By Kim Reynolds
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
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.
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