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Do you want to close your company? Is your company still solvent? If you’ve answered yes to both questions, read on.

Deregistration

If you want to close your company and cease trading, the easiest and quickest way to do this is by deregistering your company with ASIC.

You can do this if:

  • all the shareholders of the company agree;
  • the company is not currently carrying on business;
  • the company’s assets are worth less than $1,000;
  • there are no outstanding liabilities including any employee entitlements owing;
  • the company is not currently a party to any legal proceedings; and
  • the company has paid all monies payable by it under the Corporations Act.

If your company holds any licences, such as an Australian financial services licence, you need to cancel this before the company is deregistered.

If you meet the criteria to deregister your company, you can deregister your company by completing the ASIC Form 6010.

Voluntary Winding Up

 If your company does not meet the criteria for deregistration, the other method to close your company is by way of a voluntary winding up.

This requires the directors to declare that they have enquired into the affairs of the company and that at a meeting of directors, they have formed the opinion that the company will be able to pay its debts in full within 12 months after the commencement of the winding-up. It is important that the directors are comfortable in signing the declaration of solvency because if a director makes a declaration of solvency, and it is later found that there are no reasonable grounds for making this declaration, the directors may face a penalty of $8,500 and/or 12 months in jail under section 494 of the Corporations Act 2001.

Assuming that the directors are comfortable with signing the declaration of solvency, the shareholders of the company must, by special resolution, agree to wind up the company. The winding up commences once the special resolution is passed. The procedure is as follows:

1. A liquidator is appointed and notice lodged with ASIC within 14 days of the appointment.

2. Presentation of accounts and statements must be lodged within 1 month after the first 6 month period from the date of appointment of the liquidator.

3. The liquidator must then lodge a notification of final meeting convened by the liquidator within 7 days of final meeting.

Conclusion

Deregistering a company is a rather simple process and can often be done with assistance from a lawyer. A voluntary wind up is a little more complicated. It is important to have the correct procedure to properly wind up the company, and this involves making sure that the paperwork for each step is completed correctly. If you require any legal assistance in any step of the winding up process, or if you would like assistance in drafting the necessary paperwork, contact one of LegalVision’s lawyers today!

LegalVision has a team of great insolvency lawyers who can assist you. Please call our office on 1300 544 755 and our Client Care team will happily provide you with an obligation-free consultation and a fixed-fee quote.

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