Under s 601AD of the Corporations Act 2001 (the Act), a company ceases to exist on deregistration, and its property vests either (a) in the Commonwealth (all property held by the company on trust) or (b) ASIC (all other property). However, s 601AH of the Act provides that registration may be reinstated:
On the issue of whether ASIC was an aggrieved person for the purposes of s 601AH, Reeves J heard evidence that ASIC would be burdened by being involved in the affairs of the company, and specifically, by having to administer and account for the funds – which it said would not be commensurate with its role of the Regulator. The Court however noted that an aggrieved person for the purposes of s 601AH must be able to show that they have been "deprived… of something, or injured or damaged in a legal sense". Accordingly, the Court reasoned that although ASIC may be "dissatisfied" that it has to perform the obligations imposed on it by statute, that "does not … constitute any relevant prejudice to its interests".
ASIC also submitted it could not use its own power under s 601AH to reinstate BDM as the company was deregistered for a valid reason, namely, failure to pay review fees, and therefore ASIC could not be satisfied that "the company should not have been deregistered" (being the precondition for it exercising its power of reinstatement under s 601AH). The Court however concluded that s 601AH "gives ASIC a broad discretionary power to review and reverse a deregistration decision it has made at any time in the future … on the information available at that time". In other words, the discretionary power of reinstatement given to ASIC is not confined to fact known at the time of the original decision. The Court stated that:
"Based on what ASIC now knows… there is ample reason for it to be satisfied that the company should not have been deregistered in 2017 and, therefore, that it should now be re-registered"Accordingly ASIC’s application to reinstate BDM was dismissed.
McCabe Curwood’s Litigation and Dispute Resolution Group has significant experience and expertise in corporate insolvency. If you require advice in relation to deregistering or reinstating a company, please contact us for assistance.