CFO services
Special administration — and how to stay out of one
Special administration is unique to the CATSI Act. It lets the Registrar step in early when a corporation is in difficulty with its finances or its governance, with the aim of restoring it to health and handing control back to members. It is serious, and it is not the end of a corporation.
What it is, in both languages
What the Act says
“Special administration is unique to the CATSI Act. The process allows the Registrar to provide early assistance when a CATSI corporation faces problems with finances or governance.”
What that means
Two words there are worth sitting with:
- Assistance — the purpose is to fix the corporation, not to close it.
- Early — it is meant to happen before a corporation is beyond saving.
Control is intended to return to members once the corporation is stable again.
Checked against ORIC — Special administrations, .
What it means for the board
This is the part directors most need to understand plainly. On appointment, the special administrator takes control of the corporation and is regarded as an officer of it. The directors and secretary are removed from office, unless the Registrar agrees it is in the best interests of the corporation that they remain.
The administrator’s powers are broad — carrying on the business, dealing with property, engaging staff, and doing anything the corporation, its directors or a member could do. The Registrar determines how long the administration runs and can extend it, with public notice.
Before it gets there: what a board can actually do
The honest message is that the useful work happens early, and most of it is unglamorous.
- Get current financial information in front of the board. A board that sees the position quarterly can act on a problem. One that sees it annually finds out afterwards.
- Answer correspondence. Going quiet is what turns a manageable issue into an escalating one, and it is often accidental — letters going to a contact who left.
- Deal with any compliance notice properly and on time. Failing to comply with one is a ground on which a special administrator can be appointed. See compliance notices.
- Bring reporting up to date. Non-lodgement is visible and it compounds. See overdue reports.
- Take the insolvent trading duty seriously. Directors must not let the corporation trade while it cannot pay its debts — see directors’ duties.
How we help
We are not special administrators and we are not appointed by the Registrar. What we do is the financial work around the situation, in three different circumstances:
- Before — a board that senses trouble and wants a clear-eyed view of the corporation’s actual position, and a plan it can act on.
- During — reconstructing records, bringing outstanding reporting up to date, and providing the financial information the administration needs.
- After — the part that decides whether it happens again. Corporations come out of administration and go back to the arrangements that got them there. Putting real bookkeeping and board reporting in place is what breaks that cycle.
A word about blame
Corporations end up in difficulty for reasons that are usually structural rather than personal: a bookkeeper leaves, funding arrives with conditions nobody has capacity to track, a board of volunteers is asked to oversee something that needs a finance function. Directors are often the last people to find out.
If that is where your corporation is, the position is more recoverable than it feels, and asking early costs you nothing.
Frequently asked questions
What is special administration?
A process unique to the CATSI Act that allows the Registrar to provide early assistance when a corporation faces problems with its finances or governance. The aim is to restore the corporation to financial and organisational health, with control returning to members once it is stable.
What happens to the directors?
The directors and secretary are removed from office, unless the Registrar agrees it is in the best interests of the corporation that they remain. The special administrator takes control and is regarded as an officer of the corporation.
How long does it last?
The Registrar determines how long a special administration will be in force, and it can be extended if necessary. Public notice is required for changes.
Is special administration a punishment?
No. It is designed as early assistance to restore a corporation to health, and control is intended to return to the members. It is a serious step, but it exists to keep corporations going rather than to end them.
Can we do anything to avoid it?
Often, yes — and earlier is dramatically better than later. The Registrar’s stated preference is that corporations are given the opportunity to resolve lower-risk matters themselves. A board that has current financial information, has answered correspondence, and is dealing with any compliance notice is in a very different position from one that has gone quiet.