THE LAZARUS PROJECT - REINSTATING A DE-REGISTERED COMPANY

01/02/2013

You’ve de-registered a company and suddenly find you’ve overlooked assets or rights that you now can’t access unless the company is reinstated. D’Oh!

We recently acted for a client in applying to the Supreme Court for the reinstatement of a company on ASIC so that company could deal with property it controlled and pursue court proceedings.

There are a number of circumstances in which a company can be deregistered with ASIC, including:

•   voluntarily deregistration by members of the company;
•   by ASIC for failure to pay annual fees or lodge documents; or
•   by a liquidator at the end of the liquidation process.

The effect of a company being deregistered is that the company ceases to exist and the property that the company may have upon deregistration (if there is any) vests in ASIC or the Commonwealth.

In our client’s case, the company was voluntarily deregistered by the sole director/shareholder on an incorrect assumption that the company was no longer serving a purpose.

If the company has been deregistered there are generally two ways to seek to have the company reinstated with ASIC.  The first is an “administrative process” whereby a person can request ASIC reinstate the company usually for reasons that include:

•   there was an administrative error by ASIC in deregistering the company (ie – the company had paid its annual review fee on time but the payment was not processed by ASIC); or

•   the company was carrying on business at the time it was deregistered.

The application to ASIC will need to be supported by a Statutory Declaration setting out the relevant facts and information to support the application for ASIC to reinstate the company.  Where the company was deregistered voluntarily the applicant needs to show there was an oversight or defect in the deregistration procedure with ASIC.

The second process, is the reinstatement of the company by court order (pursuant to section 601AH(2) of the Corporations Act 2001.  This step is usually taken where the company cannot seek the administrative reinstatement directly through ASIC.

The court application needs to be made by a “person aggrieved” by the deregistration or a former liquidator of the company.  In our case, the person aggrieved was the sole director and shareholder of the company who voluntarily deregistered the company thinking they had no further need for the company.

At the hearing the court considers the evidence in support of the application (and any contradictory evidence) to determine:

•   if the company is solvent;
•   whether ASIC opposes or does not oppose the application; and
•   whether it is “just” to reinstate the company with ASIC. 

In our case, we were able to show that the deregistration was an oversight by our client and in all the circumstances it was “just” for the company to be reinstated.

The court ordered ASIC to reinstate the company and that actions by the company be validated from the date of deregistration up to the date of reinstatement.

For our client this means control of the assets currently held by the company including those held under trust and the continued right to pursue a cause of action.

The important consequence of all reinstatements is that the company is reinstated as if it had never been deregistered.  That is, it has always existed.

Lastly, if the company is reinstated, the applicant must pay all outstanding fees and penalties to ASIC along with the reinstatement fee to complete the process.

If you have any questions in relation to the above article or want legal advice on the issue, please contact TOWNSENDS BUSINESS & CORPORATE LAWYERS on (02) 8296 6222.