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Voluntary administration



What is a voluntary administration?
What is the voluntary administrator’s role?
How does voluntary administration affect me?
What information will I receive in a voluntary administration?
Information sheets


What is a voluntary administration?


Voluntary administration is an insolvency procedure where the directors of a financially troubled company or a secured creditor with a charge over most of the company’s assets appoint an external administrator called a ‘voluntary administrator’.

The role of the voluntary administrator is to investigate the company’s affairs, to report to creditors and to recommend to creditors whether the company should enter into a deed of company arrangement, go into liquidation or be returned to the directors.

A voluntary administrator is usually appointed by a company’s directors, after they decide that the company is insolvent or likely to become insolvent. Less commonly, a voluntary administrator may be appointed by a liquidator, provisional liquidator, or a secured creditor.


What is the voluntary administrator’s role?


After taking control of the company, the voluntary administrator investigates and reports to creditors on the company’s business, property, affairs and financial circumstances, and on the three options available to creditors. These are: The voluntary administrator must give an opinion on each option and recommend which option is in the best interests of creditors.

The voluntary administrator has all the powers of the company and its directors. This includes the power to sell or close down the company’s business or sell individual assets in the lead up to the creditors’ decision on the company’s future.

The voluntary administrator must also report to ASIC on possible offences by people involved with the company.

If a deed of company arrangement is approved, the voluntary administrator will usually become the deed administrator and oversee its operation.


How does voluntary administration affect me?


A voluntary administrator isn’t required to report to shareholders on the progress or outcome of the voluntary administration.

Shareholders don’t get to vote on the future of the company.

A transfer of shares in a company or alteration of status of shareholders during a voluntary administration will not be effective unless the voluntary administrator gives their written consent or the court permits.

Shareholders are bound by a deed of company arrangement approved by creditors. Also, the deed administrator may transfer shares in the company with the written consent of the shareholder or with the court’s permission.

If a deed administrator makes a written declaration that they have reasonable grounds to believe there is no likelihood that shareholders will receive any further distribution at any time in the future, shareholders can realise a capital loss. To realise a loss, the shares in the company must have been purchased on or after 20 September 1985.

You may wish to seek tax advice about your ability to realise a capital loss if you hold shares in a company which has been placed in voluntary administration.


What information will I receive in a voluntary administration?


A voluntary administrator isn’t required to report to shareholders on the progress or outcome of the voluntary administration. Shareholders don’t get to vote on the future of the company.

A voluntary administrator and deed administrator must lodge with ASIC minutes of all creditors' meetings, committee meetings (if formed, committee of creditors in a voluntary administration or committee of inspection if the company is under a deed of company arrangement), and detailed lists of receipts and payments every six months. A copy of these can be obtained from any ASIC Business Centre, on payment of the relevant fee.

The statutory financial reporting obligations of listed and very large companies remain while they are in voluntary administration or under a deed of company arrangement. ASIC has given relief so that a company in voluntary administration may defer meeting its financial reporting obligations for six months after the appointment of the voluntary administrator. ASIC may grant relief to a company under voluntary administration or subject to a deed of company arrangement from the requirement to hold an annual general meeting.

At the end of this deferral period, if the company is still in voluntary administration or under a deed of company arrangement, ASIC may give the company an exemption or further deferral from all or some of their financial reporting obligations in certain circumstances.

ASIC may also give an extension of time for the annual general meeting or decide to take no action for failure to hold the annual general meeting if a public company is in voluntary administration or under a deed of company arrangement.


Information sheets



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