The benefits of operating a business in a company make it one of the most common legal structures amongst SMEs, but with all its perks comes a number of legislated responsibilities for its officeholders. Common pitfalls for companies and their officeholders are:
- Not having a compliant register of members and option holders
- Not holding meetings or having the appropriate resolutions/minutes signed and filed
- Not complying with the fundraising provisions
The above three pitfalls are dangerous for all directors and company secretaries, regardless of the size of company and can result in penalty, or significantly impact the company’s ability to be involved in takeovers, company buy-outs, restructures and other company succession options. Some careful review and administration now can save a lot of pain and money in the future.
Not having a compliant register of members and option holders
The Corporations Act requires companies to maintain an up-to-date register of members and option holders. Critically, while ASIC’s records may be accurate, they are not sufficient. The register must be compliant with s. 169 of the Corporations Act and failure to do so is considered an offence.
Not holding meetings or having the appropriate resolutions/minutes signed and filed
The Corporations Act contains requirements for both director and member meetings. In certain circumstances resolutions can be circulated and signed by all members negating the need to actually hold a meeting of members. Any director or member with 5% of votes can demand a meeting of members. It is important that minutes of meetings and resolutions are appropriately prepared, signed by the required number of directors/shareholders and maintained in the company register.
Not complying with the fundraising provisions
When companies issue shares to shareholders, they must consider the fundraising provisions in Chapter 6D of the Corporations Act. Under these provisions, private companies are prohibited from offering to issue shares unless the potential issue satisfies one of the following exemptions:
- The offering is to a sophisticated investor (as defined by the Corporations Act)
- The offering is to a professional investor (as defined by the Corporations Act)
- The offering is small scale – The securities being issued are to no more than 20 people raising no more than $2M over a 12 month period.
How can Nexia Edwards Marshall NT Help?
Nexia Edwards Marshall NT offer ASIC compliance services which include maintaining all aspects of the company register and preparing and filing appropriate minutes and resolutions. Our professional staff can attend both director and member meetings to ensure they are efficiently run, address important issues and have all minutes and resolutions documented. Appropriately run member meetings (annual general meetings) can provide shareholders with the opportunity to voice their opinions they may otherwise not be heard. We can also provide advice and direction in respect of fundraising issues and options.
If you have concerns with any aspects of your compliance with the Corporations Act please contact Sarah McEachern or your Nexia Edwards Marshall NT advisor.
