We have recently come across several cases in which stakeholders of a company, which had previously been deregistered, have sought advice as to how to reinstate the company to its previous position as a legally registered company.
Reinstating a company, from a state in which it legally no longer exists, will return it to its original status as a registered company and can be undertaken in two distinct ways, which will be explored in further detail later in this article.
Once reinstated, a company will assume its original status as a registered company and, in turn, will once again become subject to the requirements of the Corporations Act 2001 (Cth).
Further implications of the reinstatement of a company include –
- Any directors of the company who held the position immediately prior to its deregistration will once again assume the position of directors immediately upon its reinstatement;
- Any property vested in the Commonwealth or the Australian Securities and Investments Commission (ASIC) revests in the company as at the date of its reinstatement; and
- If at the time of deregistration, the company was in liquidation, the company will typically continue in liquidation upon reinstatement.
As discussed earlier, there are two way in which a party can reinstate a company. They may either apply to –
- ASIC to reverse the company’s deregistration; or
- The Court to order ASIC to reinstate the Company.
1. Apply to ASIC for reinstatement
To apply to ASIC for reinstatement of a company as a director, secretary or member, you –
- Must have been a director, secretary or member of the company at the time of deregistration;
- Must be able to confirm that upon reinstatement the company will be able to pay its debts as and when they fall due;
- Cannot be disqualified from managing corporations; and
- Provide supporting documentation as to why the company should not have been deregistered (where required).
If a stakeholder applied for voluntary deregistration of a company, they will need to prove that the declaration made on the application for voluntary deregistration was incorrect at the time the company was deregistered.
If ASIC deregistered a company, the stakeholders may need to prove that it was an error by ASIC.
For a third party to apply for the reinstatement of a company, they must –
- Have started legal proceedings against the company before its deregistration; and
- Be able to provide copies of court documentation to evidence the legal proceedings.
For further information, please visit: https://asic.gov.au/for-business/closing-your-company/reinstating-a-deregistered-company/applying-to-asic-for-reinstatement/
2. Apply to the Court for an Order that ASIC reinstate a company
A person who is aggrieved by the deregistration of a company can apply to the court for an order that ASIC reinstate a company.
You can also apply to the Court if ASIC have refused your reinstatement application or if you can’t meet the criteria.
The Court will consider four (4) key factors when deciding whether to reinstate a company. These are –
- The circumstances surrounding the dissolution of the company;
- Whether reinstating the company will result in a good outcome;
- Whether reinstatement will prejudice anyone; and
- Overall public interest.
For further information, please visit: https://asic.gov.au/for-business/closing-your-company/reinstating-a-deregistered-company/applying-to-the-court-for-reinstatement/
About the author
Benjamin Mitchell is a Senior Insolvency Accountant at HLB Mann Judd Insolvency WA. Benjamin assists the Principal and Director with the many Corporate and Personal insolvency appointments managed by the HLB Insolvency team.
If you have any queries about insolvency matters, please feel free to contact the team on 08 9215 7900.