The Corporations Act requires each company to have a registered office. Most companies have their registered office at their trading address or that of their external accountant. Various statutory documents can be served on a company by mailing the documents to the registered office. It is important that you recognise and deal with critical documents, such as a Creditor’s Statutory Demand, as it requires urgent attention.
A Creditor’s Statutory Demand For Payment of Debt (Form 509H) is a formal demand for payment of an outstanding debt. It is also the first step in the Court winding up process. Failure to comply with such a demand is grounds for the debtor company to be wound up in insolvency.
Once a Statutory Demand has been served, the debtor company has 21 days within which to pay the debt or apply to set aside the Statutory Demand. On occasions a Liquidator has been appointed by the Courts to potentially solvent companies that have failed to adequately deal with Statutory demands.
It is therefore imperative that a Statutory Demand is dealt with adequately. Some reasons for failing to comply with Statutory Demands include:-
• Failing to notify the Australian Securities & Investment Commission (ASIC) of changes in the registered office.
- A Statutory Demand is served on the registered office of the debtor company. The details of a company’s registered office are usually obtained by performing a company search of the ASIC records. Should the registered office address change, it is important that ASIC be notified immediately. This will help ensure that Statutory Demands are received and can be dealt with appropriately within the short time frame.
• Failing to pass on the Statutory Demand to the client.
- If you are acting as the registered office of a client, it is important for the client be notified immediately in the event of receiving a Statutory Demand. This will give them sufficient time to take appropriate action.
• Failing to understand the significance of a Statutory Demand.
- A Statutory Demand may be issued after a number of other requests for payment. On occasions the recipient of a Statutory Demand may not fully understand its significance. The Statutory Demand should never be treated as merely another request for payment.
It is important to understand the significance of a Statutory Demand. In addition, the importance of keeping current details with the ASIC should never be underestimated. This will help ensure that such a demand can be dealt with in a timely and adequate manner.
Macks Advisory is a firm that practices exclusively in the areas of insolvency and business reconstruction and members with queries are invited to contact Peter Macks at Macks Advisory on 08 8231 3323 or by email to [email protected]