Wind up a solvent company
Key points:
- Even if your company is no longer doing business, you must ensure your company meets its legal obligations while it is still registered with ASIC.
- If your company is solvent, you can ‘wind it up’ and end the company’s obligations.
- A majority of directors must make a declaration of solvency. Members must also pass a special resolution to wind up the company.
- The company must publish a notice about the special resolution.
About winding up a solvent company
A solvent company is able to pay all of its debts as and when they become due. This can be where the company has enough assets to pay its debts.
During the winding up of the company, its assets are sold and the proceeds divided among creditors and members (shareholders). After the winding up is complete, the company will be deregistered.
- Make a declaration of solvency
- Tell ASIC about the declaration
- Send a notice to members
- Pass a special resolution
- Hold a meeting to pass a special resolution and appoint a liquidator
- Tell ASIC about the special resolution
- Publish notice of the special resolution
- Wind up company affairs and deregistration.
Other ways to close a company
If your company’s assets are worth less than $1,000 and you meet some other criteria, you may be able to close your company by voluntary deregistration. This is a different process.
If the company is insolvent, you should get professional advice from a registered liquidator, accountant, or lawyer and legal advice as soon as possible. You may need to wind up an insolvent company.
Steps to wind up a solvent company
Make a declaration of solvency
To wind up a solvent company, a majority of directors make a declaration of solvency at a meeting of directors. This means they believe the company can pay all existing debts in full within 12 months of starting to wind up. Use this form:
Form 520 Declaration of solvency
It is an offence under the Corporations Act 2001 to make a false declaration of solvency. Penalties can apply.
Tell ASIC about the declaration of solvency
You must then lodge the Form 520 with us.
The declaration of solvency must be lodged before the next step.
Send a notice to members
The company must send a notice of a meeting to the company’s members. The purpose of the meeting is to vote on a special resolution to wind up the company.
All members must receive the notice at least 21 days before the meeting. You can shorten this period if the members agree.
Hold a meeting to pass a special resolution and appoint a liquidator
This meeting must be held within 5 weeks of the declaration of solvency.
At the meeting, the members must pass a special resolution to wind up the company.
The winding up begins from the date the special resolution is passed.
At the same meeting, the company must also appoint one or more liquidators. The liquidator must notify us of their appointment within 14 days after the appointment using this form:
Form 505 Notification of appointment or cessation of an external administrator
Tell ASIC about the special resolution
If the resolution passes, the company must notify us within 7 days. Use this form:
Publish notice of the special resolution
The company must publish notice of the resolution to wind up the company on the Published notices website. The notice must be published by the end of the business day after the liquidator’s appointment. You, or the company's liquidator, will need to sign up to the website. You must pay a fee before you can publish a notice. The current notice fee is $64.
Wind up company affairs and deregistration
The liquidator then starts the process of winding up the company (also known as liquidation). They must lodge a detailed list of receipts and payments for the liquidation within 3 months of the anniversary of when they were appointed. They must do this every year on the anniversary of their appointment, until the liquidation ends. Liquidators must use this form:
Form 5602 Annual administration return
- hold a meeting of creditors
- appoint a voluntary administrator, or
- apply to the court for the company to be wound up in insolvency.
The liquidator must notify ASIC within one month after the end of the winding up. Liquidators must use this form:
Form 5603 End of administration return
The company will be deregistered 3 months after Form 5603 has been lodged.
Court involvement
A member or creditor can ask the court to review any part of the winding up process. This includes appointment and payment of a liquidator, and other issues that arise.