Once a new company has completed its initial company registration it still has a number of ongoing obligations and requirements to remain compliant with the Australian Securities and Investments Commission (ASIC), the government body responsible for all companies registered in Australia.
When applying to ASIC for a new company registration, the owners of a business need to abide by certain legislation, as outlined in the Corporations Act 2001, and its internal management rules which the company and its Officer must comply. Each company may decide to adopt the internal management rules that are set out in this Act, or establish its own Company Constitution or a mixture of both. Clearly, keeping up to date with current legislation and remaining adherent to the company rules is critical to ensuring ongoing compliance.
After the company registration, the officers of the company are required to advise ASIC of any changes in company details; such as, change in company officers (directors, secretaries and alternate directors), change of members or share structure, change of registered office or change of principal place of business. ASIC has strict requirements on how and when these changes are to be notified. When ASIC receives notice of these changes, they are updated in their public records.
In relation to company registration changes, the common challenge small business operators often face is knowing which forms need to be completed and submitted to ASIC. Once the company has the correct form/s it is important to compete them accurately, including all relevant information, and then ensuring that they are lodged on time to avoid late-lodgement penalties.
Some key changes to any company that requires a notification to be sent to ASIC are:
• Change in company name (to be notified within 14 days)
• Change in company type (to be notified within 14 days)
• Change in company location (to be notified within 7 days)
• Change of registered office or principal place of business (to be notified within 28 days)
• Change of director, alternate director or company secretary (to be notified within 28 days)
• Change in the name or address of company officers (to be notified within 28 days)
• Shares issued, transferred or cancelled (to be notified within 28 days)
• Registered charges (to be notified within 45 days)
It is also important to ensure that the company register is continually kept up to date. This register is a living document that needs to be reviewed and updated whenever a change occurs. While ASIC maintains company details of a business since company registration, it is expected that the business also holds a comprehensive and detailed register.
On the anniversary of the company registration, ASIC requires each company to confirm its details against its own records. This is done by an Annual Company Statement, which is an extract of company details held on ASIC’s database, which is provided to the company for review. Details of this extract include:
• the date of company registration and review date
• names and addresses of each director, alternate director and company secretary;
• current shares issued and options granted;
• details of the company’s Members;
• address of the company’s registered office;
• address of the principal place of business.
• the ultimate holding company name & Australian Company Number (if applicable)
• ASIC’s recorded postal address for correspondence sent to the company
If any of the details in the Annual Company Statement provided by ASIC are incorrect at the review date, the company must lodge the required forms to correct the details in ASIC’s database. In addition, at the time of an annual review a solvency resolution must be passed by the directors stating that the company will be able to pay its debts when they are due. Directors falsifying this information may be charged and be liable for penalties and even gaol sentences, so this obligation is one to be taken seriously.
At the time of the annual review an annual fee is to be paid to ASIC. This fee will vary depending on the type of company registration; for example, a preferred name proprietary company limited by shares has an annual fee of $218 (from 1 July 2010), while a public company limited by shares has an annual fee of $1,029 (from 1 July 2010). The company officers will also need to ensure that the annual fee is paid within 2 months to avoid late-payment penalties being applied to the company.
Many companies unnecessarily pay Annual Review fees when they do not need to. Examples include:
• Where a company intends to voluntarily deregister. If ASIC approves and publishes the company deregistration within 2 months before or after the Annual Review data. The ASIC fee payable is $33.
• If the Company is a Special Purpose Company, such as a Home Unit Company, a Charitable Purposes Company, a Superannuation Trustee Company. The ASIC Annual Review fee for a Special Purpose company is $41 (from 1 July 2010).
ASIC will consider waiving late fees if evidence can be provided to prove that the reasons leading to the late fee were beyond the control of all the officers of the company. Examples of this include where:
• ASIC caused the delay
• Court proceedings caused the delay
• Records have been seized by ASIC or police
• Records were destroyed and there has been insufficient time to reconstruct them
• Industrial disputes (eg a postal strike)
• An officeholder has passed away
ASIC will not waive a late fee if the company already has outstanding review fees and will only reimburse late fees if they accept the application for waiver of those fees (therefore, pay outstanding fees first). Examples of where ASIC will not waive a late fee include where:
• A third party fails to lodge on time (eg. accountants or agents on behalf of the company)
• The Annual Statement is not received (it is important that company officers notify ASIC of current contacts and addresses)
• Company Officers were inexperienced (company officers must be aware of their obligations and can outsource lodgement tasks)
• Insufficient funds to pay fees (which could indicate the company is insolvent)
• Small or not-for-profit company (under the law all companies are responsible for lodging and paying ASIC fees on time).
Keeping your company registration details up-to-date with ASIC and responding to them in a timely manner, will go along way to making sure your business complies with company requirements in Australia. As always, if you are in doubt of your obligations seek independent professional advice.