What is the procedure for Winding Up a Solvent company

Voluntary deregistration is an option for winding up a company which has less than $1000 worth of complex assets. Due this reason many companies cannot use the path of voluntary registration.

Winding up a company involves liquidating its assets, finalising all outstanding matters and ceasing the existence of the company.

For Winding up a Solvent company the following steps need to be taken:

• The Company directors to make a declaration of solvency  - The majority of company directors must make a Declaration of Solvency ( Form 520)  which means that they believe that the company will be able to pay all of its outstanding debts within 12 months of starting the winding up procedure. The directors must be truthful in making this declaration as a false declaration is an offence under the Corporations Act 2001 and penalties may apply.

• The company members to pass a Special resolution  - After the lodgement of the Declaration of Solvency the company members must make a special resolution to wind up the company by lodging a Notification of Resolution  which is Form 205. They also need to lodge a  Notification of appointment or cessation of an external administrator (Form 505) to let ASIC be informed of the liquidator’s appointment.

• All the members need to be given at least 21 days written notice of the meeting to pass the Special resolution and for the resolution to be passed at least 75% of the company members must be in favour of the resolution. The winding up begins on the date of the passing of the special resolution. A printed copy of the resolution that was passed needs to be lodged by the company with the Notification of the resolution.

• The notice of the special Resolution passed must be published on ASIC’s Published Notices website within 21 days. For this you need to sign  up for the website also a fee is payable to be able to publish a notice

• The Liquidator can now proceed to wind up the company and also it is necessary they lodge Presentation of accounts and statement (Form 524) every six months after the liquidator is appointed for the duration of the winding up process. If at any time the liquidator is of the opinion that the company will be unable to pay its debts in full they should either convene a meeting of creditors or apply to the court for the company to be wound up in insolvency.

• When the liquidator finishes winding up the company they have to lodge the Notification of final meeting convened by the liquidators (Form 523) within 7 days of the final meeting of the company. The liquidator also has to lodge the Presentation of accounts and statement which is Form 524 and Copy of minutes of meeting (Form 5011). The company will be deregistered 3 months after the lodgement of Form 523.
  
  

A creditor or a member can ask the court to review any part of the winding up process of the company

If the company which is being wound up is insolvent a different procedure needs to be followed