Small business-are you allowed to operate a business

Some people are automatically disqualified from managing companies or operating businesses in Australia.

Companies

A person is automatically disqualified from managing a corporation if they are convicted of certain types of offences detailed in section 206B of the Corporations Act.

The period of disqualification is five years and commences from the day they are convicted, or if imprisoned, from the day they are released.

A person who is a bankrupt cannot manage a company. For more information about bankrupts see Information Sheet 14 Bankruptcy and personal insolvency agreements.

ASIC also has the power to disqualify or ban a person under s206F of the Corporations Act from managing a company for up to five years if:

  • they have been involved in two or more failed (liquidated) companies in the last seven years, and

  • a liquidator has lodged a report with ASIC for each of the companies about the companies' inability to pay its debts.

It is a serious criminal offence to manage a company when disqualified.

Business names

Certain entities* are also disqualified from holding a business name if the entity has been disqualified from managing a company under section 206B(1) of the Corporations Act or convicted of criminal offences under section 32(1) of the Business Names Registration Act 2011.

*An entity can be:

  • an individual

  • a body corporate

  • a corporation sole

  • a body politic

  • a partnership

  • any other unincorporated association or body of persons

  • a trust

  • a superannuation fund

You must notify ASIC if you,or a person involved in the management of your business, is disqualified from holding a business name.

More about this topic

Members of a company

Starting a company

Australian company numbers

Corporate key

Registering a business name

What is a company?

Appointing alternate directors

Minimum officeholders

Shares and the share register

Notify ASIC of disqualification

More about small business

Small business home

Starting a small business

Compliance for small business

Closing a small business

Resources

Protect your business from unfair contract terms

Pen1 

Find out more about the new law applying from 12 November 2016 that aims to protect small businesses from unfair contract terms.

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Last updated: 06/11/2013 12:00