IP Implications Of Company Deregistration

When an Australian company is liquidated, placed into receivership, wound up or otherwise deregistered, the tangible assets such as the real estate, equipment and stock are typically sold to pay any remaining stake holders. However, during deregistration, the transfer of ownership of the company’s intangible assets is often overlooked.

Upon deregistration of an Australian company, any outstanding property of the company vests in the Australian Securities and Investment Commission (ASIC). Property includes land and all other assets vested in ASIC, tangible or otherwise. This includes the company’s intangible assets such as any patents, registered trade marks and design registrations.

After the date of deregistration, the company (or any other third party) may not dispose of or deal with its property. Any transfer or attempted transfer made by the deregistered company (or any third party) will be invalid.

From the date of deregistration, the IP may only be transferred at the discretion of ASIC, or if the company is restored through an order from the Federal Court of Australia.

Transfer of IP after deregistration

Section 601AF of the Corporations Act states that ASIC may do an act on behalf of the deregistered company or its liquidator if ASIC is satisfied that the company or liquidator would be bound to do the act if the company still existed. ASIC generally will not enter into a new contract, vary an existing contract or pay out creditors on behalf of the deregistered company.

In order to transfer the registered IP to a different entity, ASIC typically requires the submission of statutory declarations evidencing the nature of the transfer, the value of the IP, and evidence outlining why the transaction was not completed prior to the company’s deregistration. An official fee is also payable.

IP owners should be aware that recovering any IP or other asset which vests with ASIC may be quite a costly and labour intensive process. In addition, there is no certainty that such an application will be favourably considered by ASIC.

Practical considerations

In order to reduce the risk of losing control of valuable IP assets on account of company deregistration, IP owners should be aware of the size and content of their IP portfolio. Holding IP in the name of a separate legal entity such as an IP holding company is one strategy that can be applied to protect valuable IP assets, by keeping them separate from other more vulnerable entities. Whilst there are taxation and other legal implications concerning IP ownership and transfer, it is beneficial to have the correct structures in place from the outset.

Please contact Cotters if you would like any further information about the changes or if you wish to request examination on any pending patent applications.

By Chris Atichian
Cotters Patent & Trade Mark Attorneys
24 November 2009