Company Seller Facing Deregistration? Check Before Buying

You've found a Victorian home you want to buy, but a search of the company selling it reveals a proposed deregistration notice. Before signing, you need to establish whether the company still exists and who has authority to complete the sale.

The short answer: A proposed deregistration notice doesn't prove that the company has been deregistered. The notice can remain online even after the process stops. Your conveyancer should compare the current company record, contract and property title to identify the seller and check whether the proposed transfer can proceed.

1. Check the company's current registration status

Start by comparing the notice with a current company search. The Australian Company Number (ACN) helps identify the correct company, particularly where businesses have similar names.

When ASIC initiates deregistration, its process can involve changing the company's status to 'strike off in progress' and publishing a proposed deregistration notice.

These are steps towards possible deregistration, not confirmation that deregistration has occurred.

ASIC also confirms that published notices remain accessible even if deregistration is stopped. Finding a notice dated several months ago doesn't establish the company's present status.

Keep copies of:

• The proposed deregistration notice, including its publication date.
• The current company search showing the company name, ACN and registration status.
• Any written explanation supplied by the seller or its representative.

The date of the company search matters because the company's position may have changed since the notice appeared.

2. Match the company against the contract and title

The next question is whether the company identified in the notice is actually the company selling your property.

Your conveyancer should compare the company details against three documents:

1. Contract of sale: Which company is named as the vendor?
2. Current title search: Who is recorded as the registered proprietor, meaning the person or entity holding the registered ownership?
3. Company record: Do the company name and ACN identify the same legal entity, and what is its current status?

The review should also address the authority of the person proposing to sign or act for the company.

Suppose the contract names one company, but the title identifies another with a similar name. That discrepancy needs investigating rather than assuming the businesses are interchangeable.

In Victoria, the seller must provide a signed Section 32 statement before the purchaser signs the contract. This disclosure document contains information about the property, including its title.

Provide the complete contract and Section 32 to your conveyancer. Matching company details is a starting point, not proof that the seller has authority to complete the transfer.

3. Distinguish strike off from completed deregistration

A company facing deregistration isn't necessarily a deregistered company.

ASIC distinguishes three relevant situations:

Following completed deregistration, former company officeholders normally lose authority to deal with property registered in the company's name.

Property the company owned, other than trust property, generally vests in ASIC. Property held on trust vests in the Commonwealth, represented by ASIC.

'Vests' means ownership passes by operation of law, rather than through an ordinary transfer signed by the former directors.

Certain exceptions exist, including powers available to secured parties and land title registrars. These don't give former directors general authority to sell the property.

The actual title and transaction documents must therefore be examined before reaching a conclusion.

4. Check who can lawfully complete the sale

An ordinary company signature cannot overcome completed deregistration.

ASIC explains that a deregistered company cannot itself sell property registered in its name unless the company is reinstated.

There may be circumstances where someone seeks to purchase property vested in ASIC. ASIC's power to sell that property is discretionary, not mandatory.

An application or proposed arrangement doesn't guarantee approval or settlement.

Your conveyancer can review the transaction documents, identify the authority issue and explain how it affects the proposed conveyancing and settlement.

Specialist legal advice may be necessary where company reinstatement, disputed ownership or other corporate proceedings are involved.

5. Review your contract position before deadlines pass

What you should provide depends on whether you've already signed.

If you haven't signed, send your conveyancer the proposed contract, Section 32, company notice, current company information and any explanation from the seller's representative. Ask which company status or transfer authority questions remain unresolved before committing.

If you've already signed, also provide:

• The complete signed contract and any variations.
• Notices and correspondence about the company's position.
• Your contractual settlement date.
• Any approaching condition deadlines.

A deregistration concern doesn't automatically extend your contractual dates or give you a right to cancel.

Prompt review can help identify which questions need resolving, what your particular contract requires and whether specialist advice is necessary before the next step.

About the Pearson Chambers Conveyancing team

Pearson Chambers Conveyancing assists with residential property purchases, sales and title transfers throughout Melbourne and Victoria.

Our team reviews contracts, Section 32 statements and title documents, helps coordinate settlement and identifies matters requiring specialist legal advice. Where a company seller's status is uncertain, we can help examine the conveyancing documents and explain the outstanding transfer requirements.

Sources we consulted

• ASIC: When ASIC initiates a company's deregistration
• ASIC: Deregistered company property and the effects of deregistration
• ASIC: Purchasing property registered to a deregistered company
• Consumer Affairs Victoria: Conveyancing, contracts and Section 32 statements

Have the company seller's status checked before buying

If a company selling your prospective home faces deregistration, arrange a document review before signing.

Pearson Chambers Conveyancing offers a complimentary contract and Section 32 review for prospective buyers. Send us the company notice and available company information alongside your purchase documents.

If you've already signed, contact our team promptly to discuss the contract, approaching deadlines and next steps.

Email contact@pearsonchambers.com.au.

General information only, current as at the date of publication. Victorian conveyancing rules and legislation change frequently. Please contact the Pearson Chambers Conveyancing team for advice on your specific contract.