Dormant Companies in Australia: What Small Businesses Need To Know

Thinking about keeping your company registered but not actively trading? Making your company “dormant” can be a practical way to pause operations, hold assets or preserve your structure without shutting everything down.

However, “dormant” isn’t a formal legal status in Australia - and there are still rules to follow. In this guide, we’ll explain what dormant companies are (and aren’t), the steps to pause safely, the compliance you still need to meet, key risks to watch, when deregistration might be better, and how to switch back on when you’re ready.

Our goal is to help you make an informed decision and stay compliant while you focus on what’s next for your business.

What Is a Dormant Company in Australia?

A dormant company is a company that remains registered with the Australian Securities and Investments Commission (ASIC) but isn’t actively trading, generating income or entering new business transactions.

In practice, a dormant company will:

• Not sell goods or services, or enter new commercial contracts
• Not generate income (beyond incidental interest or similar, which you should discuss with your accountant)
• Limit expenses to unavoidable costs, such as the ASIC annual review fee
• Retain historical records and hold assets it already owns (e.g. intellectual property, equipment, or cash)

There’s no special ASIC registration status called “dormant.” You simply stop trading and keep up with core compliance for as long as you want the company to remain registered.

Why Keep a Company Dormant?

There are several legitimate reasons to keep your company registered but inactive:

• Pause and preserve: Take a break from trading while you restructure, explore new markets or step back for personal reasons.
• Hold assets: Keep existing assets (like IP or equipment) in the company while you decide your next move.
• Keep optionality: Maintain your corporate shell so you can restart quickly without setting up a new entity.
• Governance continuity: Retain your governance framework - for example, your Company Constitution and registers - so you’re ready if opportunities arise.

A quick note on brand and name protection: keeping a company registered does not, by itself, give you exclusive rights to a brand. Company names and business names help identify you to the market, but trade mark registration is what gives stronger, enforceable brand protection. If your dormant company is holding brand assets for a future relaunch, consider registering a trade mark to protect key names and logos.

How Do You Make a Company Dormant?

Going dormant isn’t just “do nothing and hope for the best.” It’s a short, deliberate process to wrap up trading, tidy up liabilities and set your company into maintenance mode. Here’s a practical, step-by-step approach.

1) Finalise Trading and Contracts

• Complete existing orders and projects, or formally end them with a short Deed of Termination where appropriate.
• Stop taking new orders and avoid entering any new contracts while dormant.

2) Communicate With Stakeholders

• Notify clients, suppliers, lenders and other key stakeholders that you’re pausing operations.
• Confirm what will happen to support, warranties and service obligations for existing customers (to avoid disputes later).

3) Address People and Payroll

• Pay outstanding wages, superannuation and other entitlements.
• If you have employees, ensure appropriate end-of-employment paperwork and accurate records. When you hire again, use up-to-date Employment Contracts and policies.

4) Settle Liabilities and Close Down Trading Activities

• Clear supplier balances and consider whether to wind down subscriptions and non-essential services.
• Close or freeze trading bank accounts if that suits your plan (some owners maintain a low-activity account just to pay ASIC fees).

5) Put Your Compliance on “Maintenance Mode”

• Ensure ASIC details (addresses, officeholders and share structure) are current.
• Keep minutes, registers and your constitution in order (dormant companies still need good records).
• If you hold brand assets, consider filing a trade mark through Register Your Trade Mark rather than relying on a company or business name.

6) Plan Your Document Suite for Relaunch

• Make a simple list of contracts and policies you’ll need when you resume (for example, a Customer Contract and Privacy Policy if you take customer data, or supplier agreements if you rely on third parties).
• If you have co-founders, ensure your Shareholders Agreement is up to date so decisions during dormancy and at relaunch are clear.

If you’d like a quick, tailored gap check before you switch off, our Legal Health Check can help you prioritise the essentials.

What Ongoing Compliance Still Applies?

Dormant companies still have legal obligations. Here’s what typically continues - and a few points that can trip up owners.

ASIC Annual Review and Company Details

Each year, ASIC issues an annual statement and review date. You need to:

• Review the statement to confirm details are correct (address, officeholders, share structure).
• Pay the ASIC annual review fee on time (late fees apply if you miss the deadline).
• Notify ASIC of changes within the prescribed timeframe (for example, changes to directors or addresses).

Some companies also need to consider a solvency resolution around their review date. If that could apply to you, read up on solvency resolutions and ASIC compliance.

