Notification to ASIC of resignations of directors of charitable corporations

Resignation as a company director is only effective if and until the Australian Securities and Investments Commission (ASICs) is notified.

Businesses registered as charities with the Australian Charities and Not-for-profits Commission (ACNC) have simplified reporting requirements. This means that charities are only required to notify CANAC when directors are appointed or removed. However, the amendments to the Companies Act 2001 (Cth) (Corporations Act) now mean that directors must also notify ASIC for the resignation to be legally effective.

Amendments to the Corporations Act

Businesses registered as charities with the ACNC are exempt from the requirement to notify ASIC if a person ceases to be a director[1]. Instead, charities are only required to notify the ACNC when a director resigns by updating their contact information on the charity portal.

Section 203AA of Corporations Act has had an unintended impact on charities not notifying ASIC of director resignations. Introduced as part of the fight against the illegal activities of phoenix, section 203AA of the Corporations Act was intended to prevent the improper backdating of director resignations. Under Section 203AA(1):

  • if ASIC is notified that a person has ceased to be a director of a company within 28 days, the person’s resignation is effective on the day they ceased to be a director; and
  • in any other case, the resignation takes effect on the day of filing with ASIC of a written notice stating that the person has ceased to be a director of the company.

Although charitable corporations are exempt from the requirement to notify ASIC of director resignations, they are not exempt from Section 203AA(1). This means that directors who have resigned and are no longer serving on a charity’s board but did not notify ASIC can still be legal directors of the company – with all the associated duties and responsibilities.

Our recommendation

The charitable and non-profit sector is calling for legislative changes in this area. However, unless and until this change is made, we recommend that charities consider notifying both ASIC and ACNC of resignations. For the many charities that have a long-standing practice of only notifying the ACNC, it would be prudent to restore ASIC’s historical registry to ensure that all director appointments and resignations are noted.

Charitable businesses can notify ASIC of appointments and resignations by doing the following on the Business Portal[2]:

  • Start a new Form 484.
  • Select ‘appoint or terminate an administrator position’.
  • Submit details of office holders you wish to appoint or remove.

ASIC may issue an invoice for late fees if changes are made more than 28 days after the appointment or withdrawal. Charitable businesses are not required to pay such late fees and should apply for a fee waiver through the business portal.[3].

Charities should also consider how they document the appointment and resignation of directors. A register of directors may be prepared and maintained for this purpose and reconstituted in the event that it becomes obsolete. Our director register template can be used to record details of current and former directors, including their dates of appointment and resignation.