Responsibilities after Registration of an Australian Company

The Australian Securities and Investments Commission (ASIC) is the Australian Federal Government’s company law watchdog, and is responsible for making sure companies follow the regulations as set out in the Corporations Act 2001.

Officers of Australian companies, called “Directors and/or Secretaries”, must be honest and careful at all times, make sure the company acts responsibly, can pay its debts and that the company keeps proper financial records.

“Small Proprietary” companies do not generally have to lodge Financial Accounts with ASIC, however must still keep financial records for organisational and taxation purposes.

All companies must apply for an Australian Tax File Number (TFN) and an Australian Business Number (ABN) for Goods and Services Tax (GST). For more information, please visit www.ato.gov.au

“Large Proprietary” companies, “Public” companies and “Non-profit” public companies must prepare financial reports, have them audited and lodge them with ASIC annually.

Any changes to the Officers of the company, changes to shareholdings or changes in Registered Office or Business addresses must be notified to ASIC within 28 Days of the Date of Change or penalty fees will be incurred.

Annual Reviews:

Every Australian company has an “Annual Review” each year, on the anniversary date that the company was registered.

At this time, all details of the company should be checked with ASIC’s “Company Statement” and if there are any changes to be made, they must be notified to ASIC within 28 Days of the Date of Change or penalty fees will be incurred.

The Annual Review Fee for the company must be paid within 2 months of the company’s Annual Review Date or late payment penalties will be incurred. (See below)

Review Fees:

Penalties:

The company’s Directors must pass a “Solvency Resolution” within 2 months after the company’s Annual Review Date, unless the company has lodged a financial report with ASIC within 12 months before the due date.

A “positive” Solvency Resolution means that the Directors are of the opinion that there are reasonable grounds to believe that the company will be able to pay its debts when they become due and payable. Notification of a positive Solvency Resolution does not have be lodged with ASIC, but kept in the company’s file to be provided if necessary. The company must pay its Annual Review Fee, which is taken to be a representation by the Directors that the company is “Solvent”.

Annual Reviews: (continued)

A “negative” Solvency Resolution means that the Directors are of the opinion that the company cannot pay its debts when they become due and payable. If the Directors pass a negative resolution, ASIC must be notified using a Form 485 within 7 days after the end of the two month period following the Annual Review Date.

Registers of Shares, Options or Charges:

If you want to keep the Register of Shares, Options or Charges at an address other than the company’s Registered Office address or Principal Place of Business, you must notify ASIC by lodging a Form 909 within 7 days after the change.

If you create a charge on company property, you must notify ASIC within 45 days by way of lodging a Form 309 & 350.

Change of Company Name:

If the company wants to change its name, it must make sure the proposed new name is available for registration, pass a resolution by a majority of the Members / Shareholders and notify ASIC by lodging a Form 205 and paying the prescribed ASIC Fee of $351 within 14 days of the date of the resolution.

Company name changes cannot be backdated and the Date of Change on the ASIC Certificate will be the date ASIC processes the name change.

Issue of New Shares:

ASIC must be notified of allotments of new shares by lodging a Form 484 with 28 days of the Date of Change or penalties will be incurred. Share transfers must also be notified by lodging a Form 484 within 28 days of the Date of Change.

Ultimate Holding Company:

Proprietary companies must notify ASIC of changes to the Ultimate Holding company within 28 days of the Date of Change or penalties will be incurred.

Voluntary Deregistration of a Company

When it comes time for you to deregister your Australian Company, there’s a particular process that you must follow – please read on.
(If you want to know how to deregister a “Foreign Company Registered in Australia”, please look here.)

What are the requirements to deregister an Australian Company?

Before the Australian Securities and Investments Commission (ASIC) will consider an application for Voluntary Deregistration of a company:

• all members of the company must agree to the deregistration
• the company must not be carrying on business
• the company’s assets must be worth less than $1,000 AUD
• the company must have paid all ASIC fees and penalties (if applicable)
• the company must have no outstanding liabilities
• the company must not be a party to and legal proceedings – and any charges registered on the company must be discharged.

There must be NO Charges currently registered against the company and NO outstanding ASIC Fees.

You must also check to ensure that the company does not own property, business names, trademarks / patents, car registrations, etc. before applying for voluntary deregistration.

How can you apply for voluntary deregistration?

ASIC requires the lodgement of a Form 6010, along with the application fee of $35 (No GST applicable).

For NCS to prepare this on your behalf, we require the following information:

• Company Name, ACN and Registered Office address
• Details of current Directors and all Members (Name, address, date & place of birth)
• Who the main signatory Director is for signing of documents.
• Contact name and mailing address for documents.

