What is the Safest Way to Resign as a Director to the Company

The Australian Government recently made a significant change to the Corporation Act regarding director resignations. As of February 18, 2021, backdating director resignations are no longer allowed. If you wish to resign as a director of a company, you must notify ASIC within 28 days via written notice. Failure to do so will result in the resignation being dated as the lodgement date. For instance, if you resign on January 1, 2021, but fail to notify ASIC until July 1, 2021, your resignation date will be July 1, 2021, and a late fee will apply.

Legal Obligations when You Resign as a Director

Upon resigning or retiring as a director of an Australian company, directors typically discharge their legal obligations, and associated requirements cease. However, they may still be held liable for their conduct during their tenure. Therefore, it’s crucial to follow the correct procedure when removing oneself as a director. As the leading CPA accountant and tax agent in Inner West Sydney and Northern Beaches, we offer assistance in this process.

Correct Procedure for Removal

Reviewing your company constitution or ASIC’s replaceable rules is essential to ensure compliance with the correct procedure for notifying ASIC of the change in directorship using the proper ASIC form.

Handling Early Resignation Dates

If the director’s resignation date is within 28 days, rectifying the situation is straightforward. We can assist you in writing to ASIC to backdate the resignation to the original date.

Resignation Dates Beyond 28 Days

For resignation dates exceeding 28 days but within 56 days, you or the company may apply to ASIC within 56 days from the claimed resignation date using Form 502. This application includes providing reasons for the change, and a fee is applicable. If ASIC approves the application, the resignation date will be adjusted accordingly.

Applications to the Court

Applications to the Court must be made within 12 months of the claimed resignation date unless an extension is granted. If the Court approves an earlier resignation date, the Order must be lodged with ASIC within two business days using the Form 105 Cover page for an office copy of a court order.

Seek Professional Assistance

Given the complexity of director resignations and associated procedures, it is imperative to seek professional advice. As the leading CPA accountant in Inner West Sydney, Northern Beaches, and Adelaide, we are here to assist you through every step of the process.

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