How to avoid a company disaster

13/08/2016 0 Comments

compliance
compliance
So you have incorporated a new company and signed all the documents and put that all important certificate of registration in its folder. You are excited and your business cards and stationery look real cool. You have registered your company’s for ABN, GST and Tax File Number and you have your payroll registration. A brief review of all the documents and all finished.

A year later you purchase equipment and sign a lease in the company’s name. You even purchase a block of land with the view of building a small office block all in the company name. You move your office to the new one you have built. You have really moved up in the world. You contact the tax office and change your address. However, you don’t remember to change your details with ASIC. Years go by and you don’t realise that you have not paid your annual fees to ASIC. Then one day you go to the bank to get a new loan for the business and you get that call from the manager that the company that you indicated is yours has been deregistered and the name is now registered under the same name as a different entity.

You ring ASIC and are told that the company was deregistered for failing to pay its fees and because correspondence was returned to ASIC. The officer explains that it is your duty as a Director to inform ASIC of a change in address.One difficulty for you is that the property and the business is now the property of ASIC and you will need to get permission from ASIC to transfer the title and business to a new entity. This will involve the payment of fees and charges to ASIC and potentially involve title changes and capital gains issues.

You may be lucky and your deregistered company may not have been registered to another owner. If that is the case, you could reinstate the company and just incur the costs of doing that. These costs may be significant but are small compared to having to create a new company and transfer the business and property to the new entity.

For example, you may need to change all your logos and stationery and may need to negotiate a new lease or change in title which may result in stamp duty and other charges. The upshot of this simple error could lead to thousands of dollars of costs not to mention the heartache and time involved in fixing the issues that arise.

The way to avoid this is to develop a simple risk management spreadsheet that lists corporate secretarial risks as one of the risk and ensure that you review and follow up on this business risk on at least a quarterly basis. Alternatively, you can delegate the work to your accountant. Your risk spreadsheet can include this delegation as your monitoring of this risk. Your accountant will require you to sign an engagement for this secretarial service and will follow up on any changes in your address and notify ASIC of any changes or insolvency issues as required by law. A fee for this service is well worth the peace of mind.

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