Every company needs a registered office, which could be the same as its business address or even the home address of a director, lawyer, or accountant. Now, if that address changes, the company must inform ASIC within 28 days. Consequences for not updating your registered office can be serious than you might think and could result in judgments being entered against the company or in particular circumstances, the company facing a presumption of insolvency which can lead to it being wound up.
And let's not forget about Director Penalty Notices issued by the Tax office. If a director does not update their residential address, they may not receive these notices in time (if at all), resulting in personal liability for the company's debt. That's a big deal and could seriously affect the director involved.
The legal background
Starting at the basics, a company must have a registered office in order to be served with documents. This can be the same address as the place of business, but many registered offices use the home address of one of their directors, or the address of their lawyer or accountant.
If these locations change, a company must remember to lodge notice of this change with ASIC no later than 28 days of the change occurring. A failure to do so would constitute a breach of section 142(2) of the Corporations Act 2001 (Cth) (Corporations Act).
Potential consequences of not updating registered office
Where a company forgets to update their registered office address with ASIC, the consequences may be more extreme than expected. Consequences can include (but are not limited to):
- default judgement being entered against the company;
- the company being presumed insolvent;
- being issued with director penalty notice; or
- being issued with a late fee or having the company struck off the register.
Risk of default judgement
A not uncommon situation is that a company is served with a statement of claim seeking payment of a debt at its former registered office as a result of a failure to update its details with ASIC. A court document can be served on a company by posting the document to the company’s registered office pursuant to section 109X(1)(a) of the Corporations Act.
In these circumstances, the company is unlikely to be aware that it needs to respond to that claim by filing a defence within 28 days. If the company fails to file a defence within 28 days of being served with a statement of claim the plaintiff will be entitled to seek judgment for the whole of the amount of the debt.
In this situation, given the company has been legally served, the only way to set aside the default judgment is by bringing an application to the court and satisfying the requirements that it has:
- a genuine defence on the merits;
- an adequate reason for failing to file a defence; and
- an adequate reason for any delay in bringing the application to set aside default judgment.
Such an application, though not impossible to succeed on, has no guarantee of success and is inevitably expensive in respect of both the time and money required. Of course, a company can avoid such a situation by simply updating its details when required, meaning it would never miss out on receipt of vital documents.
Risk of presumption of insolvency
When a company is served with a statutory demand under s 459E of the Corporations Act, the creditor will be able to wind up the company if the debt isn’t paid or demand isn’t set aside within 21 days.
If the company fails to receive such a demand due to having changed registered offices without notifying ASIC, the company may be presumed insolvent. By failing to repay the debt or applying to the Court to have the statutory demand set aside within 21 days, the company will be deemed to have failed to comply.
Within three months of the non-compliance, the creditor can use the presumption of insolvency to apply for the company to be wound up. If the creditor brings such an application, the Court may order the company be wound up. This is because the courts have shown a reluctance to allow a failure to update a registered address to be a legitimate excuse for failing to respond to a statutory demand.
Director penalty notices
Similarly, the Australian Tax Office may send a director penalty notice (DPN) to a director’s personal residential address as recorded with ASIC. Not responding to a DPN may lead to a director being personally liable for a company’s debts. The issue with not updating an address in these circumstances is that DPNs have a fixed time limit which will not be extended.
Two types of DPN can be issued, a 21-day DPN and Lockdown Director Penalty Notice (LDPN). For the first type, directors have 21 days to take action to avoid being held personally liable for the company’s conduct. On the contrary, LDPNs are issued in circumstances where a company has not lodged necessary information within 3 months of the due date.
The LDPN immediately places personal liability on the director with no prospect of avoiding liability. Failing to receive notice of these penalties could cause extreme detriment for a director leading to an imposition of personal liability.
Late fees and the risk of strike-off action by ASIC
The above circumstances, though possible and indeed likely, at the end of the day are consequences that may never arise. ASIC, however, leaves no room for escaping punishment for failing to update a registered office’s address, or a director’s residential address. Whether or not a company is in receipt of important documents, or legal notices, ASIC issues fines for not updating details that have been changed. If a company fails to update its address after a month from the required 28 days, a fine of $93 will be issued and any later than a month will result in a $397 fine.
ASIC also charges late fees when a company is late to make payment of annual review fees and/or late to lodge their changes to information in the annual statement. If ASIC sends notice of these requirements to a company’s former address, it will be unaware that it is due to pay the annual review fee to maintain its registration or lodge their changes. Consequently, the company will be required to pay the late fee of $93 if non-compliance is within a month of the due date or $397 for any time longer. This will be on top of the annual review fee to keep its registration, which can range up to $1,440 depending on the company structure.
Beyond the financial penalty that may be imposed, ASIC may take steps deregister a company if it has not paid its annual review fees within 12 months of the due date or a company has not responded to a company compliance notice.
When you should update the company’s registered office address?
You should update the company’s registered office address in the following situations:
- the company has changed lawyers or accountants;
- the company has moved to a different premises;
- your registered office is somewhere that is rarely monitored or checked; or
- your registered office is the personal home of a director who has recently sold or leased their house.
How to update your address with ASIC
Updating your registered office address with ASIC can easily be done online. All you are required to do is fill out a form online to change your company details. To do so simply:
- Register for ASIC’s online access using your company’s corporate key,
- Log in to ASIC’s online portal using your company’s ACN or ABN,
- Select ‘Start new form’ and select form 484, named ‘Change to company details’.
Remember this must be completed within 28 days of a change of address. Companies should regularly check, especially if their registered office is their accountant’s or lawyer’s address and they have moved offices.
If you wish to check a company’s current address details:
- Log into your company officeholder account, or
- Search the ASIC registers for your company details and locate what your address details are.
For more information on how to update your registered office address with ASIC, visit the ASIC website.
Conclusion
Forgetting to update details about your registered office address is unlikely to be accepted as a defence by the Court. To take precautions from default judgments, presumptions of insolvency and taking personal liability for a company’s actions or debts you should make sure to update details as soon as they are changed.
