New rules aimed at resigning directors have come into force and there is no longer any room for delay when it comes to lodging a resignation with ASIC.
The Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2020 (Cth) (the Act) came into force on 18 February 2021 and deals with, among other matters, the effective resignation date of directors and resignation of last remaining directors. These changes can initiate significant repercussions if a director’s resignation is not properly, and promptly, lodged with ASIC.
Three takeaways for resigning directors
We have summarised three take-aways from the new rules below that directors should be aware of when resigning from their directorship:
- A director (excluding a last remaining director) has 28 days from the date of resignation to notify ASIC of the resignation. This can be done by the company (using ASIC Form 484) or personally (using ASIC Form 370).
- ASIC will no longer ‘backdate’ an effective date of resignation. From 18 February 2021, the effective date of resignation will be the date ASIC is notified of the resignation (the effective date). If notification is not provided within the 28 day period, fines may apply. Note that, as a director, you will remain duty-bound to the company until the effective date. Further, you may be responsible for any liabilities incurred by the company up until the effective date (i.e. Director penalty liabilities).
- ASIC will refuse any application for the resignation of a last remaining director. There are small exceptions to this rule (i.e. where the last remaining director dies or did not consent to being a director in the first instance). Similarly, any company resolutions to remove the last remaining director from a company will be deemed invalid.
What does this mean for you?
Any delay in notifying ASIC of your resignation as director could have significant implications for you as an individual, particularly if the company is facing hardship. You will remain responsible for the company, including any liabilities, until the date ASIC is notified.
Whilst resigning as a director may mark a busy time of change, it is important not to overlook this administrational step and get the appropriate paperwork filed as soon as possible to avoid unwanted implications.
Please get in touch with our team if you have any questions regarding your obligations as a company director.