VOLUNTARY DEREGISTRATION VS VOLUNTARY WINDING UP

 

A company ceases its legal entity when it is deregistered with the Australian Securities &Investments Commission (ASIC).

 

The directors or members of a company may consider closing a company for different reasons. If the company is solvent, it can be closed in two ways:

  1. apply to ASIC to voluntarily deregister the company; or
  2. the members of the company can voluntarily wind it up.

 

Voluntary deregistration

Voluntary deregistration closes the company and removes company officeholders’ obligations.

 

To voluntarily deregister a company, the company needs to fulfil all of the following requirements:

  1. all members of the company agree to deregister;
  2. the company is not carrying on business;
  3. the company’s assets are worth less than $1,000;
  4. the company has no outstanding liabilities, for example, debts and employee entitlements;
  5. the company is not involved in any legal proceedings;
  6. the company has paid all fees and penalties payable to ASIC.

 

Before lodging an application, it is recommended to complete the following steps:

  1. close company’s bank account;
  2. cancel any registered business names and licenses;
  3. ensure no property is registered in the company’s name.

 

Voluntary winding up

If a company does not fulfil the requirements of voluntary deregistration, and it is solvent. In that case, the members of the company may choose to close the company by winding up. For instance, if a company has assets that worth more than $1,000. Winding up is a process to finalise the company’s business affairs, liquidate its assets and distribute to its creditors and shareholders.

 

The steps to wind up a company are:

Step 1: Company directors make a declaration of solvency.

Step 2: Company members pass a special resolution to wind up the company.

Step 3: Notice of the special resolution is published on the Published notices website.

Step 4: The liquidator winds up company affairs and lodges final documents.