Strike-Off Progress In Action
A ‘strike off action’ is the process undertaken by the Australian Securities and Investments Commission (ASIC) to remove a company name from the company register. It is not the most conventional way to close down a business, but effectively dissolves a company and it no longer legally exists. The impact of this should not be underestimated, in particularly if the company in question has significant assets. Below we take an in-depth look at strike off action including why a company would be struck off, the striking off process, and how to apply for reinstatement.
Why would a company be struck off?
There are numerous reasons why a company would be struck off and deregistered. An ASIC-initiated deregistration may be initiated if:
- The company has failed to pay its annual review fee on time (12 months of the due date)
- The company is inactive and not carrying out any business operations
- There has been a failure to respond to a compliance notice or no lodged documentation for a period of 18 months, or
- The company is being wound up and there is no liquidator.
If for some reason the above applies to your company, there is no need to panic just yet. There are several stages in the process of striking off a company to the extent that any Directors would be aware if this was happening. That said, Directors should have a comprehensive understanding of corporate insolvency and their fiduciary duties.
What is strike off action in progress ASIC?
A strike off action in progress indicates that ASIC has begun taking the necessary steps to deregister a company. The actions taken by ASIC are listed below in chronological order:
- A letter is sent to the company Directors and/or liquidator where applicable to advise of the pending deregistration
- The company status is updated to display ‘SOFF’ (strike off status) on the ASIC register to reflect that it is in the process of being deregistered
- ASIC will post a notice on the published notices website to advise the public that the company will be deregistered in two months if not action is taken
- A failure to act within the nominated two month period will result in the company being deregistered with Directors and/or liquidators advised of such via a letter.
The process highlights both the emphasis on clarity from the regulator, and the key responsibilities for company Directors.
What happens if your company is struck off?
Striking off a company is significant in more ways than one. In the process of being deregistered your company will also be dissolved. This has an impact on a wide range of business areas as outlined below:
Legal Capacity: As the company ceases to exist, it is no longer recognised as a legal entity and no longer holds any legal capacity. Any legal proceedings that the company was a party to can no longer continue nor can any new proceedings against the company begin.
Assets: Property owned by the company vests in ASIC while property held on trust vests in the Commonwealth represented by ASIC. In essence, the regulator will take control of, and assume any benefit of company property.
Directors: The rights of ‘former’ officeholders become both restricted and limited. They no longer have the right to deal with property and other assets that were registered in the company's name.
How do I stop ASIC strike off action?
The necessary actions taken to stop an ASIC strike off action will depend on why the company is being deregistered and the striking off phase that it is currently in. For instance, if you have just received a letter advising you of a pending deregistration, it will include the relevant steps that can be taken to stop the striking off action. You may be required to pay any outstanding fees, lodge relevant documentation, or simply write to ASIC to inform them that the company is still actively trading.
If your company has already been deregistered, you must apply to ASIC for reinstatement. To be eligible you must have been a Director, secretary, or member of the company at the time when it was deregistered. Most importantly, you must be able to prove that upon reinstatement, the company will be solvent and able to pay any debts when they are due. The ability to recognise any indicators of insolvency will allow you to provide evidence and supporting documentation which demonstrates why the company should not have been deregistered.
How to apply for reinstatement?
Application for reinstatement can be achieved by undertaking the following few steps:
- Check name availability to ensure that the company name is available and reserve it
- Request a detailed estimate of the fees that must be paid, and
- Complete a Form 581 – application for reinstatement form.
It may take up to four weeks for ASIC to decide on an application. If your application is refused, you can apply for reinstatement through a court order. If you have received a letter relating to striking off a company and need expect advice, contact Australian Debt Solvers for a free consultation.
We care about our customersAt Australian Debt solvers we take feedback seriously and pride ourselves on providing the best customer services possible
Rated 5 out of 5