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Business and Corporate Law, Food for thought

Importance of keeping company records updated with ASIC

Changing your personal address or the address of your company may be a busy and stressful time, with many tasks to take care of whilst trying to carry on as normal. It is, however, an obligation of a director or secretary to ensure certain details are kept up to date with the Australian Securities & Investment Commission (ASIC).

Details which need to be regularly reviewed and updated include the registered office, principal place of business, residential address of a director or secretary and the address of a shareholder (if a proprietary company with under 20 members).

Implications of not updating your records within 28 days could include:

  • Late fees being charged by ASIC
  • Important company documents not reaching the company, directors, secretary or shareholders
  • Court action being taken against the company or directors without the knowledge of the company or directors.  If a company owes money the directors and shareholders could be at risk of losing everything, without even knowing about it

A company and/or a director can find themselves in various risky positions if records are not kept up to date. These are examples of situations where a company allegedly owes money:

    • An application to wind up the company can be made without the knowledge of directors.  A Creditor’s Statutory Demand for Payment of Debt can be served on the registered office, and if no response to the demand is made within 21 days, the company is assumed insolvent and the creditor can file an application to wind up and serve the application on the registered office.  If the address details are incorrect and documents are not received, the director may not know about the debt, the need to either negotiate or pay the debt and/or speak up as to the solvency of the company.  If an application is successful, it is likely a liquidator will be appointed.
    • Court proceedings can be initiated, and judgment made and executed without the knowledge of directors. If no defense is filed by the company within 28 days of being served with an initiating process the creditor can proceed to obtain default judgment against the company.  Once default judgment is obtained, the creditor can execute judgment in several ways against the company and/or the directors to recover all amounts the creditor says are owing (including costs and interest).  Attempts can include:
      • serving garnishee orders to sweep funds from company bank accounts for amounts owed – which could leave insufficient funds to pay wages and accounts
      • writs allowing Sheriffs to attending company premises to seize goods and, when it is realised the address is no longer current, the writ can easily be redirected to the new current place of business;
      • directors being ordered to attend court with financial records for examination and, if the director does not attend when ordered, the director can be arrested.

It is important to remember that the company can get into a sticky situation without the knowledge of a director (through an employee’s actions, for example), making the dangers all the more perilous!

Company details can be checked and changed online through ASIC, or through your online agent.

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