- Members are required to act with professional competence and due care
- The Corporations Act 2001 (Cth) in Australia outlines types of engagements for those other than registered liquidators
- ASIC and ARITA provide many resources
As a Chartered Accountant, you may be asked to help a client wind up their solvent company or carry out voluntary deregistration procedures. The types of engagements that can be performed by someone other than a registered liquidator are defined by the Corporations Act 2001 (Cth) in Australia.
However, insolvency is a specialist field and if you are not a registered liquidator or do not have appropriate experience in these engagements, you should not undertake them.
Members who are not registered liquidators in Australia are reminded that under APES110 Code of Ethics for Professional Accountants they are required to act with professional competence and due care. You should not take on an engagement that you are not competent to perform.
Members Voluntary Liquidations (MVL) is a complex area which involves specialist knowledge when dealing with liabilities, assets and ensuring that all tax obligations (federal and state) are appropriately considered. We recommend that you obtain specific advice for your client’s requirements from a specialist.
We recommend that you contact or obtain specific guidance for your client's particular circumstances from the Australian Securities and Investments Commission (ASIC) or Australian Restructuring Insolvency & Turnaround Association (ARITA) (only if you are also a member of ARITA).
ASIC and ARITA provide many resources on their websites and we recommend that you refer to these websites for current and up-to-date information. The general information below is correct at the time of publication only.
APES110 Code of Ethics for Professional AccountantsRead the APES100 Code of Ethics
Visit the ARITA webpageFind out more
Voluntary deregistration of a solvent company
You can apply for voluntary deregistration of a solvent company by lodging an application for voluntary deregistration of a company (Form 6010) with ASIC.
The application requires that:
- all members of the company agree to deregistration
- the company is not conducting business
- the company's assets are worth less than $1000
- the company has no outstanding liabilities (e.g. unpaid employee entitlements)
- the company is not involved in any legal proceedings and
- the company has paid all fees and penalties payable to ASIC.
If the company holds an Australian Financial Services Licence (AFSL) or an Australian Credit Licence (ACL), these should be cancelled before filing the application.
Winding up a solvent company
If a company is solvent but does not meet the requirements for voluntary deregistration (e.g. has assets worth more than $1000), the company's members can 'wind up' the company. This involves resolving outstanding affairs including:
- ceasing or selling operations
- paying outstanding debts
- appointing a liquidator to manage any assets.
The steps involved in winding up a solvent company are:
- Step 1: A majority of the directors are required to make a declaration of solvency. This is done by lodging a Declaration of Solvency (Form 520) with ASIC, which is a notification that in the directors' opinion the company will be able to pay debts in full within 12 months of commencement of the members' voluntary winding-up.
- Step 2: Members of the company must pass a special resolution to wind up the company. This requires calling a meeting to vote on the special resolution, obtaining a vote of at least 75% of the company members being in favour of the resolution and appointing a liquidator.
- Step 3: Notice of the special resolution must be published on the ASIC's published notice website.
- Step 4: A liquidator is appointed and starts the work required to wind up the company.
- Step 5: After the liquidator completes the work required, appropriate AISC forms are prepared to affect the registration of the company.
(Note: There are strict timing requirements in respect of Step 2 and Step 3.)
Most commonly lodged forms
Information sheet (INFO 29) outlines most commonly lodged ASIC forms when:
- An external administrator has been appointed to a company
- A controller has been appointed over company property
- An administrator of a scheme of arrangement has been appointed.
INFO 29 also includes flowcharts for form lodgements to assist external administrators, controllers and scheme administrators meet their obligations.
Note: A meeting must be held within 5 weeks of Form 520 (Declaration of solvency) being lodged.
Insolvency and restructuring
Chartered Accountants play a key role in the field of insolvency and restructuring.Read More
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