Choose the right way to close the company
Before closing your company, you must understand whether it is solvent or insolvent. The right process depends on whether the company can pay its debts as they become due and payable.
A company may be:
- solvent (able to pay debts as they become due and payable), or
- insolvent (unable to pay debts as they become due and payable).
If your company is solvent, then you can apply to deregister the company if it has no liabilities and meets certain other requirements. If it is solvent but has liabilities or does not meet the other criteria, then you will need to discharge those obligations or otherwise follow the process under the heading ‘Wind up a solvent company’ below.
If your company is insolvent, then you will need to speak to a registered liquidator, accountant or lawyer to discuss your options.
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Apply to deregister your solvent company, if eligible
If your company is solvent and no longer needed, you may be able to apply to deregister it. Deregistration may be appropriate if the company:
- is no longer trading
- has minimal assets, generally less than $1,000
- has no outstanding liabilities, including money owed to the Australian Taxation Office or other creditors
- meets the other eligibility requirements.
Deregistration means the company stops existing as a legal entity and is removed from ASIC’s register.
Until the company is formally deregistered, it must continue to meet its legal obligations, including paying fees, keeping records and complying with the law.
Directors sometimes assume that stopping trading ends their obligations – but it does not.
You should confirm that all requirements are met before applying. This includes confirming with the company’s creditors (such as the Australian Taxation Office) that no money is outstanding.
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Wind up a solvent company
If your company is solvent but is not eligible to be deregistered, you must make sure:
- the directors declare that the company can pay its debts
- members must pass a resolution to wind up the company.
This allows the company to be closed in an orderly way.
Read more: Wind up a solvent company
Wind up an insolvent company
If your company is insolvent, you need to speak to a registered liquidator, accountant or lawyer to discuss your options.
One of these options will likely include appointing a registered liquidator to undertake a ‘creditors voluntary liquidation’. The registered liquidator will wind up the company in an orderly and fair way to benefit creditors. This includes selling any assets to pay any debts.
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Understand ASIC-initiated deregistration
ASIC may deregister a company without an application in certain circumstances.
This can happen where:
- the company is no longer carrying on business
- annual review fees remain unpaid
- the company has not met its ongoing obligations.
In practice, the most common reason is the company is more than 12 months late in paying its annual review fee.
If a company is deregistered, it ceases to exist as a legal entity.
However, ASIC‑initiated deregistration is not a substitute for properly closing your company.
As a director, you:
- remain responsible for the company’s affairs before deregistration, and
- must ensure obligations are properly completed before the company is deregistered, including dealing with debts, employees and records
Simply stopping trading or failing to pay fees does not bring a company to an orderly end.
You should not rely on ASIC‑initiated deregistration as a way to close your company, as this can:
- leave obligations unresolved
- create risks for creditors and employees
- expose you to further regulatory scrutiny.
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Reinstating a closed company
Apply to reinstate a deregistered company
In some circumstances, a deregistered company can be reinstated. Reinstatement means the company is returned to the companies register.
Reinstatement is not automatic and may not be available in every situation. Depending on the circumstances, you may need to apply to ASIC or to a court.
Reinstatement may be considered where:
- the company was deregistered by mistake
- the company still has assets or liabilities
- legal, financial or contractual issues need to be resolved
- the company needs to take action that can only be done if it is registered.
If a company is reinstated, it is generally treated as if it continued to exist during the period it was deregistered. This means obligations and liabilities may still apply.
Before seeking reinstatement, you should consider:
- why the company needs to be reinstated
- whether there are outstanding debts, assets, contracts or legal issues
- whether reinstatement is the most appropriate option
- what steps are required to apply.
You should seek legal advice if you are unsure whether reinstatement is appropriate or how to proceed.
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Complete final obligations when closing your company
Finalise the company's legal and financial obligations
When closing your company, you must complete all outstanding legal obligations before the company is finalised.
This means making sure the company’s affairs are properly wrapped up. In practice, this includes:
- paying employee wages, leave and other entitlements
- paying outstanding debts and liabilities
- meeting any outstanding tax obligations
- keeping company records (usually for at least 7 years).
Even if your business has stopped trading, these obligations do not stop until the company is formally closed.
As a director in a small company, you need to take an active role to ensure nothing has been missed. This may involve:
- reviewing the company’s financial position and all liabilities
- finalising reporting and record-keeping
- confirming that all outstanding matters have been resolved.
Communicate the company’s closure
You should also notify people your company deals with – including employees, customers and suppliers – that the company is closing.
Clear communication at this stage helps to avoid confusion, reduce the risk of disputes and support an orderly wind-down of the business.
Taking these steps helps protect both the company and your position as a director. If the company is not properly finalised, it can lead to ongoing issues such as unresolved debts, disputes with creditors or employees, and potential regulatory consequences.