Company Records

Keep your company registers, minutes and governance documents complete and accessible. Even when inactive, the company remains a separate legal entity and must be able to demonstrate proper corporate records if asked.

Director Duties Still Apply

Directors of dormant companies must still comply with their duties under the Corporations Act 2001 (Cth). In simple terms, you need to act in the best interests of the company, avoid improper use of position or information, and ensure the company keeps adequate financial records. Dormancy doesn’t switch those responsibilities off.

Tax and ATO Filings

You may still have tax obligations during dormancy, such as lodging a “nil” activity statement or return if required by the Australian Taxation Office (ATO). Your position depends on your registrations (for example, GST, PAYG) and your actual activity.

Important: Sprintlaw provides legal guidance. We don’t provide tax advice. Always confirm your ATO lodgement and registration position with your accountant or a tax adviser.

Intellectual Property and Brand Assets

If your inactive company is holding brand assets for a future relaunch, maintain those rights properly. Company or business names don’t create strong brand rights. For meaningful protection, consider trade mark registration now rather than waiting - it can save disputes when you return to market.

Risks, Directors’ Duties and When To Deregister Instead

Dormancy can be low effort, but it isn’t risk free. Be aware of the following.

Key Risks To Watch

• Fees and compliance slippage: Missing the ASIC annual review or fee can lead to penalties and, in time, deregistration.
• Historic liabilities: Past guarantees, debts or disputes don’t disappear because you stopped trading. Keep an eye on outstanding risk.
• Drift back into trading: If you start entering new contracts, raising invoices or employing people, you’re no longer dormant - and your compliance footprint ramps up immediately.
• Governance gaps: Out-of-date constitutions, unclear founder arrangements or poor records can cause friction when you reactivate. Keeping your governance documents current (like your Company Constitution and Shareholders Agreement) helps you pivot quickly and safely.

When Is Deregistration a Better Option?

If you’re confident the company won’t be used again, voluntary deregistration might be more sensible than keeping it dormant and paying annual fees.

ASIC generally allows voluntary deregistration when all of the following apply:

• The company is not carrying on business
• The company’s assets are worth less than $1,000
• There are no outstanding liabilities (including to the ATO and employees)
• All members (shareholders) agree to deregister
• The company is not a party to any legal proceedings
• All ASIC fees and penalties are paid, and the company is not under external administration

Deregistration is permanent. The company ceases to exist as a legal entity and you can’t trade, hold property or sue in its name. If you change your mind later, you’d need to set up a new company from scratch.

Can You Reactivate a Dormant Company?

Yes - you can resume trading at any time. There’s no formal “reactivation” process with ASIC, but do these things before you switch the lights back on:

• Update ASIC details: Make sure director, address and share information is current so you can receive notices and sign documents where required.
• Refresh your registrations: Check your ABN, GST and payroll registrations based on your new activity level (speak with your accountant about timing and thresholds).
• Reopen banking and operations: Re-establish operational accounts and systems so payments, invoices and payroll run smoothly.
• Put key contracts and policies in place: At minimum, have a current Customer Contract, supplier terms where applicable, a website Privacy Policy if you’re collecting personal information, and employment or contractor agreements if you’ll be hiring.
• Protect your brand: If you didn’t do it during dormancy, consider filing trade marks before launching campaigns or onboarding customers to reduce the risk of brand disputes.

A short, tailored review can save time and cost at relaunch. If you’d like a quick audit of your setup, our Legal Health Check will highlight what to fix now and what can wait.

Key Takeaways

• “Dormant company” isn’t a formal status in Australia - it simply means your ASIC-registered company has stopped trading but remains compliant and up to date.
• To go dormant safely, finish or formally end active contracts, clear liabilities, notify stakeholders and move your compliance to maintenance mode.
• Even when inactive, you must pay the ASIC annual review fee, keep company details and records current, and comply with any solvency resolution requirements.
• Director duties continue during dormancy, and past liabilities don’t vanish - good records and governance documents reduce risk.
• Deregistration may be better if the company won’t be used again and you meet ASIC’s criteria (not trading, no liabilities, assets under $1,000, not in legal proceedings, all fees paid and members agree).
• You can reactivate at any time - update ASIC details, refresh ATO registrations with your tax adviser, and put key contracts and policies in place before trading.

If you would like a consultation on managing a dormant company or planning a clean relaunch, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.