LEGISLATIVE CHANGES | changes relating to resignation of directors

Earlier this year, legislative changes were enacted that require companies, that is, company secretaries/directors, to notify the Australian Securities and Investments Commission (ASIC) in a timely manner, where directors wish to retire or resign from their position. These changes also mean that, in some circumstances, a director is unable to resign/retire from the role.

Importantly when there are changes to the directors of a company, some evidence of the changes must be retained. Where such changes occur, the final documentation step is notifying ASIC of these changes.

The legislative changes which came into effect on 18 February 2021 relate to:

  • timeframe for notification of director resignation/retirement
  • resignation of the last remaining director

Late notification

Where a director resigns/retires and notifies ASIC more than 28 days after the effective date, ASIC will override the effective date and replace it with the lodgement date of the relevant form. For example, if the resignation date is 1 April but ASIC is not notified until 1 November, ASIC will record the resignation date as 1 November.

Directors can apply to ASIC or the Court to have the resignation date changed. However, this is likely to be a costly endeavour.

These legislative changes are part of the government’s ongoing effort to combat illegal phoenixing of companies and avoid systemic fraud. The government intends these changes will stop directors deliberately backdating resignations/retirements to avoid certain obligations.

Resigning the last remaining director

Also, it is no longer possible to use ASIC Form 484 or Form 370 to notify the resignation/retirement of the last remaining company director, unless appointing a replacement director via the same lodgement. If the company is not appointing a replacement director, ASIC will reject the form.

There are, as always, some exceptions where:

  • the last director is deceased;
  • The company is winding up or under external administration;
  • The officeholder never consented to the appointment.

However, where any of the above apply, it will be necessary to contact ASIC for assistance and provide evidence to support the application of the resignation exemption.

Want to know more?

If you have any questions about how these changes may effect you or your business, please contact Kim Reynolds, our Taxation Advisory Director, for assistance.

An Important Message

While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents.  Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.

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