Setting up a company is relatively easy these days. If you fill out the right form and pay the right fee, you can have a company before the week is out. However, one of the more mundane details on the form – listing the registered office – could actually be the undoing of your company, or your clients’ companies, if you fail to keep it updated.
The Risk
To commence litigation proceedings, a plaintiff must serve court documents with the details of the proceedings on the defendant. This is a strict requirement at law to ensure that defendants have the knowledge of the proceedings and can defend themselves. However, once service is satisfied, it is the defendant’s responsibility to respond to the proceedings appropriately or the plaintiff may seek a default judgement (i.e. judgement in the absence of the defendant).
According to the Corporations Act 2001 (Cth) 109X, the requirement of service will be satisfied for a corporation if a document is posted to or left at the company’s registered office. If you fail to keep your registered office address updated, you risk being served without your knowledge and possibly having a default judgement issued against you. If you are served with a Statutory Demand (a different kind of court process) and fail to respond within 21 days, the filing creditor can seek orders for your company to be wound up so their debt can be satisfied. The fact that you were unaware of the proceedings will be not be a defence if the Statutory Demand was served on your registered office.
What can be done?
For this reason, it is important to review your registered office and ensure it is a location where documents will be received and passed on to the appropriate person in your company.
Some scenarios to be wary of are:
- Where the registered office is a property owned by the company which has been leased out to another entity;
- Where the registered office is the address of an accountant or law firm you no longer deal with;
- Where the registered office is the place of business of the company, but you do not have procedures in place to ensure such correspondence is dealt with appropriately. For example, where the registered office is a factory which the directors do not frequently attend and which does not have appropriate administrative support;
- Where the registered office is a shared home address and your mail might be mixed up with another person’s mail; and
- Where the registered office is a home address and your mail tends to sit unopened on the counter.
If this applies to you or your clients, we recommend that:
- The registered office be updated to the address of the company’s current accountant or lawyer; or
- The registered office be updated to the address of the directors’ place of work, presuming that they reliably receive mail addressed to them in this place of work; and
- The people working at your registered office are trained in the correct procedure and policies for dealing with court documents.
If you or your clients’ need assistance with updating their registered office or responding to the service of court documents, please call 02 9688 6023 or email jfrank!@franklaw.com.au
This is not legal advice
Photo by Samuel Zeller on Unsplash
