Winding up a solvent company
It can be difficult for some companies to meet the requirements for voluntary deregistration (e.g. they have complex assets well over the $1000 requirement).
Winding up is a process where a company's outstanding matters are finalised, its assets are liquidated, and it ceases to exist as a company.
Step 1 – Company directors must make a declaration of solvency
To begin winding up a company, a majority of the directors must make a Declaration of Solvency (Form 520). This means they believe the company will be able to pay all its existing debts within 12 months.
It is an offence under the Corporations Act 2001 to make a false declaration of solvency. Penalties can apply. If you believe that a company is insolvent, see Winding up an insolvent company.
Step 2 – Company members must pass a special resolution
After the solvency declaration has been lodged, the company members must make a special resolution to wind up the company. You can do this by lodging a Notification of resolution (Form 205). They must also lodge a Notification of appointment or cessation of an external administrator (Form 505) to advise of a liquidator's appointment.
The Declaration of Solvency (Form 520) must be received before you can lodge the Form 205 and Form 505.
All members must have at least 21 days notice (in writing) of the meeting to vote on the special resolution. At the meeting, at least 75% of company members must be in favour of the resolution for it to pass. The winding-up begins from the date the special resolution is passed.
The company must lodge a Notification of resolution (Form 205) with a printed copy of the resolution that was passed.
Step 3 – Notice of the special resolution must be passed on the Published notices website
Once passed, notice of the resolution must be published on ASIC's Published notices within 21 days. You will need to sign up to the website and pay the appropriate fee before you can publish a notice.
For more information on how to publish a notice, see Published notices website.
Step 4 – Liquidator winds up company's affairs
The liquidator can then begin winding up the company. They must lodge Presentation of accounts and statement (Form 524) every six months after the liquidator has been appointed. This form needs to be lodged for the duration of the winding up process.
At any point, if the liquidator thinks the company will be unable to pay their debts in full, they must either:
- convene a meeting of creditors or
- apply to the court for the company to be wound up in insolvency.
Step 5 – Liquidator finishes winding up company and lodges final documents
Once the liquidator has finished winding up the company, they need to lodge the Notification of final meeting convened by liquidators (Form 523) within seven days of the company's final meeting. It must include an account of how the winding up was conducted.
The liquidator must also lodge a:
The company will be deregistered three months after the Form 523 has been lodged.
A member or creditor can ask the court to review any part of the winding up. This includes appointment of a liquidator, a liquidator's payment, or other issues that arise.
This is Information Sheet 78 (INFO 78), reissued in April 2016. Information sheets provide concise guidance on a specific process or compliance issue or an overview of detailed guidance.