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Dealing with businesses and companies: How to avoid being swindled





This information sheet sets out general steps you can take to reduce the risks of being swindled by unreliable operators and fly-by-night businesses. It is not personal advice.

As a consumer or small business owner, you need to ensure that your interests are protected when you deal with other businesses. You can take four steps to help protect your interests:

1. Ask questions

2. Verify information

3. Seek help

4. Monitor and report


1. Ask questions



Find out details about the company or business that will help you to obtain further information. Ask for:

What is an ACN?



Since 1 January 1991, every company in Australia has been issued with a nine-digit ACN. The ACN is a unique identifier and no two companies can have the same ACN.


What is an ABN?



The Australian Business Number (ABN) is a number for business dealings with the Australian Taxation Office (e.g. an ABN is needed to register for GST). When a company with an ACN has also been issued with an ABN, the ABN may be the ACN with two additional digits before it, resulting in an eleven-digit number. For example, a company that has both an ACN and ABN could have an ACN of 123 456 789 and an ABN of 77 123 456 789 (i.e. the last nine digits will be the same).


What is a business name registration number?



Since 28 May 2012, business names are registered by ASIC and the business name holder must have an ABN. Before 28 May 2012 they were registered by the state or territory in which the business or trade was carried out. Each registered business name had an individual number, but the format and length varied according to the state or territory of issue. The state or territory of registration preceded the number (e.g. NSW E6882145 or QLD BN2027148 or SA 0341685J).


You can search ASIC’s registers on
ASIC Connect Opens new window to find out if a business name or company is registered. For more about the differences between a registered business name and a company, see 'Understand the difference between a business and a company’ below.


2. Verify information



After you have obtained the ACN, ABN or state and territory business name registration number, you can:

Verify that the business or company is registered



You can verify that the company or business name is registered by conducting an
Organisations & Business Names Index search.Opens new window Because each company and business has its own unique registration, searching by an ACN, ABN or former state or territory business name registration number can assist in narrowing a search.

Remember that finding a company or business on our register doesn’t mean it’s a safe company or business to deal with. There are many other searches that will help you find out more about the company or business: see Search ASIC’s registers and databases below.

It is also important to understand the difference between a registered business name and a registered company.


What is a registered business name?
A registered business name is a trading name under which a person or entity carries on business or trades. Examples might be Roxy Cafe, TJ Smith & Co or Hollingdale & Page. The word ‘Company’ or ‘Co’ in a name does not necessarily mean that the business is registered as a company under the Corporations Act 2001 (Corporations Act).

See more about business names.

What is a registered company?
A company is a body corporate registered in Australia by ASIC under the Corporations Act (section 9 of the Corporations Act has a detailed legal definition). Each company is allocated a unique ACN.

A company name will usually include one of the following legal elements:
The general characteristics of a company are that it:

Find out who owns the business



If you are dealing with a business trading under a business name or company, it must be registered with ASIC. The business name holder or company must provide us with information which is available to any member of the public: see
Search ASIC’s registers and databases below.


Search ASIC’s registers and databases



You can use our registers to find information about a company. You can print summaries of key information.


ASIC lists
Our MoneySmart website enables you to check basic facts about the people, companies or schemes you are thinking of dealing with before you get financial advice, hand over your money for an investment, get a loan or credit or buy financial products. Our databases can tell you if these people or companies are registered or licensed.

ASIC media releases
Our media releases and advisories cover a wide range of ASIC activities, such as enforcement outcomes and consumer warnings. You can check if we have issued a media release about a company or individual by searching the company or individual name.

Detailed company and name searches
You can purchase a company extract at ASIC Connect Opens new window that will provide current and historical details about a company, including the officeholders, addresses and, in some cases, members (or shareholders) of the company. You can also purchase images of company documents that are on ASIC’s public register.

You can do a personal name search on the directors and company officers for a fee. This will show what other companies each person is involved in as a company officer or member.

You can also purchase a business name extract. This shows the business name holder and details such as the principal place of business and address for service of documents.

Getting help
You can also use an ASIC information broker to do company and name searches of our registers. Your accountant, solicitor, business consultant, credit reference agent or mercantile agent may also be able to do the searches for you.


Use your search results




If a business is a registered company, you can use your search results to answer the following questions, which will help you to assess how risky dealing with that company is.

How long has the company been in business under its current name?
This may give you some idea about the stability of the company.

What’s the company’s status? Is it registered, deregistered or under external administration?
You should only deal with a registered company. If it’s deregistered, then the company can’t legally operate. If it’s under external administration (shown as EXAD in your search), you know that it has run into financial trouble and you should be cautious about dealing with it.

Who are the directors and company officers? How long have they been with the company?
This will give you some more clues about the company’s stability. New management and new directors may mean fresh ideas, but frequent changes can point to problems. The company may not be stable, and it may have inconsistent management policies.

If the person you are dealing with seems to be in charge of the company but isn’t a listed director, this could be a warning sign. You should make further inquiries to find out if they are bankrupt (see below), or have been disqualified as a director (see below).

What’s the company’s share capital? Is it a $2 company or does it have more capital?
A $2 company is not necessarily a bad risk, but $2 may be all the members have put in to fund a company’s operations. The amount that members are willing to invest suggests how much risk they’re willing to accept in backing the business.

Who are the members?
The names and details of the members will tell you more about who is behind the business. Member information cannot be obtained if the company is a public company because these types of companies are not required to tell us who their members are.

