017, the liquidator will continue to lodge the six-monthly Form 524 (Presentation of accounts and statement) until the six-month period ending on the first anniversary of their appointment date. Thereafter, they will lodge the annual administration return.

At any point, if the liquidator thinks the company will be unable to pay their debts in full within 12 months, they must either:

    convene a meeting of creditors
    appoint a voluntary administrator
    apply to the court for the company to be wound up in insolvency.

Step 5-Liquidator finishes winding up company and lodges final documents

If the liquidator has finished winding up the company before 1 July 2018, they need to lodge Form 523 (Notification of final meeting convened by liquidators) within seven days of the company's final meeting. It must include an account of how the winding up was conducted.

The liquidator must also lodge a:

    Form 5603 (End of administration return)
    Form 5011 (Copy of minutes of meeting).

If the winding up finished on or after 1 July 2018, the liquidator is not required to convene a final meeting but must lodge Form 5603 (End of administration return) within one month after the end of the winding up.
The company will be deregistered three months after the Form 523 or Form 5603 has been lodged.

Winding up an insolvent company

If the company is insolvent, you can't apply for voluntary deregistration. Unless you refinance the company and make it solvent, you will need to consider voluntary administration or liquidation.

ASIC-initiated deregistration

ASIC may deregister a company if we believe the company has ceased trading or has outstanding fees and penalties. This includes:

    the company has not paid its annual review fee within 12 months of the due date
    the company has not responded to a Company compliance notice or
    the company has not lodged any documents in 18 months and we believe the company is no longer in business.

The steps for an ASIC-initiated deregistration are:

    ASIC sends a letter to the company's directors and/or liquidator (if applicable)to advise of the pending deregistration.
    ASIC updates the company's status on their register to display as 'SOFF' (Strike off status), meaning it's being deregistered.
    ASIC posts a notice on their Published notices website, advising that the company will be deregistered in two months unless stopped.
    When two months have passed, ASIC deregisters the company and sends a notice to the directors and/or liquidators to confirm.

Once a notice has been published on the Published notices website, it can't be removed, even if deregistration is stopped.

Stopping deregistration

If you've applied for voluntary deregistration and changed your mind or ASIC has begun to deregister your company, you may be able to stop deregistration.

A third party (e.g. another company) can apply to ASIC to defer deregistration of a company if they are conducting, or plan to conduct, legal proceedings against the company.

How can I stop an ASIC-initiated deregistration?

Depending on why the company is being deregistered, you can stop deregistration by paying the company's annual review fee and any other overdue fees.

You must allow enough time for your payment to be processed. If the company is already deregistered, it is too late to apply to stop deregistration.

A third party (e.g. another company) can stop ASIC from deregistering a company if:

    they are conducting legal proceedings against the company or
    they intend to conduct legal proceedings against the company shortly.

ASIC will delay deregistration to allow any action to be completed.