Situations are commonly encountered where an individual has commenced a business under a company name, subsequently sold that company, distributed the profits to the shareholders and not deregistered the company. ASIC then send an annual return to the director of the company for return and payment of the annual fee.

Not knowing the company is deregistered, an individual can buy other property in its name.  This can create innumerable legal problems as the entity no longer exists, it cannot own property.  It is for that reason we would always recommend that if anyone has an unused company, prior to using it, they undertake a search with ASIC to determine the status of that company.  Re-registration can be quite expensive.  We would certainly never recommend that another company be incorporated with the same name as the A.C.N number will be different and even more problems encountered if you try such an easy solution to use the assets of the company.

Entering Partnerships with Pre-existing Companies:

It is also frequently the case that someone will say they have a company that has not traded for some time and accordingly wish to use it for the purposes of a new venture with a partner.  In most circumstances we would recommend that such a step not be taken particularly by the new joint venture partner.  Without knowing the full history of the pre-existing company one never knows what potential liabilities lurk in the background and the risk of something occurring is too high for the minimal saving that can be generated by using a pre-existing company.  For instance a company may have a debt, which has not been enforced for the sole reason that the company had no assets.  However if the creditor does yearly checks on the company and finds that it back trading they may well then institute proceedings, which could be very detrimental to a new business.  Depending on its use it could well be that someone was previously injured but the nature of the injuries only became evident well into the future.  The Court has the power in certain circumstances to extend a period of limitation and if the company possesses no appropriate insurance cover at the relevant time then whatever assets it has may well be used up in defending that Court action.

Accordingly prior to entering into a venture with any pre-existing company we recommend you obtain the appropriate legal and accounting advice and undertake the necessary searches.