Insolvency for shareholders

What is insolvency?

An insolvent company is one that is unable to pay its debts when they fall due for payment.

The two most common external administrations are:

  • voluntary administration; and
  • liquidation, and

In addition a secured creditor or the Court may appoint a receiver (or receiver and manager, controller or managing controller).

How does insolvency affect me?

Shareholders rank behind creditors in a liquidation, although in some circumstances they can claim as a creditor. As a shareholder, limited information is received from the external administrators of insolvent companies or receivers.

If a company is placed into external administration, shareholders cannot transfer shares in the company without permission from the external administrator or the Court.

As a shareholder of an insolvent company, you can realise a capital loss in certain circumstances:

  • if a liquidator or deed administrator makes a written declaration that they have reasonable grounds to believe there is no likelihood that shareholders will receive any further distribution in the winding up, or
  • if no such declaration is made by the liquidator, the deregistration of a company at the end of the liquidation also enables realisation of any capital loss.

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 external administration.

More information

Information sheets

Return to Overview

What's new

ASIC reports on corporate insolvencies 2017–18

ASIC has published its annual overview of corporate insolvencies based on statutory reports lodged by external administrators for the 2017–18 financial year. 18-342MR. 14 November

Report On Company Activities and Property (ROCAP)

After an extensive revision process and industry consultation conducted through an external consultant, ASIC has released the new ROCAP - Report On Company Activities and Property to replace the RATA. 


Industry funding

The Government has introduced new laws that change the way ASIC is funded. Regulated entities will receive an invoice for ASIC’s regulatory services delivered in the prior year. Find out what this means for registered liquidators.



Insolvency Law Reform Act 2016

Releases on insolvency

Liquidator registration applications

Registered liquidator disciplinary decisions

Insolvency statistics


Sign up for:

ASIC Corporate Insolvency Update

Published notices

View insolvency and deregistration notices on the published notices website.

ASIC and registered liquidators

Last updated: 01/09/2017 01:41