Notarial Requirements When Closing an Overseas Entity

Closing a foreign subsidiary or branch is mostly done by people in that country: a local liquidator, lawyer or accountant takes the entity through whatever process its law provides. The Australian parent's part is narrower — it makes the shareholder decisions, authorises someone to act for it, and sometimes has directors in Australia who must swear declarations.

Those are the points where an Australian notary comes in. There are usually three of them, and one easily forgotten fourth at the very end.

1. The parent's decision

The foreign process will need evidence that the shareholder has decided to close the entity. For an Australian parent, that is typically a board resolution of the parent approving the dissolution or liquidation, authorising a named person to vote the shares or sign the shareholder resolution, and approving any power of attorney.

Alongside it, the foreign side will want the usual evidence that the parent exists and who its officers are. The pages on board resolutions and company incorporation documents cover both, and the page on certifying company records for a foreign registry explains the difference between a certified copy, an officer's certificate and a notarial certificate of fact.

Have the resolution drafted to the local lawyer's requirements. A foreign liquidator will read it literally, and a resolution that authorises "the closure of the subsidiary" may not cover the specific steps their law requires.

2. The power of attorney

Winding up is not one act. There may be a shareholder meeting, a resolution to appoint a liquidator, dealings with the tax authority, the release of a final distribution, the closure of bank accounts and a final meeting. Rather than execute documents in Australia for each step, the parent usually grants a power of attorney to a local representative.

The issues that matter at closure specifically:

• Duration. Dissolution can take much longer than planned, particularly where tax clearance is involved. A power of attorney that expires halfway through means another round of notarisation and authentication. Ask the local adviser how long the process realistically takes, and draft for longer.
• Receiving money. If the attorney will receive the final distribution or surplus assets on the parent's behalf, the power must say so. Banks and liquidators check.
• Bank accounts. The subsidiary's bank may have its own forms for closing an account and changing signatories, and may want those signed by current directors rather than by an attorney. Ask the bank separately.

3. Declarations by directors

Many jurisdictions require the directors of a company being voluntarily wound up to declare that it can pay its debts, or that it has no outstanding liabilities, or that its records are complete. If some of the subsidiary's directors live in Australia, they may need to make those declarations here, sworn or affirmed before a notary.

The notary administers the oath or affirmation and attests the signature. The notary does not check the company's accounts and cannot vouch for what is declared.

This is the part of a closure that deserves most care. In some systems a director who makes an incorrect declaration of solvency can be personally liable, and the declaration is typically made on the strength of accounts prepared by someone else. Before swearing one, a director should be satisfied the declaration is correct and should take advice on the foreign law if there is any doubt. That advice comes from a lawyer in the destination country, not from the notary.

Directors resigning as part of the closure may also be asked for signed resignations or releases, sometimes notarised. These can usually be signed at the same appointment as the declarations.

4. The evidence that comes back

When the process finishes, the foreign registry issues something recording that the entity no longer exists. That document may be needed in Australia: by the parent's auditors, for tax purposes, or to close out intercompany balances.

A document issued overseas for use in Australia is authenticated in the country that issued it. An Australian notary cannot vouch for a foreign registry's certificate. So ask the local adviser to obtain an authenticated copy of the evidence of dissolution — and certified copies of the final accounts and liquidator's report if you will need them — before they close their file. Once the entity is gone and the adviser has moved on, obtaining these becomes much harder.

Ask, too, who will hold the entity's records after dissolution. Many systems require records to be kept for a period, and the parent may want certified copies later.

Keeping the count down

Each separate document the parent sends generally needs its own DFAT certificate: an apostille for a Hague Apostille Convention member, checked against the HCCH status table on the day, or authentication and embassy legalisation otherwise. A notary cannot issue an apostille. Combining the decisions into one resolution, covering all the steps in one power of attorney, and having every Australian-based director sign their declarations at a single appointment is usually the difference between one authentication round and several.

Common questions

Can we close the entity without anyone in Australia signing anything? Sometimes, if a local director or an existing attorney has sufficient authority. Ask the local adviser before assuming Australian documents are needed.

Does the notary need to understand the foreign insolvency law? No. The notary deals with identity, authority and execution in Australia.

One of our directors has already resigned. Can they still sign the declaration? Usually the declaration must be made by the directors in office at the time. Ask the local adviser.

Is a closure cheaper than a formation? Not necessarily in paperwork. It often involves more separate steps, spread over a longer period.