27/05/2015

A recent sad story highlights that you need to be careful when de-registering your company so that your reputation isn't de-registered along with it.

When Natalie Smith (name is fictitious) decided to close her business so she could concentrate on her new family-to-be she asked her accountant what would happen to the company she used to run the business. He told her she could put it aside for a while and simply pay annual fees until she was ready to come back to work and revive the company.

Natalie wasn’t sure that she would ever use the company again so she told her accountant she didn’t want to keep paying the annual fees and he then recommended she simply de-register the company with ASIC.  It had no assets and no liabilities so the accountant could simply file the relevant forms with ASIC to achieve de-registration.

One thing wasn’t considered – the company was called Natalie Smith Pty Limited.

A few years pass and now Natalie is ready to resume work.

She starts to set up her new business and quickly runs into a problem.  Her prospective suppliers say she has a negative notation on her credit record because her previous company was de-registered.

She tries to explain that de-registration is different from liquidation but runs into a brick wall of ignorance.

She contacts the credit agency to complain and they remove the notation.  Several months later the notation is back.  When she complains again she is told that the internet spiders have picked up the de-registration again and automatically made the notation.   She will have to contact the credit agency every few months to have the notation removed.

She then decides to revive the company and rid herself of the artificial ‘stigma’ of de-registration.  But there are problems with that solution as well.

The company has been de-registered for too long and ASIC will not consider simply re-registering her company.  She will need to apply to the Court for an order of re-registration.  Not only will this cost her maybe $5,000 (money she doesn’t have), but there is no guarantee that the Court would agree to her request anyway, given the reasons she wants to do it.

What should Natalie have done?  Put more correctly, what should her accountant have advised her to do?  It seems the answer may be to change the name of the company immediately before de-registration.  If the company were named simply by its ACN (see s.148(1) Corporations Act 2001 (Cth)) the de-registration would not have come to the spiders’ attention in the manner that is causing Natalie such angst.

So if you use your name or your product’s name in the name of your company and are considering de-registration you may want to consider a s.148 name change just to be on the safe side.

Townsends Business & Corporate Lawyers can help you de-register or re-register your company.  Call us on (02) 8296 6222 to find out how.