When running a company in Australia, it’s crucial to comply with various legal requirements. One of the most important legal requirements for Australian companies is the annual renewal of a company’s registration with the Australian Securities and Investments Commission (ASIC).
This process is known as ASIC company renewal, and it’s mandatory for all companies operating in Australia.
In this article, we’ll explain what ASIC company renewal is, why your company needs to renew annually, how the ASIC company renewal process works, what happens if you don’t renew, and how Lawpath can help you with the renewal process.
Read along!
What is ASIC company renewal?
ASIC company renewal, also known as an annual review, refers to the process of renewing your company’s registration with ASIC on an annual basis. This process involves the following:
- Updating your company’s details to ensure that your company’s information is up-to-date and accurate
- Paying the annual fee to ensure that your company remains registered
The company renewal process aims to ensure that companies are operating legally, complying with ASIC’s regulations and meeting their obligations under the Corporations Act 2001.
Don't know where to start?
Contact us on 1800 529 728 to learn more about customising legal documents, obtaining a fixed-fee quote from our network of 600+ expert lawyers or to get answers to your legal questions.
Why do you need to renew your company annually?
There are several reasons why a company needs to renew its registration annually. These include the following:
- Your company needs to renew annually to ensure that the company’s information is up-to-date and accurate. Companies are required to provide ASIC with details such as their registered office address, director details, and share structure. By renewing their registration annually, companies can ensure that this information is current and correct.
- ASIC renewal enables ASIC to monitor and regulate companies in Australia to ensure they comply with the law. ASIC can use the information provided during the renewal process to identify companies that may be at risk of breaching their obligations under the Corporations Act. This can help to prevent fraudulent activities and ensure that companies are operating in compliance with the law.
- ASIC renewal is important because it maintains the legal status of the company, which is essential for your company’s ongoing operation. Furthermore, failure to renew a company’s registration can result in the company being deregistered by ASIC. This can have serious consequences for the company, including the loss of its legal status, assets, and contracts.
- Through the company’s annual review, the directors of your company can verify your company’s ability to pay debts on time and pass a solvency resolution
- Another important aspect of the annual review is that it’s a time for you to pay your company’s annual ASIC fee
How does the company renewal process work?
The ASIC company renewal process involves the following steps after ASIC has sent you your company’s annual statement:
1 Annual Company Review Fee Payment
The first step in the company renewal process is that you’ll be required to pay your company’s annual review fee. The amount you will be required to pay will be outlined in the invoice that is contained in the annual statement that ASIC has sent you. The amount you will be required to pay depends on the type of company that you have.
For example, if you have a public company, you’ll be required to pay $1346, whereas if you have a proprietary company, you’ll only be required to pay $290. It’s important to note that you have the option to make advance payments for your annual reviews.
2 Updating your company details
Based on the annual statement that ASIC has provided for your company, you should check whether any of the details included in the statement are outdated or incorrect. If you find that your company’s details are incorrect, you will need to update your company’s details. You can update the details of your company online through ASIC’s portal.
You can do this by registering online using your company’s corporate key. Your company’s corporate key is provided to you by ASIC within the annual statement. You can then login into ASIC’s online services using your company’s ABN or ACN to update your company’s details.
3 Passing a solvency resolution
The third step in the annual review process is passing a solvency resolution. The directors of your company are required to pass and store a solvency resolution within two months after the date of the annual review. The exception to this is if your company has filed a financial report with ASIC within the last 12 months.
A solvency resolution refers to company directors stating whether the company has the ability to repay its debts on time. The resolution is required to be passed by the majority of the directors of the company, and the directors are required to provide a convincing argument in support of their opinion.
The resolution that needs to be passed has to be either a positive solvency resolution where the company directors state that the company has the ability to repay its debts. Alternatively, they can pass a negative solvency resolution where they state that they believe the company won’t be able to repay its debts on time. If your company passes a negative resolution, you must notify ASIC.
If your company’s directors fail to pass a solvency resolution within two months following the review date, you must notify ASIC online or through the lodgement of Form 485.
What happens if you don’t renew your company?
There are several consequences you may face if you fail to renew your company with ASIC. These include the following:
- You should be aware that you’ll be required to pay a late fee for late payments of your annual review fee. For example, you will be required to pay a late fee of $87 if your payment is late by up to one month, and if you pay your annual review fee late by more than one month, you’ll be required to pay a late fee of $362.
- Furthermore, late fees also apply when you lodge changes to your company details after 28 days have passed from when you were issued your annual statement. If you lodge your changes late by up to one month, you’ll be required to pay a late fee of $87. Whereas, if you lodge your changes late by more than one month, you’ll be required to pay a late fee of $362.
- ASIC can also charge you a fee for failing to notify them about any changes to your company’s details.
- If you fail to renew your company’s registration, there is a possibility that your company can be deregistered. Therefore, your company could lose its assets and contracts, legal action could be taken against your company, and it may also face penalties.
How can Lawpath help you renew your company?
At Lawpath, we can help you complete your annual ASIC renewal! As one of Australia’s leading online, on-demand legal services providers, we can assist your company by equipping it with the tools it needs to needed to stay active and legally compliant. We will also provide support and guidance throughout the renewal process, ensuring that your company complies with all legal requirements.
Other benefits of using Lawpath to renew your company include the following:
- If you use our service, we ensure that your annual ASIC company renewal is completed on time so that you avoid any late fees
- Using our service, you will avoid the paperwork that’s associated with company renewal as you won’t be required to review two online documents and sign them. The rest of the hard work will be done by us!
To use Lawpath’s ASIC company renewal tool, you simply need to perform the following steps:
- Sign and Complete Form 362 to authorise Lawpath to act on your behalf with ASIC
- After you have provided payment, Lawpath will pay the ASIC fees on your behalf and submit the correct documentation to ensure you stay compliant and avoid late fees
- As soon as ASIC confirmation is received, your company’s Annual ASIC Compliance will be complete
Next steps
In conclusion, company renewal is an important requirement for all companies operating in Australia. It ensures that companies are operating legally and meeting their obligations under the Corporations Act.
By renewing their registration annually, companies can ensure that their information is up-to-date and accurate, provide a mechanism for monitoring and regulating companies in Australia, and maintain their legal status.
Company renewal is crucial to avoid the possibility of your company being deregistered and legal action. At Lawpath, we can assist with ASIC renewal and provide support to ensure that your company complies with all legal requirements. Furthermore, if you’re still feeling unsure about the ASIC company renewal process, you can hire a lawyer for legal advice.
Get a fixed-fee quote from Australia's largest lawyer marketplace.
