ASIC Updates to their policies

ASIC Changes to Director Resignation

Business

Updated February 15th 2021

Effective 18 February 2021, new requirements apply when ceasing a company director.

Why have ASIC made these changes?

Back in February 2020, Parliament passed the Treasury Laws Amendment (Combating Illegal Pheonixing) Act 2020, which takes effect on 18 February 2021.

This legislation introduces new offences and grants additional powers to ASIC and liquidators to help combat illegal phoenixing and avoid systemic fraud by holding directors accountable, preventing them from improperly backdating their resignation or leaving their company without a Director.

What are the changes?

From 18 February 2021, ASIC will no longer allow the resignation of the last company director, unless that director is simultaneously replaced by a new appointment.

Under the changes, ASIC will refuse to record a resignation of the last-remaining director of a company, whether that resignation is notified via a Change of Company Details Form (Form 484) or a Notice by Officeholder of Resignation or Retirement (Form 370).

Some exceptions apply, including where:

  • the last director is deceased;
  • the company is being wound up or is under external administration;
  • the director never consented to their appointment as a director of the company;

If you are ceasing a director under any of these exceptions, you need to contact ASIC either by phone or online for assistance.

ASIC notes that exceptions may be applied where the company, or the relevant director, lodges an application with ASIC or a court to change the effective resignation date.

It’s important to note –

In addition to the above changes, if a director’s cessation date is notified to ASIC more than 28 days after the effective date, then the effective date will be overridden and replaced with the lodgement date. Late fees still apply to the Change of company details form in this scenario.

For example;

  • Company Director resigns 1 April 2020 – the effective date
  • Company notifies ASIC 1 November 2020 – the lodgement date
  • ASIC will replace the effective date, with the lodgement date

Directors can apply to ASIC or the COURT to change a resignation date. This action will involve an application fee.

These changes are intended to stop Directors deliberately back dating cessations to avoid legal responsibility to creditors.

ASIC will release further information over the coming weeks on their website.

In the meantime, contact either ASIC or your legal representative should you have questions or concerns in relation to your company.