If NCS does prepare the necessary documentation on your behalf, our costs are $110 AUD inclusive of GST plus the $35 ASIC application fee. This includes the preparation and lodgement of all documents, as well as following up with ASIC until the company is struck off the register.

What happens once we lodge for deregistration?

Once ASIC approves the voluntary deregistration, a “Notice of Intention to Deregister” is published in the
Government Gazette* for three consecutive months.

If no objections are received by the end of that period regarding the deregistration of your company, ASIC will
strike your company of the register.

* The gazette is released and updated each Tuesday and Friday of each week, except the first and last weeks of
the year.

Unit Trust

Disclaimer: NORFOLK CORPORATE SUPPORT (NCS) is not a legal advisor.
It is strongly recommended that you seek competent and qualified advice from a legal advisor or Accountant before ordering any Trust structures.
All Trusts supplied by NCS are prepared by a qualified Solicitor.

Setting Up a Unit Trust

A Unit Trust creates obligations which are imposed upon a Trustee, usually a company which owns a jointlyowned asset such as a business, for the benefit of the person or persons and companies which are named as the Unit Holders of the Trust.

The Unit Holders hold their interest in the Trust as fixed entitlements similar to ownership in shares in a company.

The Trustee

may be either a natural person or persons or a proprietary limited (Pty Ltd) company.

Costs:

Establishment costs do vary from State-to-State/Territory, together with Stamp Duty costs / requirements.

Currently for Victoria, NCS Charge $350 for the Trust, and there is $200 Stamp Duty payable to the State Revenue Office.
(Please contact our office for costs relating to Trusts set up in other States / Territories)

As reported on their own website, ASIC have received orders to wind up York Capital Limited (read the Fact Sheet here). ASIC received these orders in the Federal Court of Australia after York Capital Limited failed to lodge its financial reports and hold annual general meetings for the past three years.

This highlights the importance of both the AGM as well as the financial statements – ASIC takes these matters very seriously as they are an integral part of your company’s ability to remain compliant with the Corporations Act 2001.

Hot on the heels of this decision, ASIC issued a warning to company directors that “it will be closely scrutinising 2011 company financial reports” after it was found in a separate court ruling that “found directors had breached their responsibilities by signing off on accounts that were later revealed to be misleading.” – (ASIC warns directors on financial reporting, Smart Company. 8 July 2011 – Link)

Lodging annual financial statements isn’t merely a formality for companies in Australia, it is a vital step in ensuring compliance with the laws that govern the running of companies as well as ensuring the companies are not trading while insolvent.

If your company is required to hold an AGM and/or lodge annual financial statements, take the time to review the reports carefully to make sure that you and your company are doing the right thing. The penalties can be quite severe if you don’t.

A headline grabbed our attention recently from the Smart Company website: Scoopon accuses beauty site of trademark infringement over the word “scoop” (Link)

A small business startup by the name of Bellabuy was originally called “BeautyScoop”, however they were approached some seven weeks after they launched by group-buying behemoth Scoopon with a formal insistence that they change the name of their business due to Scoopon’s belief that their trademark had been infringed upon.

Scoopon is a site that offers heavily discounted prices on a wide variety of items through the concept of “group buying”, wherein a business will offer their product or service for a nominated fee if a certain amount of customers buy into the deal. The concept is very similar to one operated overseas by Scoopon’s bitter rivals Groupon.

The infringement, thankfully caught and dealt with early, still presented a nightmarish situation for Bellabuy’s founders who said that they had to scramble to rebrand and re-advertise their business across a three-week period and had to pay out upwards of $10,000 in legal fees, advertising and the rebranding.

You can read the full article on the Smart Company blog here: Scoopon accuses beauty site of trademark infringement over the word “scoop”

This presents a clear case of the importance of doing the proper research and getting professional advice before proceeding with the registration and establishment of your business venture, no matter how large.

If you have any questions about your own business or trademarks, we recommend you get in touch with Brian Goldberg from EKM Patent & Trade Marks.

Now, in 2011, with a further increase to many of their standard fees, we’ve had to make the decision to increase some of our standard service fees.

There is good news in this for our clients: Our standard fees are only increasing according to the ASIC increases. For example:

As you can see from the above example, our standard fee for a new company setup includes the ASIC fee. So, our prices really haven’t increased at all – they just appear to have gone up due to the increase in ASIC Fees.

In an effort to remain competitive in our industry, we continue to do all we can to keep fees as low as possible for you, our clients, despite increases from our major service providers like ASIC.

If you’d like to review all adjusted prices, please visit our website here: NCS Catalogue

You can also download our standard fee schedule here.

If you have any questions, please don’t hesitate in contacting our office.

We’ve gathered the ASIC Media Releases from June 2011 and include them for your review below the cut.

If you have any details regarding media releases or advisories from other government agencies, please do let us know and we shall add the information to this page.

