Notarial Requirements When Closing an Overseas Entity

When an Australian parent closes an overseas subsidiary or branch, a notary is usually needed at three points: the parent's resolution to close it, a power of attorney for a local representative, and any declarations Australian-based directors must swear. A fourth step is easily forgotten: getting authenticated proof of the closure back from the foreign country.

Key takeaways

• The closure itself is run in the other country by a local liquidator, lawyer or accountant. The Australian parent's part is its decisions, its authority and its directors' declarations.
• The parent's board resolution should be drafted to the local adviser's wording. A foreign liquidator reads it literally.
• A power of attorney for a closure should run long enough and should expressly cover receiving the final distribution.
• A director's declaration of solvency, where the foreign law requires one, can carry personal liability. Take advice on the foreign law before swearing it; the notary cannot vouch for what is declared.
• Each document the parent sends usually needs its own apostille or authentication from DFAT. Combining documents keeps the count down.

Who does what in a closure

Closing a foreign entity is mostly done by people in that country. The local process may be called liquidation, dissolution, winding up, deregistration or striking off, and each system has its own steps, forms and time limits. A local adviser takes the entity through them.

The Australian parent is the shareholder. Its job is to make the decisions only a shareholder can make, to authorise someone to act for it locally, and, if some of the subsidiary's directors live in Australia, to have them sign what the foreign law requires of directors. Every one of those documents is signed in Australia and used overseas, which is where an Australian notary comes in.

Before assuming anything must be signed in Australia, ask the local adviser. If a local director or an existing attorney already has enough authority, the closure may need no Australian documents at all.

1. The parent's decision

The foreign process needs evidence that the shareholder has decided to close the entity. For an Australian company, that is usually 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.

Have it drafted to the local adviser's requirements. A resolution approving "the closure of the subsidiary" may not cover the specific steps the foreign law names, such as appointing a particular liquidator, approving final accounts or releasing the directors. A liquidator reading it literally may ask for a second resolution, which means a second round of notarisation and authentication.

The foreign side will also want the usual evidence that the parent exists and who its officers are: a current company extract, sometimes the constitution, and an officer's certificate that the resolution was passed. Company records for a foreign registry explains the difference between a certified copy, an officer's certificate and a notarial certificate of fact, and notarising a board resolution covers what the notary checks.

2. The power of attorney

Winding up is rarely one act. There may be a shareholder meeting, a resolution appointing a liquidator, dealings with the tax authority, the sale or transfer of remaining assets, a final distribution, the closure of bank accounts and a final meeting. Rather than execute a new document in Australia for each, the parent usually grants a power of attorney to a local representative.

• Duration. Dissolution can take much longer than planned, particularly where tax clearance is involved. A power 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 for the parent, the power must say so expressly. Banks and liquidators check.
• Bank accounts. The subsidiary's bank may have its own forms for closing an account or changing signatories, and may want them signed by current directors rather than an attorney. Ask the bank separately.

The notary witnesses the signature of the parent's authorised officers, checks their identity and, usually, their authority to sign for the company. The notary does not draft the power for the foreign law; the local lawyer does. See power of attorney and legal declarations.

3. Declarations by directors

Many systems require the directors of a company being voluntarily wound up to declare something formally: that it can pay its debts within a period, 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, often on a form the foreign law prescribes.

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. A notary never certifies that a document's contents are true.

This is the step that deserves most care. In some systems a director who makes an incorrect declaration of solvency can be personally liable, and the declaration is usually made on the strength of accounts someone else prepared. Before swearing one, a director should be satisfied it is correct and should take advice on the foreign law if there is any doubt. That advice comes from a lawyer in that 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 proof that comes back

When the process finishes, the foreign registry issues something recording that the entity no longer exists. The parent may need it in Australia: for its 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 has gone and the adviser has moved on, these become much harder to obtain. Ask too who will keep the entity's records afterwards, since many systems require records to be kept for a period. Apostilles on documents from overseas covers the inward direction.

Translation

Where the foreign process runs in another language, ask the local adviser early whether the parent's documents should be prepared in both languages, translated in Australia, or translated locally after authentication. Bilingual documents drafted by the local lawyer often avoid a separate translation step altogether. If an Australian translation is wanted and DFAT is to legalise it, the translator must be NAATI certified or recognised. Keep the parent's name exactly as registered in every language; see NAATI translation with a notary.

Keeping the count down

Each separate document the parent sends generally needs its own certificate from the Department of Foreign Affairs and Trade (DFAT): an apostille for a country in the Hague Apostille Convention, or an authentication certificate followed by legalisation at that country's embassy or consulate for other countries. Check membership on the HCCH status table on the day. Only DFAT issues these; a notary cannot. DFAT's page of documents it can legalise treats company documents as private documents that need a notary first.

1. Combine the decisions into one resolution covering every step the local adviser lists.
2. Cover all the steps in one power of attorney, drafted to last.
3. Have every Australian-based director sign declarations and resignations at a single appointment.
4. Lodge everything with DFAT together, with any translations the country requires.

That is usually the difference between one authentication round and several. Apostille and authentication sets out the DFAT step.

Document	Signed by	Notary's role
Board resolution to close	The parent's directors or secretary	Witnesses the officer, checks the company
Power of attorney	The parent's authorised officers	Witnesses and checks authority
Declaration of solvency or similar	Each Australian-based director	Administers the oath or affirmation
Resignation or release	Each resigning director	Witnesses the signature, if asked
Evidence of dissolution	The foreign registry	None; authenticated abroad

Here is an illustration, not a real case

A Perth engineering firm closes its dormant subsidiary in Malaysia. The Malaysian adviser sends a list: a parent resolution in set wording, a power of attorney for the adviser's firm, and statutory declarations from the two directors who live in Perth. The firm's board passes one resolution covering every step on the list. At a single appointment, a notary witnesses the company secretary sign the resolution certificate and the power of attorney, and administers affirmations to both directors. Because Malaysia is not a party to the Convention at our last check, DFAT authenticates the documents and the Malaysian High Commission legalises them. The firm asks the adviser, early, for an authenticated copy of the final dissolution record.

In short

An Australian notary deals with the parent's side of closing an overseas entity: the resolution, the power of attorney and any declarations Australian-based directors must swear. The foreign adviser sets the wording, and the directors should take foreign legal advice before declaring solvency. Combine documents to limit DFAT rounds, and arrange the authenticated proof of closure before the adviser's file closes. For the notary step, see document notarisation.

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