Closing a company

Dear Client,

Thank you for your instructions. Below is a summary of the key steps involved in voluntarily closing down a solvent company in Australia by way of a members' voluntary winding up under Part 5.5 of the Corporations Act 2001 (Cth) (the "Act").

Declaration of Solvency

The directors must make a written declaration of solvency, stating that they have inquired into the company's affairs and have formed the opinion that the company will be able to pay its debts in full within a period not exceeding 12 months from the commencement of the winding up (section 494 of the Act). This declaration must be lodged with ASIC before the resolution to wind up is passed. A director who makes a declaration of solvency without reasonable grounds for the opinion that the company is solvent commits an offence.

Special Resolution

The members must pass a special resolution to wind up the company voluntarily (section 491 of the Act). A special resolution requires at least 75% of the votes cast by members entitled to vote. The resolution must be lodged with ASIC within 14 days.

Appointment of Liquidator

The members must appoint a registered liquidator at, or as soon as practicable after, the meeting at which the winding up resolution is passed (section 495 of the Act). Once appointed, the liquidator takes control of the company's affairs, realises its assets, pays its debts, and distributes any surplus to members in accordance with the company's constitution.


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Regards,

Richard Prangell, Director
Viridian Lawyers
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