Winding up a solvent company
When a company is solvent (i.e. it can pay all of its debts as and when they fall due) and the shareholders (called members) wish to distribute the net assets of the company amongst themselves, there is a formal process under the Corporations Act known as a Members Voluntary Winding Up which can be effected.
This process can be relatively straightforward although like anything, a bit of planning can make the process a lot simpler.
Issues which need to be considered when winding up a solvent company include:
From a cost effectiveness perspective, the directors should endeavour to minimise the amount of activity required to be undertaken by the Voluntary Liquidator to realise the assets, pay the remaining liabilities and distribute the surplus to members.
If a company has no assets and no liabilities and is not trading, it is also possible to seek the deregistration of the company with ASIC – This is a cost effective solution to closing down a solvent company. Before de-registering your company, it may be appropriate to obtain legal and tax advice as well as advice from an insolvency practitioner to make sure your company is suitable to be de-registered.