Finalising the affairs of a solvent company
Directors can wind down and deregister a solvent company, by simply applying to the Australian Securities and Investments Commission (ASIC) with a Form 6010 for a minimal administration fee. However, before ASIC will accept the application, directors must ensure that:
- all company shareholders agree to deregister the company
- the company is no longer conducting a business
- the company's assets are worth less than $1,000
- the company has no outstanding liabilities
- the company is not involved in any legal proceedings
- the company pays ASIC’s fees and penalties. (Arguably an important criterion for ASIC).
So, what options do directors have if they want to wind down and deregister a solvent company, but can’t satisfy all of the above conditions?
Firstly, directors must have a resolution of the company’s shareholders agreeing to wind up the company. Under section 249H of the Corporations Act 2001 at least 21 days’ notice must be given to the company shareholders to hold a meeting to consider this resolution (subject to any other specific clauses that may be included in the company’s constitution). However, if at least 95% of valid voting members agree beforehand, the company can seek a shorter notice period.
At the meeting, company shareholders must pass a special resolution to wind up the company. Accordingly, this requires obtaining a vote of at least 75% of the company shareholders present at the meeting being in favour of the resolution to wind up the company.
Worrells has undertaken liquidations of solvent companies (e.g. members’ voluntary liquidations, court-appointed liquidations) and has found the process to be beneficial as it can address:
- disagreements among directors and/or shareholders on which creditors are due and payable by the company, as opposed to debts that maybe payable by the director’s personally
- how to deal with certain assets to ensure they are sold at their appropriate market value by engaging an expert and independent party
- the need to get accounting and/or legal taxation advice in respect to the company assets distribution to shareholders (addressing issues such as dealing with pre-capital gains tax assets)
- settlement of all debts to the company’s creditors (especially the Australian Taxation Office), so directors can be confident that there will be no ‘surprises’ in the future, once the liquidation is finalised and the company is deregistered with ASIC.
At Worrells, with 29 partners across our 33 locations, your local Worrells partner is here to help. Contact us for a complimentary and confidential discussion.