Reinstatement of a Company - Section 601AH of the Corporations Act

A company may be reinstated either on application to ASIC or by an order of the court.

Section 601AH (1), - ASIC may reinstate the application of the company if it is satisfied that the company should not have been deregistered. Where a company is deregistered by ASIC for not paying fees or lodging annual returns, an applicant must demonstrate to ASIC that:

• There was a procedural defect or oversight in the procedure leading to deregistration;
• The company was carrying on business or was in operation at the time it was deregistered.

It follows that where a company was deregistered because it went into liquidation, it is unlikely that ASIC would reinstate the company. In those circumstances, leave of the Court will be required. Section 601AH (2) provides that e Court may make an order that ASIC reinstate the registration of a company if the Court is satisfied that it is just that the company’s registration be reinstated.

The court has a wide discretion to consider whether reinstatement is just. In exercising its discretion, the court takes into account the following:

• The circumstances in which the company came to be registered;
• Whether good use would be made of the reinstatement;
• Whether any person would be prejudiced by the reinstatement.

Under Section 601 AH(3) the court may validate anything done by the company between its deregistration and reinstatement. However Section 601AH (5) deems that a company which is reinstated is treated to have continued in existence as if it had not been de-registered.

In most cases, it would be unnecessary to seek an order from the court to validate anything done by the company while it was deregistered. Indeed the court itself has on occasions queried whether any such order is necessary as it must follow from the operation of s601AH(5) that anything done by the company is validated retrospectively.

Nevertheless, a company which has continued to function during a period of deregistration should upon obtaining an order for reinstatement reserve liberty to apply to the court in the event that a dispute arises concerning the validity of any step taken by the company.