All Australian companies must have a registered office. Aside from the general compliance obligations, there are other very real and serious consequences to picking the wrong location.
This is relevant at this time of year when many businesses are closed in late December and early January.
Service of Documents
When a claimant seeks to enforce a debt or other claim against a natural person, the person is served with the documents. Unlike a natural person, a company does not have a single physical embodiment. Section 109X of the Corporations Act 2001 (Cth) recognises this and creates a special mechanism for service of documents on companies. Specifically, for the purposes of any law, a document may be served on a company by leaving it or posting it to the company’s registered office.
This creates a very real risk for the company, its directors, and shareholders. For example:
- the registered office may not be an appropriate address for important documents;
- the registered office may be a former accountant’s or lawyer’s premises;
In the above cases, it is possible that legal documents have been properly served, but the directors of the company remain completely unaware of the claim. Furthermore, the registered office occupant may be closed at certain times of year, particularly, during the annual Christmas shutdown.
There are typically strict timeframes for responding to legal claims and demands.
Statutory Demands for Payment
The Corporations Act 2001 (Cth) (the Act)provides that a creditor may serve a Creditor’s Statutory Demand for Payment of Debt (Statutory Demand) on a debtor company if certain conditions are met. Importantly, if the company does not pay the debt or apply to set aside the debt within twenty-one (21) days of service the company may be presumed insolvent with dire consequences for the company.
In SV Steel Supplies P/L v Palwizat [2007] QSC 24 a Statutory Demand was served on 22 December. The Court correctly determined that the Christmas holiday period had no bearing on the twenty-one (21) day period and it was outside the power of the Court to extend this time frame. The twenty-one (21) day period relates to consecutive days, and not ‘business days’.
A similar outcome was reached more recently in J & K Homes Pty Ltd v Evans Lawyers [2017] QSC 24.
Last month, a more interesting scenario was presented in Adcon Logistics Pty Ltd v Joannou Enterprises Pty Ltd [2023] QSC 265. In that case, a Statutory Demand was served by posting the document to the registered office of the debtor company pursuant to Section 109X of the Act. Due to a mail redirect being in place, the Statutory Demand was not delivered to the registered office, but instead to a related party PO Box. As a result, the debtor company was not aware of the Statutory Demand at the time it was delivered. The Court determined that because the redirection of mail was caused unilaterally by Australia Post, the redirection could not be held against the company. In this case, it meant that delivery to the PO Box was not service to the registered office.
Key takeaways
The rules in relation to service of documents and resulting timeframes are very strict. Importantly, it is not always relevant whether the directors, officers, or indeed any personnel of the company are in fact aware of service of documents. Systems must be in place to avoid loss of legal rights.
If you are a director or officer of a company, consider:
- are you aware of the current registered office recorded with ASIC?
- if a professional advisor or third party occupies the registered office, have you checked their office closures, particularly over Christmas and New Year?
- will the occupant of the registered office have systems in place to check mail during this period?
If you have any questions about Christmas shutdowns, NB Commercial Law office remains ready and able to assist with these matters.
Give NB Commercial Law a call, we offer an complimentary consultation and are happy to help.
Please email us via [email protected] or call +61 (07) 3876 5111 to book a consultation.
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About the Author
Daniel Dash has over ten (10) years of experience in commercial and corporate law and is a Director of Commercial Law team at No Borders Law Group. His areas of focus include contractual disputes, commercial transactions, finance, corporate advisory services and trusts.
His practice areas also include business structuring, shareholder contracts, corporate law, commercial litigation, commercial property, intellectual property, taxation and business succession planning.
Daniel works with company directors and business owners to achieve results that align with client objectives. In all matters, he endeavours to provide practical recommendations and develop clear and effective strategies.
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