What are the company’s financial details?
If the company is a small proprietary company, it doesn’t have to prepare or lodge financial statements with ASIC.

If it’s a large proprietary company, a public company, a disclosing entity, or a registered scheme, it should have lodged financial statements within four months after the end of its financial year (three months for a disclosing entity or registered scheme). You can obtain copies of financial statements lodged with ASIC.

Are any of the directors disqualified from acting in management?
Your search of the banned and disqualified persons register on ASIC Connect Opens new window should show if a director is disqualified from managing a company. (Note that the register does not include those disqualified from management because they are undischarged bankrupts or have been convicted of fraud.) A disqualified director is a strong danger signal. If the search says ‘NIL return’ it means the directors haven’t been disqualified.

What other companies are the directors and company officers involved in? Are any of these failed companies?
Your personal name search on the directors and company officers will show what other companies each person is involved in. This may help you form an opinion about their business background. If the directors have been involved in other failed companies, it is a strong warning sign.

Has the company or director offered an ‘enforceable undertaking’ to ASIC?
Enforceable undertakings are undertakings given to us (and accepted by us) that are enforceable in a court. They are generally accepted by us as an alternative to civil or administrative action if there has been a breach of the Corporations Act or other legislation we administer (e.g. the Insurance Act 1973). For example, a director may undertake to stop acting as a director or taking part in the management of a company for a specified period.

For further information, refer to the enforceable undertakings regulatory guide.


Ask more questions



Before doing business, here are some more questions you can ask of the people you are dealing with:


Do the business activities require a licence?
Many small businesses need a licence to carry out their business (e.g. builders, plumbers, motor car traders). The fair trading/consumer affairs department in your state or territory can tell you which licences a business needs and whether that business or company holds a particular licence.

You can verify licence details by checking with the relevant state or territory bodies.

Businesses and companies that engage in activities relating to credit or financial products may need to be licensed with ASIC or be authorised to engage in these activities. It is important to only deal with licensed people and businesses because you will be better protected if things go wrong and will have access to free dispute resolution services. Visit our MoneySmart website for information on when a company or business may need to hold a credit licence or an Australian financial services (AFS) licence.

You can browse our professional registers Opens new window for AFS licensees and authorised representatives to determine whether the company or business has the appropriate authorisations.

To help you determine whether the company or business has the appropriate authorisations, you can also browse Professional registers Opens new window for:
Are any of the people you’re dealing with, or anyone involved with the management of the business, bankrupt?
You can check if a person is an undischarged bankrupt with the Australian Financial Security Authority Opens new window (AFSA) (formerly ITSA) for a small fee. It’s against the law for bankrupts to be involved in the management of companies.

Does the business have adequate books and records?
You may not be able to inspect the records, but do any of your dealings suggest these records are poorly kept? Poor records are a definite danger sign.

Does the business have an accountant? If so, how long has that person been associated with the business?
An accountant isn’t a guarantee of safety, but it means there’s a better chance that the financial records are in order. Larger companies may have an external auditor as well.

Does the business have a good name with others (e.g. suppliers, competitors)? Does the business pay its suppliers on time? Can it produce credible trade references?
It’s a good idea to check trade references by contacting others who deal with the business and asking some questions.

What’s the credit rating of the business?
If you provide credit to someone for more than seven days (even if it’s just a small amount), you may join Veda Advantage Opens new window. You can use its credit reference services to find out the credit rating of the business and if it has any credit defaults. This will tell you whether it’s a good idea to extend credit to the business.

You can also check with credit reference agents (where you do not have to be a member). There will be a fee for this service.

What’s the quality of the goods or services?
You may know, or you may be able to find out, from previous customers the standard of goods or services being offered. This is not a guarantee of good business practices, but poor quality may be a warning sign.

Is the business a member of an industry association?
There are various industry associations that the business could belong to. Some of these have standards of conduct and ethics that their members must comply with. If the business belongs to one of these, it’s a good sign.
Call the Employers Federation/Chamber of Commerce or equivalent in your state or territory. They can tell you which industry associations are relevant to the business you’re interested in. Ask the business if they are a member of an association, and check this with the relevant association.


3. Seek help



You may need help understanding the answers to the above questions, or the answers you have found may point to serious problems. In this case, you may wish to get professional advice from your accountant or solicitor. While this may be expensive, it’s money well spent if it stops you from losing money owed to you by a business or company that fails.


4. Monitor and report



To monitor the company, you can register for our free
Company Alert service. This service will automatically notify you by overnight email if documents are lodged relating to the companies you nominate.

If you believe directors of a company may be breaching the Corporations Act (e.g. the company is still trading even though it can’t pay its debts or the directors are not honest or taking proper care when operating a company), contact us on 1300 300 630 (for the cost of a local call from anywhere in Australia) or lodge a complaint online.

If you are concerned about a company’s products or services, you may need to contact the fair trading/consumer affairs office in your state or territory.


Where can I get more information?




Important notice



Please note that this information sheet is a summary giving you basic information about a particular topic. It does not cover the whole of the relevant law regarding that topic, and it is not a substitute for professional advice. You should also note that because this information sheet avoids legal language wherever possible, it might include some generalisations about the application of the law. Some provisions of the law referred to have exceptions or important qualifications. In most cases your particular circumstances must be taken into account when determining how the law applies to you.

This is Information Sheet 26 (INFO 26). Information sheets provide concise guidance on a specific process or compliance issue or an overview of detailed guidance.

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