The Australian Securities and Investments Commission – June 2011 media releases and advisories.

All media release and advisory contents are Copyright © Australian Securities & Investments Commission. Reproduced with permission.

Despite the fact that we were told by ASIC staff not two weeks ago that they didn’t know if fees were increasing, ASIC have updated their website and put out a list of fees that have been increased with some attracting more than a CPI increase.

From the ASIC advisory page, please see the below:

ASIC fees are being increased based on the Consumer Price Index for the March quarter 2011.

Here are examples of changes to some common fees:

Further examples of common fees to apply from 1 July 2011 are provided in the following information sheets:

• commonly lodged documents
• searches.

More about ASIC’s fee indexation

Increase to the annual review fee

On 1 July 2011 there will be a further increase to the annual review fee for companies and schemes (excluding special purpose companies) to offset increased appropriations in the Commonwealth Budget 2011-12 to the Australian Accounting Standards Board (AASB) and the Auditing and Assurance Standards Board (AUASB).

This increase is made by the Corporations (Review Fees) Amendment Regulations 2011 (No 1).

The annual review fee for companies and schemes from 1 July 2011 incorporating both the increases is shown below:

Updated fee schedules will be available from 1 July 2011

Download a copy of the most recent Fee Schedule from ASIC, which also shows the intended increases for most commonly lodged forms.

Companies

COB (5pm) – Tuesday 28^th June (Orders placed on Wednesday may not make it out in overnight mail.)

Trusts

As Above

Self-Managed Superannuation Funds (SMSF)

4pm – Thursday 23^rd June (SMSF Orders typically take 3 Business Days to be established & returned to us – ordering as early as possibly will give a better chance of receiving orders prior to June 30.)

—–

Having Trust Deeds Stamped Prior To June 30

Wednesday 29^th June – this is the latest that we can accept trust deeds that must be stamped on-or-before 30^th June.

Clients in business partnerships need to consider the risk associated with a partner leaving the business – for whatever reason. Below are three clients we have advised. Unfortunately for two of them they came to us too late.

Clients: David was one of three working partners. When he died, his wife Susan inherited his share in the business. She asked the remaining partners if they would mind if she stayed on as a silent partner. It suited them because it meant they didn’t need to fund her payout, nor would she be involved in running the business. Unfortunately she found over time that the profits reduced dramatically and she was no longer receiving a viable income from it.

Objective: The whole episode had been extremely difficult for Susan, not only financially but emotionally and she now just wanted to sell her share in the business.

Outcome: When someone wants to exit a business partnership their only option is to start negotiating with the remaining partners to buy their share or to liquidate the assets under the Partnership Act (and lose goodwill). Susan’s best option was to negotiate a sale although she was not in a strong position, particularly as the business had dropped significantly in value since her husband died.

Preferred Outcome: If the partners had had a Buy Sell Agreement in place, with insurance to support it, Susan would have received full value for her share when David died, with the remaining partners receiving the equity.

Client: Greg, Max and Sam were partners in an accounting practice. They wanted to put agreements in place to cover the eventuality of one of them leaving. What we thought was to be a fairly standard meeting became problematic as Greg suddenly announced he didn’t want his share to go to Max and Sam if he was to leave – he wanted his son to take over his share. This was clearly unwelcome news to the other two partners.

Objective: While Max and Sam thought Greg’s son had potential they did not want to be in partnership with him. A solution was needed.

Outcome: We suggested to Max and Sam that they sign an agreement between the two of them. When Greg realised this meant he could be left with a minority share, he decided he would participate and an agreement was prepared for all three.

Client: George had operated a manufacturing business for the last 35 years and had taken on a partner, Alan about 15 years ago. Unfortunately about 5 years ago they had a falling out and had not spoken since. George came to us extremely distressed. He wanted to get out.

Objective: George wanted to extract fair value from the business, indeed he needed to, as it was to fund his retirement. Alan however did not want to buy George’s share. Under the Partnership Act, George had no recourse but to wind up the partnership and force the sale of assets in the business. However whilst still functioning, the ageing equipment would not have realised enough to make it worth the effort.

Outcome: This was a distressing case all round. On the designated day our lawyer went with George to the factory and declared the partnership over. George then simply walked away.

Preferred Outcome: If George and Alan had signed an agreement back when they were talking, George could have had the option of selling his share to Alan based on a pre-agreed formula and terms.

Irongroup Lawyers
Level 8, 533 Little Lonsdale Street Melbourne, VIC Australia 3000

P: 03 8621 9000 F: 03 8621 9001
www.irongrouplawyers.com

Copyright © 2011 Irongroup Lawyers Pty. Ltd. All rights reserved. Used with permission.
Irongroup Lawyers – estate planning & business succession planning.