Levitt Robinson has provided a submission to Australian Securities and Investments Commission (ASIC) Chairman Mr Greg Medcraft that the corporate watchdog should implement immediate changes to the procedure for changing ASIC’s records of company details, as flaws in the current system are creating millions of dollars of unnecessary costs in family law property disputes.
According to Levitt Robinson Family Law Division Director Louise Cassar, urgent action is required by the ASIC to rectify the situation.
“We have been instructed in several multi-million dollar property dispute proceedings under the Family Law Act 1975 where a current office holder of a family company has unilaterally decided to change the company’s details to remove his or her estranged spouse as a director, appoint a new director, or change shareholdings in circumstances where the office holder did not have the company’s authority to do so,” Ms Cassar said.
“The above scenario has on several occasions attracted protracted and costly litigation in the Family Court jurisdiction.
“This is because the ASIC’s current procedure lacks the appropriate checks and balances to determine if any change to company details is pursuant to the requisite authority of the company evidenced by a signed directors’ minute or shareholder’s resolution.”
The ASIC’s current system for changing a company’s details is a two-stage process, namely:
- A Form 484 (Corporations Act 2001) is required to be filled out which requires general information but specifically:
- Under the section “Company Details” insertion of the company’s Corporate Key; and
- A signature by a current office holder such as a director or company secretary.
- The Form 484 (Corporations Act 2001) is then to be lodged by mailing it or emailing it to the ASIC or via a form on the ASIC’s website.
Ms Cassar said requiring more than just knowledge of a company’s corporate key and being a current office holder to sign the Form 484 Change to Company Details application will not only limit the need for further protracted litigation on behalf of litigants to a property dispute in the family law jurisdiction but also save the Commonwealth millions of dollars in tax payers’ money.
Alternatively, the problem could be resolved through notifying all officeholders of the company whenever a change is made, and giving them a short period in which they can lodge a complaint to prevent the change from going through, pending further investigation by ASIC.
Levitt Robinson has requested the ASIC immediately implement changes to the current procedure which would include a notification of directors/shareholders when an application for change is made and a 1- business day cooling off period.