Notice to ASIC of Share Cancellation

The offence of Notice to ASIC of Share Cancellation is found in section 254Y of the Corporations Act 2001 in Victoria. It is committed by a company that failed to notify ASIC about the cancellation of its shares within 1 month of the cancellation.

Have you been accused of Notice to ASIC of Share Cancellation?

ASIC Interview
You should seek legal advice from an experienced criminal lawyer as soon as you are aware that you are under investigation for failing to give Notice to ASIC of Share Cancellation. One of our lawyers can arrange a confidential conference with you and discuss your options and explain what you can expect in the interview process.

One of our lawyers can also attend the interview with you if you prefer. It is important to have a lawyer present because they can get a sense of the case against you.

Pleading Not Guilty
It is important to engage an expert criminal lawyer at an early stage if you have been charged with filing to give Notice to ASIC of Share Cancellation and you wish to plead not guilty. One of our criminal defence lawyers will prepare a defence strategy for you and carefully analyse the brief of evidence. There will be extensive material that will form the prosecution brief. Our criminal defence lawyers are pro-active in their approach and will look for discrepancies in this evidence.

The process for pleading not guilty can be a long and difficult one. It is important to engage an experienced and trusted criminal lawyer to advocate on your behalf at each step of the proceedings so that you are aware of how your matter is progressing.

Pleading Guilty
If you are pleading guilty to failing to give Notice to ASIC of Share Cancellation, one of our lawyers can assist you by advising you of the potential penalties, how to reduce the penalty and make plea submissions on your behalf in Court. Our lawyers have decades of experience representing people in Court and understand that it can be daunting for our clients. Our lawyers also understand that it is important for your current or future employment that you are not convicted of the offence. In those circumstances, an experienced criminal lawyer will make detailed submissions to the Court about why you should not be convicted.

Examples of Notice to ASIC of Share Cancellation
  • A company member pays money to a company in respect of the member’s shares. The company pays this money back to the member, and cancels their shares. The company does not notify ASIC.
  • A company, by resolution at a general meeting, cancels shares that have been forfeited. The company notifies ASIC after two months have passed.
What is the legal definition of Notice to ASIC of Share Cancellation?
The legal definition of this offence is failing to notify ASIC of a share cancellation within 1 month of the cancellation.

The legislation for this offence can be found in section 254Y of Corporations Act 2001.

Elements of the offence
The prosecution must prove the following beyond reasonable doubt:

  1. Shares in the company have been cancelled; and
  2. One month has passed since the shares were cancelled; and
  3. A notice has not been filed with ASIC or has been filed but does not contain the requisite information.
Element 1: Have shares in the company been cancelled?
Firstly, this offence must be committed by a company. A company means a company registered under the Act. A company can be limited by shares or limited by guarantee.1

Secondly, the company’s shares must have been cancelled. There are different types of cancellation of shares, which are described on ASIC’s website2:

  1. Redeemable Preference
  2. Capital Reductions
  3. Equal Reduction
  4. Selective Reduction
  5. Forfeited Shares
  6. Share Buy-backs
  7. Other Share Cancellations
Whether or not shares have been cancelled is a matter of fact.

Element 2: Has one month passed since the shares were cancelled?
This will usually not be a controversial element. ‘One month’ has the same meaning as in section 2G of the Acts Interpretation Act 1901 – a month is a period starting at the end of any day of one of the calendar months, and ending immediately before the start of the corresponding day of the next calendar month (or if there is no such day, at the end of the next calendar month).

Element 3: Has no notice been filed with ASIC, or an incorrect notice?
All companies must notify ASIC if they cancel shares by completing a ‘Change to company details – Form 484’ online. The paper form is no longer available, and must be lodged online.

“Did the company fail to notify ASIC of the share cancellation?”
In this form, the company must advise:

  1. The number of shares cancelled; and
  2. Any amount paid by the company on the cancellation of shares; and
  3. If the shares are cancelled following a share buy-back, the amount paid by the company on the buy-back; and
  4. If the company has different classes of shares, the class to which each cancelled share belonged.3
It is important to fill out this form correctly. If the company fills out the wrong information, this will constitute a failure to notify ASIC, and the company will be liable for a criminal offence.

Defences to this charge can include a factual dispute, honest and reasonable mistake of belief, or the concept of beyond reasonable doubt.

You should ring us and discuss your case if you have been charged.
Questions in cases like this
  • Was there actually a share cancellation?
  • Did the company notify ASIC how many shares were cancelled, and which class of shares did they belong to?
  • Did the company notify ASIC if they paid money on the cancellation of shares?
  • Did the company notify ASIC using the appropriate form?
  • Did the company notify ASIC within one month?
Maximum penalty for section 254Y of the Corporations Act 2001
Schedule 3 of the Act stipulates the penalties for offences under the Act. According to Schedule 3, the offence of Notice to ASIC of Share Cancellation (s254Y of the Corporations Act 2001) is punishable by a maximum of 5 penalty units (about $805). This is a fairly small fine for most companies.

However, deciding on whether to plead guilty or not still has consequences for a company. This decision should only be made after proper discussion with a criminal lawyer.

Other important resources

[1] Section 9 of the Corporations Act 2001.