30/10/2013

In an earlier version of BLB News this year we outlined a case we recently worked on to get a court order reinstating a client's company with ASIC.

Following on from that work we have recently acted on another case for a client, which achieved a similar favourable result.

Importantly for this client, the company reinstatement enabled the company to sell its real estate and get paid even though when the contract was entered into the company was deregistered.

The key facts were:

•    the client's company owned real estate and was looking to sell it
•    the client found a buyer and signed a sale contract
•    after the contract was entered into the purchaser's adviser obtained a company search which showed the vendor company had been deregistered by ASIC and effectively no longer existed!
•    the client was unaware the company had been deregistered
•    the company had been deregistered for failing to pay the ASIC annual review fee
•    the client did not receive the ASIC notices about the annual review fee as he had changed address and not updated the company details on ASIC.

The effect of the company deregistration meant that the deregistered company no longer "existed" and the property it was seeking to sell had vested in ASIC on the company’s deregistration.  This meant the company could not proceed to sell the property and receive the proceeds.

An application was made to the court to reinstate the company and, importantly, to validate the contract for sale of the property entered into by the company.

The court order was obtained, the company was reinstated with ASIC, and the contract for sale validated and subsequently completed so the company was able to receive the proceeds of the sale.  Of important note is that when a company is reinstated by ASIC, it is taken to have never been deregistered, that is, the company has always existed.

This was a great outcome for the client given the circumstances of the case and the possibility of losing the asset.

We note that applications for company reinstatements are decided on the specific facts of each case and therefore advice should be sought in each case.

If you have any questions in relation to this article or need advice or assistance on reinstatement of companies please contact Townsends Business & Corporate Lawyers on (02) 8296 6222. We have systematised our company reinstatement service, so to provide instructions or make an enquiry, please click here .