Property of deregistered corporations

This is an outline of the Registrar’s powers to deal with the property of deregistered corporations under the CATSI Act. 

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Background 

Corporation property is usually sold or transferred before deregistration. However, sometimes a corporation’s property is only discovered after the corporation has been deregistered. 

When a corporation is deregistered, it ceases to exist as a legal entity and all of its remaining property interests vest in the Registrar – sections 546-20(1) and 546-20(2).

This extends to:

• corporation property vested in a liquidator immediately before deregistration
• property outside Australia
• property held by a corporation on trust immediately before deregistration.

In this context ‘property’ means all legal and equitable interests in real or personal property, whether tangible or not. It includes land, bank accounts, shares, motor vehicles, other assets, interests in contracts, mining interests, insurance policies and intellectual property.

Property of deregistered amalgamating corporations does not vest in the Registrar. It becomes the property of the amalgamated corporation –

section 546-10(4).

After deregistration a corporation or anyone else (other than the Registrar) may not dispose of or deal with a deregistered corporation’s property. Any purported disposition or transfer by the deregistered corporation or anyone else (other than the Registrar) will be invalid.

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Rights attaching to property vested in the Registrar

The Registrar has all of the powers of an owner in relation to property vested in the Registrar after deregistration – section 546-20(4). 

Where the property is not held on trust, the Registrar may dispose of or deal with the property as the Registrar sees fit, and apply any money received to defraying expenses and paying liabilities imposed on the property – section 546-25(2). 

Where property is not dealt with or disposed of under section 546-25(2), including any property remaining after expenses and liabilities are met, that property must be dealt with as ‘unclaimed property’ as per part 12-3 of the CATSI Act.

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Liabilities attaching to property vested in the Registrar

Where property of deregistered corporations is vested in the Registrar, the Registrar only has the same property rights that the corporation itself had and takes the property subject to any securities or other interests or claims that the property was subject to at the time of deregistration – section 546-20(3). 

Property vested in the Registrar also remains subject to all liabilities imposed on the property. These liabilities include rates, taxes and other charges or claims arising under law and any other charges or claims over the property – section 546-25(3).

If the Registrar is already a party to litigation or proceedings, legal documents should be served at the address for service nominated by the Registrar in those proceedings. Legal notices and other documents, seeking to institute litigation or proceedings to enforce liabilities imposed on the property of deregistered corporations vested in the Registrar, may be served on the Registrar at the Registrar’s Canberra office.

The Registrar’s obligation in relation to liabilities is limited to the extent that the property is properly available to satisfy the liabilities – section 546-25(4).

Generally, the Registrar will not pay out creditors on behalf of a deregistered corporation and operate a de facto winding up service. The appropriate course available to a creditor is to seek to reinstate the corporation and appoint a liquidator.  See ‘PS-17: Deregistrations and reinstatements’.

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Registrar’s general power to fulfil outstanding obligations of a deregistered corporation

The Registrar may act on behalf of a deregistered corporation or its liquidator if the Registrar is satisfied that the corporation or liquidator would be bound to do the act if the corporation still existed – section 546-30. 

This is a general power and not limited to acts in relation to property vested in the Registrar. 

Generally the Registrar will not enter into a new contract or vary an existing contract on behalf of a deregistered corporation. 

The procedure for applying to the Registrar to use this power is set out in 'PS-18 – Property of deregistered corporations'.

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Accounts to be kept by the Registrar

The Registrar must keep a record of all property of deregistered corporations that the Registrar knows is vested in the Registrar. The Registrar must keep records of all dealings with the property and all money received from those dealings and copies of all accounts, vouchers, receipts and papers relating to the property and that money – section 546-25(5). 

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Property held on trust by the corporation before deregistration 

Property held by a corporation on trust immediately before deregistration vests in the Registrar. The unclaimed property provisions in Part 12-3 of the CATSI Act and section 546-25(2) of the CATSI Act have no application to the trust property.

Under the CATSI Act, the Registrar may continue to act as trustee or apply to a court for the appointment of a new trustee for any of the property of a deregistered corporation that was held by the corporation on trust – section 546-25(1). However, the Registrar will only exercise these powers as a last resort.

In most cases where a person is endeavouring to obtain an interest in trust property previously held by a corporation that is deregistered, applicants should apply to reinstate the corporation. See ‘PS-17: Deregistrations and reinstatements’. 

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Insurance contracts and claims against insurers

The CATSI Act provides a right to a person to proceed directly against an insurer under a relevant insurance contract held by a corporation immediately before its deregistration even though the corporation’s rights under the insurance contract vest in the Registrar. 

A person may recover from the insurer of a deregistered corporation an amount under the insurance contract if the corporation had a liability to the person and the insurance contract covered that liability immediately before deregistration – section 546-35.

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Unclaimed property

Unclaimed property is property vested in the Registrar that: 

• was not held on trust by the corporation before being deregistered – section 551-1, and 
• the Registrar has not dealt with or disposed of under section 546-25(2) to meet any expenses and liabilities associated with the property. 

Unclaimed property that is money at the time it becomes unclaimed property is held by the Registrar, on behalf of the Commonwealth, on trust under Part 12-3 of the CATSI Act – section 551-5(1). The money must be credited to the Aboriginal and Torres Strait Islander Corporations Unclaimed Money Account.

Unclaimed property that is not money at the time it becomes unclaimed property is held by the Registrar, on behalf of the Commonwealth, on trust under Part 12-3 of the CATSI Act until it is sold or disposed of by the Registrar. The Registrar then holds the proceeds on trust – section 551-5(2). The proceeds from sales or disposals must also be credited to the Aboriginal and Torres Strait Islander Corporations Unclaimed Money Account.

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Unclaimed money account

Special account

Section 551-20 of the CATSI Act establishes the Aboriginal and Torres Strait Islander Corporations Unclaimed Money Account (the account). The CATSI Act provides that account is a special account for the purposes of the Public Governance, Performance and Accountability Act 2013 – section 551-20. 

Unclaimed property that is money and proceeds from selling unclaimed property must be credited to the account – section 551-25.

The purposes for which amounts may be debited from the account are:

• to pay people whom the Registrar is satisfied under section 551 15(2)(b) are entitled to the money – section 551-30(1)(a)
• to reduce the balance of the account without making a payment to any person if 6 years have passed since the unclaimed property was first held by the Registrar – section 551-30(1)(b).

If (after the Registrar has held the unclaimed money for 6 years) the money has not been paid out under section 551-30, the account must be debited by an amount equivalent to that money – section 551-30(2).

If a person makes a claim to money after six years have passed since the property was first held by the Registrar and the Registrar is satisfied that the person is entitled to the money, the Registrar must pay the money to the person. It must be paid out of money that is appropriated by the Australian Parliament for this purpose – section 551-30(3).

Registrar and Commonwealth not liable to pay calls on shares etc.

If unclaimed property is or includes shares in a body corporate, the Registrar and the Commonwealth are not obliged to:

• pay any calls
• make any contribution to the debts and liabilities of the body corporate
• discharge any other liability or
• do any other act or thing

whether there is an obligation before or after the shares become unclaimed property, but this does not affect the right of the body corporate to forfeit a share – section 551-10.

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