August 7, 2012
Here is everything you need to know about closing your business.
If your organisation is unable to settle its business-related debts and you haven’t been able to reach an agreement with your creditors, then you may voluntarily file for bankruptcy at the Insolvency and Trustee Service Australia, the government agency that handles the administration and regulation of the personal insolvency system in the country.
Before filing for bankruptcy, however, you need to read ITSA’s Personal Insolvency Information for Debtors document, which provides alternatives to bankruptcy and details the effects of bankruptcy.
Present the following documents to the ITSA:
You can deregister a company if the following conditions are met:
There are mainly two ways to proceed:
To find out which option is more suitable for your company, consult an independent professional. Take note that you and your company’s directors must keep all necessary financial documentation for three years after deregistration.
If for some reason your company is unable to deregister, you may decide to wind up or liquidate your company under s491 of the Corporations Act 2001.
To begin the voluntary liquidation, the majority of the company’s directors need to make a written declaration that they’ve inquired about the company’s affairs and that at a directors’ meeting, they have agreed that the organisation will be able to pay its debts completely in 12 months after the start of the liquidation. This is usually called the declaration of solvency.
If a director makes a declaration of solvency but is later discovered that there are no reasonable grounds for the declaration, the director will be penalised with a AU$5,500 fine, a year in jail or both.
The main advantage of a voluntary liquidation by a company’s members is that they can choose the liquidator in charge, determine the liquidator’s compensation and generally supervise the person’s conduct.
If the company is proprietary, a person not registered as a company liquidator can still carry out the winding up.
If you no longer need your business name due to your company’s closure, you may file the necessary forms with the Australian Securities and Investments Commission, or ASIC. Don’t forget to bring your ASIC key when you do so.
Cancelling a business name takes at least 28 days. After ASIC receives your request to cancel, the agency will provide you or any other representative included in the business names register a 28-day notice that ASIC will cancel the business name. This is done to guarantee that all relevant parties are informed of the request to cancel the business name and avert unauthorised attempts to cancel a business name.