From 18 February 2021, companies can no longer remove the last remaining director on the Australian Securities and Investment Commission (ASIC) records without replacing that appointment with another director, unless certain specific exceptions apply. ASIC will reject notifications of these resignations even if the resignation is notified via a Change of Company Details Form 484 or a Notice by Officeholder of Resignation or Retirement Form 370.
The exceptions include where:
- the last director has died;
- the company is being wound up or under external administration;
- the last director never consented to their appointment as a director.
Companies must contact ASIC directly to remove the last remaining director if any of the above exceptions apply.
The new laws have been introduced to help combat illegal phoenix activity, by holding directors accountable and preventing them from backdating their resignation or resigning from the company where that resignation would leave the company without any directors.
Resignations must be lodged promptly
Resignations of company directors must be notified to ASIC within 28 days, otherwise the effective resignation date will be the date the ASIC notification document is lodged.
For example, if a company notifies ASIC that a director resigned on 15 March 2021 but lodged the notification of the resignation with ASIC on 15 May 2021, the effective date of the resignation is 15 May 2021. The company will also be required to pay a $340 late lodgment fee.
Companies can apply to ASIC (within 56 days of the resignation of the director) or to the Court for a different resignation date. Application fees apply and directors cannot expect automatic relief.
How can we help?
If you require any advice or assistance regarding corporate governance or the resignation of company directors, we will be happy to help.