Friday, February 4, 2011

ASIC rejections getting you down?

Lisa Galbraith, CEO

Twice a year, ASIC shares information about lodging activity with Cleardocs and the other “electronic lodging agents”. The information includes the number and type of forms lodged, how long the process takes and common issues. At Cleardocs, we look closely at the common errors and then look at what we can do to help reduce those errors. Sometimes, this involves a change to our interface, an extra validation check or some extra help text. Unfortunately we can’t always automate the fix.

So what are some of the common errors?

Australian address fields

Incorrect address details are the most common errors made. ASIC matches all address details against the Australia Post database. If a detail doesn’t match, then ASIC rejects the application. Newer suburbs and multi storey apartment blocks can at times cause issues. So it is worth spending a minute checking your address on the Australia Post website.

Office holder address details

If the company office holder was born in Australia, then ASIC needs to know the town AND state of birth. Town and country is just not enough. So best to make sure your client provides full details before you lodge. Also, postcodes are not required for overseas localities – entering international postcodes causes ASIC’s machine to reject the form.

Business Names

Often people register a company that will share the name of a business they currently run. ASIC is particularly vigilant in checking that your application is not in conflict with existing business names.

ASIC checks a number of different databases – including the National Names Index. If a company application is similar to an existing registered business name, then it will be rejected. The fact that say, your application is for NSW and the registered business of a similar name is in NT, is irrelevant. There is a match and therefore ASIC will NOT accept the company name.

If you own the business name, then you need to provide the Registered Business Name Number (known as an “RBN”). (The RBN is NOT the ABN.)

You find the RBN:

· on the certificate provided to you by the relevant state authority (typically the Office of Fair Trading in your state) when you first registered your business name; or

· on the ASIC company and business name search function on their home page.

Finally, ASIC will check that the person listed as the owner of (or a director of the owner of) the registered business name is also a director on the company application form.

It all gets a bit more complicated if you have a business name that is very similar (but not identical) to the name you want for your company. Here’s how it works. If you answer “Yes” and identical name is registered as a business name (but it is only similar), then ASIC will reject the company application because your proposed new company name does not match your registered business name exactly. Small spelling changes (eg: plural to singular) are enough for ASIC to reject your application. If you want your new company to have a slightly different name to your registered business name, then it is better to answer “no” to the question on our interface that asks “Is the proposed company name identical to a Registered Business Name?”. You can have a different business name and company name.

Applicant name

If you have reserved a company name the name of the applicant must match the name of the applicant on the company registration form. If they are different, ASIC will reject your company application. Resolving this issue is tedious as you need to ask ASIC to withdraw your reservation (usually done by fax) and then you can relodge your company application.

Checking the details is worth it

The ASIC company formation process is an electronic process. Set rules and parameters have been set and rejection is automatic with no human intervention. So it is worth taking a couple of minutes to check that all your data is correct.

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