Company deregistration: voluntary and involuntary
A company can be deregistered voluntarily by its members or involuntarily by ASIC. Understanding both processes is important because deregistration has significant legal and financial consequences.
Voluntary deregistration is available if all members agree, the company is not carrying on business, the company’s assets are worth less than $1,000, the company has no outstanding liabilities, the company is not a party to any legal proceedings, and all fees and penalties payable to ASIC have been paid. The application is lodged with ASIC using Form 6010. ASIC records the proposed deregistration on its database and publishes a notice on the ASIC Published Notices website, and may deregister the company two months after that notice is published.
Involuntary deregistration occurs when ASIC initiates the process, typically because the annual review fee has been unpaid for 12 months or more, or because the company has not lodged any documents in 18 months and ASIC has no reason to believe it is carrying on business. ASIC will send a notice to the company’s registered office giving two months to show cause why it should not be deregistered.
Once deregistered, the company ceases to exist. Any remaining property vests in ASIC. Outstanding debts and liabilities are not extinguished. Creditors can still enforce personal guarantees, and the ATO can pursue directors under the director penalty regime. Insolvent trading claims can only be brought in a winding up, which would require the company to be reinstated and liquidated first. The company’s name becomes available for use by other entities.
A deregistered company can be reinstated by ASIC under section 601AH(1) (on a Form 581 application, where ASIC is satisfied the company should not have been deregistered), or by court order under section 601AH(2). Court applications typically cost several thousand dollars in legal fees and filing costs, and the applicant must demonstrate a reason for reinstatement, commonly to pursue or defend legal proceedings, recover property, or rectify a compliance oversight. Prevention through proper ASIC management is significantly cheaper than cure.
Frequently asked questions
What is the difference between deregistration and liquidation?
Deregistration is an administrative removal from the register, available only where the company has essentially nothing left: no business, minimal assets, and no liabilities. Liquidation is a formal insolvency process in which a liquidator realises assets and distributes them to creditors. A company with real debts needs liquidation, not deregistration.
What happens to money in the company bank account on deregistration?
It vests in ASIC along with any other property the company still holds. The usual way to recover it is to have the company reinstated, which can be costly, so bank accounts should be emptied and closed and assets dealt with before the deregistration application is lodged.
Can creditors still chase directors after a company is deregistered?
Yes. Deregistration does not extinguish the company’s debts, and it does not discharge personal guarantees. Creditors can still enforce personal guarantees, and the ATO can pursue directors under the director penalty regime for unpaid PAYG withholding, GST and superannuation. Insolvent trading claims can only be brought in a winding up, which would require the company to be reinstated and liquidated first.
This article is general information only and does not constitute legal, financial, or tax advice. While we endeavour to keep content accurate and current, laws and regulations change frequently. For advice specific to your circumstances, please consult a qualified professional adviser. CoSec Partners Pty Ltd accepts no liability for actions taken based on this content.