This article considers how you can close your company. There are two ways of doing this:
- applying to the Australian Securities and Investments Commission (ASIC) to voluntarily deregister the company; or
- a members' voluntary "winding up" (closing down) of a solvent company.
The availability of these two methods will depend on whether the company is carrying on a business and the size of its assets. This discussion does not address the situation of winding up a company that is in financial distress or the subject of legal proceedings.
Closing down your company may be useful for simply tidying up your affairs, saving the administrative burden of ASIC's annual review or payment of the annual company fee.
This is the most straightforward way of closing your company. Under this method, the company, a director or a member applies to ASIC to deregister (and consequentially extinguish) the company on payment of a $33 fee.
However, this option will not be available to all companies. ASIC will only deregister a company if:
- all members of the company agree to deregister;
- the company is not carrying on business;
- the company's assets are worth less than $1000;
- the company has no outstanding liabilities;
- the company is not a party to any legal proceedings; and
- the company has paid all fees and penalties payable under the Corporations Act 2001 (Cth).
These criteria demonstrate that this option will only be practically open to a dormant company that all the members agree should be wound up.
Winding Up a Solvent Company
This method is more complex (and time consuming), but a more realistic option for larger businesses that still have some affairs. This method is initiated by the members of the company and requires the directors to pass a resolution that the company will be able to pay all its debts in full within the next 12 months. Commonly, a registered liquidator will be appointed to take control of the company's affairs and distribute the company's assets (although this is not strictly required in the case of a proprietary company).
Owing to the risk of penalties under the Corporations Act 2001, it would be prudent to seek advice from a lawyer on whether your company is eligible for the more simplified voluntary deregistration. If not, you will almost certainly require legal assistance in navigating the legal requirements of a members' winding up under the Corporations Act 2001.
Upon deregistration, all the company's assets become the property of ASIC (which include easily overlooked items like intellectual property or accounts), so it is vital that are sure you are ready to deregister the company.