Corporate Insolvency
Deregister a company with full distribution to members & creditors
Winding up a solvent company when its directors believe that the company can pay all its existing debts in full within 12 months is known as a members’ voluntary liquidation (MVL). An MVL is the proper, formal process of finalising the life of a company to ensure that all of its affairs are properly and expertly resolved.
Background
Winding up a solvent company through an MVL is the correct and formal procedure to finalise its affairs at the end of its life. A MVL is optimal when a business has been sold and proceeds must be distributed to members.
Other scenarios are when the company was set up for a specific project that’s now completed. Or when assets and entities need restructuring in corporate groups. Or simply that the entity has stopped trading.
Service highlights
Winding up a solvent company through an MVL is the correct and formal procedure to finalise its affairs at the end of its life.
By working with expert registered liquidators, the MVL process alleviates the risk of mistakes and potential liability of directors or committee members.
A complete analysis can ensure all funds and assets are recovered.
A MVL can result in substantial tax benefits for shareholders where certain exemptions can apply to assets distribution by a liquidator to shareholders.
An independent third party can resolve any shareholder disputes and safeguard assets’ value from being impaired during the process.
Committees for incorporated associations are assisted to discharge its duties and obligation to the incorporated association while complying with its Rules. The same principle applies to special purpose companies.
Reduced compliance costs, specifically the costs of retaining large volumes of books and records by obtaining consent from ASIC for the early destruction of the company’s records.
FAQs
Companies with assets over $1,000 cannot be deregistered through ASIC without a formal members' voluntary liquidation appointment, which means a third-party registered liquidator must be appointed.
For companies with assets under the threshold above, directors/members/shareholders can certainly deregister their company, however they could potentially missing out on some massive advantages and assurance measures.
MVLs are also the appropriate method for finalising the life of an incorporated association, which typically encompass not-for-profit (NFP) organisations such as charities, social and sporting clubs. During an MVL a solvent company is wound up and its remaining assets are distributed to its members/ shareholders, or a like-minded NFP when distributing the NFP’s assets.
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