>>>Company Information

Winding-up a solvent company

The members of a solvent company may decide to wind-up the company under section 491 of the Corporations Act 2001 (the Act).

Alternatively, the decision may be made to simply deregister the company. An application on a Form 6010 to deregister the company can only be made if:

all members of the company agree to deregister; and
the company is not carrying on business; and
the company's assets are worth less than $1000; and
the company has paid all fees and penalties payable under the Act and
the company has no outstanding liabilities; and
the company is not a party to any legal proceedings.
(For further information, please see Deregistering a Company)
The rest of this Information Sheet deals with the steps that must be taken if it is decided to go into a winding-up rather than simply apply for deregistration.

In a members' voluntary winding-up, the directors must make a written declaration that they have made an inquiry 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. This is often referred to as a solvency declaration.

After the solvency declaration there must be a special resolution, that is, a resolution requiring at least 21 days notice and a 75% majority of eligible voters who vote at a meeting.

Where the company has been under no other form of external administration, the winding-up commences formally from the time of passing the special resolution. The advantage of a members' voluntary winding-up is that the members can choose the liquidator, fix their remuneration, and in general terms supervise their conduct.

In the case of a proprietary company, the liquidation can be carried out by a person who is not a registered company liquidator.

Required forms
In a members' voluntary winding-up, the following forms must be lodged with the Australian Securities and Investments Commission (ASIC):

Form 520 - Declaration of Solvency
Must be lodged before the date on which notices are sent out of the meeting at which the resolution for the winding up of the company is to be proposed. The resolution must be passed within five weeks of the date of making of the declaration.

Form 205 - Notice of Resolution
Must be lodged within seven days of the resolution being passed (NOTE: Notice of the resolution must be published in the Commonwealth of Australia Business Gazette within 21 days from the date of the resolution being passed.)

Form 505 - Notice of Appointment of Liquidator
Must be lodged within fourteen days of appointment. The same form is used to notify ASIC of cessation of a liquidator.

Form 524 - Liquidator's Accounts
Must be lodged within one month after the first six month period from the date of appointment and thereafter every six months

Form 523 - Final Meeting
The liquidator must lodge the form, together with a copy of the account showing how the winding up was conducted, within seven days after the final meeting. (The meeting must be advertised in the Commonwealth of Australia Business Gazette at least one month before it is to be held.) The company is dissolved three months after the date on which form 523 is lodged. These forms can be lodged at an ASIC Service Centre or with a Local ASIC Representative.

Court involvement
During the course of a members' voluntary liquidation, a creditor or a member may ask a Court to determine any question arising in the winding-up, review the liquidator's remuneration or exercise any power that a Court possesses in a compulsory winding-up, such as choosing a liquidator.

A company cannot be voluntarily wound up if an application for the company to be wound up as insolvent has been filed in a Court, or if a Court has already ordered that the company be wound up unless the leave of the Court is obtained.

If at any time during a members' voluntary winding-up the liquidator forms the opinion that the company will be unable to pay its debts in full, then they must either apply to the Court for the company to be wound up in insolvency, appoint an administrator or convene a meeting of creditors.