ASIC Form 485 Sets Seven-Day Lodgment Rules for Company Solvency Resolutions Under Section 347A

Key Takeaways

• ASIC has published Form 485 and its accompanying guide, which require directors to lodge a statement within seven days if they pass a negative solvency resolution or fail to pass any resolution within two months of the company's review date.
• The document restates existing obligations under section 347A of the Corporations Act 2001 rather than introducing new ones.
• Compliance teams should confirm that review dates, board resolutions, and lodgment deadlines are tracked across all Australian entities.

Deep Dive

ASIC has published Form 485 and its accompanying guide, which require directors to lodge a statement within seven days if they pass a negative solvency resolution or fail to pass any resolution within two months of the company's review date. The document restates existing obligations under section 347A of the Corporations Act 2001 rather than introducing new ones. Compliance teams should confirm that review dates, board resolutions, and lodgment deadlines are tracked across all Australian entities.

The timelines differ by scenario and are strict. For a negative resolution, the form must be lodged within seven days of the resolution date. If no resolution is passed, the form must be lodged within seven days after the two-month period ends, and it must not be lodged before that period expires. A positive resolution requires no lodgment, but directors should retain a copy for their records. If directors are evenly divided, the chair has the casting vote. A majority view determines whether the resolution is positive or negative. The form must be signed by a current director or company secretary, who certifies that the information is true and complete. It can be lodged by post or electronically.

Compliance teams should take the following actions:
- Maintain a register of review dates for all Australian subsidiaries and controlled entities.
- Build calendar triggers for the two-month resolution window and the seven-day lodgment window.
- Confirm that board minutes properly document solvency resolutions, including the vote count and the chair's casting vote where applicable.
- Establish an escalation path so that a negative resolution triggers immediate lodgment, legal review, and notification to treasury and risk.
- Confirm which entities are exempt because of a recent Chapter 2M financial report.

Risk implications are significant, particularly for groups with many dormant or low-activity entities where review dates are easily missed. Late or missed lodgment can expose the company and its officers to regulatory action. A negative resolution is also a strong signal of financial distress. It may trigger insolvent trading concerns for directors, covenant and disclosure considerations, and counterparty or credit implications. The guide states that directors uncertain about solvency should advise ASIC in writing of their circumstances and seek their own legal or accounting advice. Institutions should treat that as a prompt for early engagement with counsel.

Source: Australian Securities and Investments Commission