If your company has been abandoned by its directors, then as an employee, you may find it difficult to retrieve the entitlements owed to you by your employer. If this is the case, it might be worthwhile to seek help from the Australian Securities and Investments Commission (ASIC). ASIC has the power to wind up a company in order to allow employees to access Fair Entitlements Guarantee (FEG) assistance to recover some of these entitlements, such as unpaid wages.
This article will explain how you can seek help from ASIC to wind up the company. We will then explore the different circumstances taken into consideration by ASIC in making their decision. Finally, we will investigate the alternatives available to you if ASIC chooses not to wind up the company. For more information, you can access ASIC’s Regulatory Guide here. If you need further assistance, contact a lawyer today.
Seeking help from ASIC
As an employee, you may lodge a request for ASIC to wind up the company so that you can claim FEG assistance (to recover some entitlements owed to you), by lodging a report of misconduct. If successful, ASIC may appoint a liquidator to facilitate the winding up of the company. This will allow you to apply for FEG assistance. However, before lodging the request, you must demonstrate that you may be eligible for FEG assistance. You must also provide proof of your employment and the employee entitlements owed to you.
For example, if ASIC winds up the company, you may be eligible for FEG assistance, given that you:
- lodge a claim within 12 months of the date you lost your job or the date of liquidation
- lost your job six months before the appointment of a liquidator
- are owed entitlements (such as unpaid wages, annual leave and long service leave) and
- were an Australian citizen or a permanent visa holder at the time you lost your job
Circumstances where ASIC can wind up a company
In response to your request, ASIC can choose to wind up the company for a number of reasons. For example, if it aligns with public interest and:
- the company has been unresponsive to compliance notices from ASIC or has not lodged documents with ASIC for 18 months
- the company’s annual review fee is at least 12 months overdue
- the company’s registration was reinstated in the last 6 months
- there are other reasons for ASIC to believe the company is not carrying on business and there have been no objections from director(s) to the winding up of the company
There are also other factors that may affect ASIC’ decision. For instance, if there is a creditor who can wind up the company using their own resources, ASIC will likely wait up to six months to give them the opportunity to do so. ASIC may also decide to wind up the company if the cost of the liquidation (estimated to be around $15,000) would exceed the amount you and other employees can claim for entitlements. Further, current business operations may deter ASIC from winding up the company as it is not indicative of abandonment.
Alternatives if ASIC chooses not to wind up a company
If you are unsuccessful in your request for ASIC to wind up the company, you may apply for a court order to wind up the company. If this is the case, you should consult a lawyer, who may also be able to inform you of better alternatives.
Otherwise, you also have the right to request a review of the decision by ASIC from the Administrative Appeals Tribunal. The request must be sent in writing, within 28 days of being informed why ASIC made their decision.
