ASIC’s new administrative powers to wind up companies strengthens the remedial measures that can be taken against business operators attempting to avoid liabilities by abandoning companies and should help employees access their entitlements.
The Corporations Amendment (Phoenixing and Other Measures) Act 2012 (Cth) (Act) will commence on 1 July 2012.
Currently, ASIC is required to apply to a Court to have a company wound up. However, the Act grants ASIC the power to place an abandoned company into liquidation in 4 circumstances, namely where:
- ASIC otherwise has the power to deregister the company for non or late lodgement of documents, has no reason to believe that the company is carrying on business and believes that winding up is in the public interest;
- the company has not paid its annual review fee within 1 year of the fee being due (ASIC can currently also deregister a company in these circumstances);
- ASIC has reinstated the registration of a deregistered company in the last 6 months and believes winding up is in the public interest; and
- ASIC has reason to believe that the company is no longer carrying on business and there is no objection to the company being placed into liquidation.
These new powers will assist employees of abandoned companies to access payments under the Government’s General Employee Entitlements and Redundancy Scheme (which requires a company to be in liquidation before it can be accessed by employees).
The Act also removes the current print media and ASIC business gazette publication requirements for external administration notices and requires them instead to be published in the “prescribed manner”. The Corporations Legislation Amendment Regulation 2012 (No 1) (Regulation) amends the Corporations Regulation 2001 to prescribe the manner of publication of external administration notices to satisfy a liquidator’s publication obligations under the Act. The Regulation:
- requires ASIC to establish a publicly available website for the publication of external administration notices;
- provides that liquidators’ lodgement requirements under the Corporations Act 2001 are satisfied where the notices are lodged on the new website in the format required by ASIC, and the requisite fee has been paid; and
- sets out the minimum information required to be provided by liquidators and administrators for the notices.
The publication fee for notices that are currently required to be gazetted will remain at $64 and the publication fee for notices that are currently required to be published in print media will be $400 for the first year (to be reduced to $145 from 1 July 2013).
The new publication regime will lead to reduced costs for the administration of companies and easier access to information for creditors.