The number of businesses registered in Australia has reached 1.9 million, a record number, but the number of businesses entering external administration is also at its highest level since the global financial crisis, according to the Australian Securities and Investment Commission‘s annual report published yesterday.
During 2011–12, the number of business registered with ASIC grew to 1.9 million – the highest number ever recorded while the number of new companies that registered with ASIC for the year totalled 176,062, an increase of 7.8% on the previous year.
ASIC’s annual report recorded that new company business registrations have steadily increased in volume each year since 2008–09 although the rate of company deregistration also has continued to increase, with 97,198 companies deregistered in the past year, an increase of 3.46% on the previous year.
The report emphasised the success of ASIC’s National Business Name Register launched this year, which had more than 1.4 million active business names transferred to it along with 191,311 new names transferred to it.
ASIC claims the costs for registering a national business name are significantly cheaper under the new system, at $30 for one year or $70 for three years, when previously a business would have spent over $1,000 to register a business name in every state for three years.
The regulator said the National Business Name Register is expected to deliver $480 million in benefits to businesses, consumers and the government over eight years, including the reduced fee and reduced time to register a name.
However, the report did not mention any of the difficulties many businesses have been experiencing trying to use the new register.
While a record number of businesses are now registered in Australia, the number of external administrations also reached its highest level since 2008-2009 at the height of the global financial crisis.
ASIC’s annual reported recorded 10,757 businesses entered external administration in the past year, an increase of 9.4% on 2010–11.
Colin Porter, managing director of CreditorWatch, told SmartCompany that CreditorWatch data showed a similar increase with a 22.5% increase in defaults in this financial year in comparison to the previous financial year.
“The value of defaults is also growing, with an 18.5% increase in the average dollar amount of each default registered,” he says.
Quentin Olde, partner in charge at insolvency firm Taylor Woodings, told SmartCompany ASIC’s statistics accorded with what he had been seeing throughout the year.
“I think the reason is the continued difficult trading conditions in Australia brought on by the low consumer confidence and high Aussie dollar,” he says.
Olde says the worst hit sectors to date have been property, building and construction and to a certain extent tourism.
“I think, going forward, difficult conditions will continue for tourism due to the high Aussie dollar and the retail sector is also starting to feel the pressure,” he says.
SmartCompany contacted ASIC for comment but no reply was available before publication.