You may find that you want to deregister a company in Australia, but how does company deregistration work? This article goes through the steps.
If your company is no longer trading you may conclude that you want to deregister it, especially if you’re not doing anything with it. Deregistering a company terminates its existence as a legal entity, which means you’ll no longer need to pay ongoing fees associated with running the company.
If you choose to deregister a company, the company will no longer be able to take any action in its own right. Company officers associated with a deregistered company have no obligations to it, and are only required to maintain its records for a minimum of three years subsequent to deregistration.
In this article, Fullstack will break down the process involved in deregistering an Australian company.
Who Can Deregister a Company?
- You can deregister a company if the following requirements are met:
- The company is no longer in carrying out any form of business
- All members of the company have given their consent to deregister
- The company has no outstanding liabilities
- The company holds no assets worth more than $1,000
- The company has paid all fees and penalties it is subject to under the Corporations Act 2001 (Cth)
- The company is not a party to any legal proceedings.
Make Sure Your Company Has No Assets
The first and most important step in deregistering a company is ensuring that your company does not hold any assets. Any assets a company holds on deregistration will vest in the ASIC or the Commonwealth. There are a number of exceptions, but in most cases all assets held by a company after deregistration will dealt with by ASIC.
- Ensuring that a company does not hold any assets is essential, as former company officeholders will be unable to deal with any asset registered to the company subsequent to deregistration. ASIC recommends company members take the following actions prior to deregistration:
- Make sure that the company does not hold any assets, including shares, real estate, leases, permits, trade marks, or intellectual property
- Close all bank accounts registered in the company name
- Cancel or transfer every business name registered to the company — all business names registered to the company will be terminated on deregistration
- Cancel or transfer any licenses held by the company, such as an Australian Credit License or an Australian Financial Services License
- If the company being deregistered functions as a trustee of a trust, a new trustee must be appointed. The company must not hold any trust property in its name upon deregistration.
Pay All Outstanding Fees and Penalties
All outstanding fees and penalties must be paid before a company applies for deregistration. ASIC will automatically reject any deregistration application if the company owes ASIC any fees or penalties. It’s possible to check current company account balances online with ASIC.
You’ll also want to lodge a final company tax return with the ATO.
Apply Before the Annual Review Fee Due Date
ASIC publishes a public notice of your intent to deregister a company on the ASIC website after you lodge a deregistration application. If ASIC publishes the notice before the due date of the annual review fee, applicants do not need to pay the fee for the next year. If the notice is published after the annual review fee date, however, it must be paid before a company can be deregistered.
Gain Consent from Company Members
Company deregistrations cannot be performed without the approval of all company members. Each member must ensure that the company meets the requirements for voluntary deregistration.
Apply to ASIC
Voluntary company deregistrations must be submitted to ASIC via a Form 6010 application for voluntary deregistration along with the applicable fee. This form can be lodged via the ASIC website, or via mail. Voluntary deregistration applications can be lodged by directors, members, or the company itself.
If you don’t meet the necessary requirements for deregistration upon application ASIC will reject the application, but will not return the application fee. ASIC does, however, provide the reason for rejection.
Successful deregistration applications are confirmed by ASIC in writing and as a public notice on the ASIC website. This process can take up to two weeks to complete. The deregistration process concludes two months after ASIC publishes a public deregistration notice on the ASIC website.
Deregistration applications can be cancelled once submitted. ASIC must be contacted and provided with a reason why the deregistration should not occur, and will reply within 28 days. Third parties can also defer the deregistration of a company in the case that they are currently or plan to commence legal proceedings against the company.
If you decide to deregister a business it’s important to be aware of your tax obligations. For comprehensive tax guidance regarding business deregistration, get in touch with Fullstack today.