Australian companies are deregistered for any number of reasons – for example, it is common to wind up and deregister an Australian company as part of a reorganisation of a corporate group or following a sale of the company’s physical assets. However, during deregistration, the transfer of ownership of the company’s IP rights is often overlooked. When this happens it is at best an annoyance to fix and in the worst cases valuable IP rights are lost.
After deregistration of a company, any transfer or attempted transfer of IP rights made by the deregistered company (or any third party) will be invalid. The IP rights typically can only be transferred at the discretion of the Australian Securities and Investment Commission (ASIC), or if the company is restored through court order.
How does this happen?
When an Australian company is deregistered, any outstanding property of the company vests in ASIC. Obviously this includes any land and other tangible assets, but it also includes the company’s intangible assets such as any patents, registered trade marks and design registrations. So, if the company’s IP rights have not been transferred before deregistration, they vest in ASIC – not ideal.
ASIC can deal with the property of a deregistered company, however generally will only do so as a last resort. The onus is therefore on the person representing the deregistered company (usually a former director or liquidator) to apply to reinstate the deregistered company itself, or failing that, to make application to ASIC to transfer the rights to a different entity. In order to transfer registered IP rights, ASIC requires the submission of evidence of the nature of the transfer and why the transaction was not completed prior to the company’s deregistration. There is a risk that ASIC will not be satisfied that there was a transfer, and the IP rights will not be able to be recovered.
The best way to avoid these problems is to make sure any IP rights are transferred before a company is deregistered.