The “Members’ Voluntary Liquidation” Solution

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Who would need a Members Voluntary Liquidation?

A person with a company that is solvent; and no longer wants the company for whatever reason.

To keep a company alive each year costs in terms of fees for annual returns and tax returns.

It can also be used where a company has been used in a joint venture and there are irreconcilable differences between the parties that cannot be resolved. An option is for one party to buy the other out but if that can not be negotiated a members voluntary liquidation will bring a conclusion to the dispute.

Always in a Members Voluntary Liquidation the company must be able to pay all its debts within 12 months.

Where there are no assets or liabilities the other option is to apply to the Australian Securities and Investments Commission for a strike off of the company.

How does a Members Voluntary Liquidation help?

For the person who does not want the company it is the only way to rid yourself of the company if a strike off application is not an option.

If you have a dispute with your partner in the company and there is a deadlock but the company is still solvent a members voluntary liquidation will break the deadlock. The Liquidator can sell the business. You can bid for it or it can be sold publicly and the net proceeds split between the partners.

What you should do now

You should see your accountant to have your financials brought as up to date as possible. You should then see your local registered Liquidator who will compile the appropriate documentation and orchestrate the following process to ensure the implementation of the Members Voluntary Liquidation properly.

(a) There needs to be a meeting of directors convened in accordance with the Articles of Association to resolve to call a meeting of shareholders with a view to putting the company into liquidation.

(b) At the meeting the directors’ need to make a declaration that the company is solvent and that it can pay all its creditors within 12 months.

(c) The form of declaration of solvency needs to be lodged with the Australian Securities & Investment Commission.

(d) The notices of the meeting of shareholders needs to be sent out, unless a consent to short notice can be obtained then the notice given for the meeting must be 21 days.

(e) At the meeting of shareholders the company is wound up and a liquidator appointed.

Why Clout & Associates?

Your accountant can do it and you don’t need us. He or she might know the procedures. If you use us you know that insolvency is all we do. It is our bread and butter. You will have the confidence that your job will be done right the first time at a minimum cost.

The less the cost the more for the shareholders. If you are in a dispute situation you want the job done properly. You want the value in the business preserved and maximised. This is what we do day in day out all year.

To discuss your options click here for our contact details.