ASIC CreditorWatch
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How to close down a company by voluntary deregistration

How do you voluntarily deregister a company in Australia?

For relevant officeholders enquiring how to close a company formally, the process is not as complicated as it may seem. In simplest terms: if your company has asset holdings totalling under $1000 and has not declared insolvency, you may be eligible to apply for voluntary deregistration. Lodged to the Australian Securities and Investments Commission (ASIC) by way of Form 6010, its approval signifies that you, and any other officeholders, are freed from any further obligations to that company.

The finer details

Why and when would you choose to deregister a company voluntarily?

The lifespan of a company depends on variables such as lifestyle, phase of life and economic conditions. Change is inevitable as these factors shift. Whether it be an addition to the family, a change of scenery, or a deterioration of physical aptitude – any significant life event may mean you can no longer dedicate the same time or energy to a registered company, and that it is time to stop. You may simply be moving into a new phase of your working life, exploring other opportunities.

Whatever the reason, once the registered entity has effectively ceased trading, and so long as you meet specific ASIC requirements, it may be in your best interests to commence the process for the voluntary deregistration of a company.

Ceasing trading does not, in and of itself, require the immediate winding up of a company. However, it is worth noting ASIC retains the authority to initiate the deregistration process independently. This outcome may result if they formally assess a company to have ceased trading. Such a finding may be justified by incidents such as the non-payment of the company review fee within 12 months of its due date, no response to a company compliance notice, no lodgement of company documents over 18 months, or the company being wound up without an appointed liquidator.

What are the ASIC requirements to voluntarily deregister a company?

According to their website, ASIC requires that the following criteria must be satisfied in order to be eligible for voluntary deregistration:

  • “All members of the company agree to deregister
  • The company is not conducting business
  • The company’s assets are worth less than $1,000
  • The company has no outstanding liabilities (e.g. debts)
  • The company is not involved in any legal proceedings
  • The company has paid all fees and penalties payable to ASIC”.

Please note that meeting these requirements alone will not automatically guarantee the approval of your application. ASIC may apply further eligibility tests according to the specifics of the entity and the nature of its trading.

Additionally, if any relevant officeholders change their mind during this process and instead decide to continue trading with that company – they may be able to cease proceedings. If this is the case, it is best to contact ASIC and notify them as diligently as possible.

What are the pros of deregistering?

As an officeholder of a company, there are a number of inherent obligations. These mandatory requirements have the capacity to occupy your time, energy, and finances. Examples include:

These obligations cease once the application for voluntary deregistration is approved. The associated time, money and energy can instead be devoted to any new projects. It allows you and other personnel the opportunity to tie up any loose ends. Any lawsuits in which the company is a party cannot continue, and it cannot be engaged in further legal proceedings.

Are there any cons to voluntary deregistration?

Mostly, the disadvantage of voluntary deregistration is the potential for more paperwork. If you successfully deregister a company and then later decide to re-commence trading – ABN reinstatement may be a complex task. ASIC either requires proof of a mistake in the voluntary registration application process or notification by court order to follow through with the reinstatement.

Additionally, any remaining company property is inaccessible to company directors upon deregistration. It is vested directly in ASIC or the Commonwealth, with ASIC acting as trustee. ASIC, generally speaking, becomes the only party lawfully able to take action pertaining to that property.

How to deregister a company

If you satisfy all criteria, you must lodge Form 6010: ‘Application for voluntary deregistration of a company’ with ASIC at least two weeks before the due date of your annual review fee. It can either be done online or through the mail. You will then be invoiced $44 in applicable fees within 14 days of application, which you must pay within 28 days of invoicing in order to continue. ASIC recommends “you apply for deregistration online, as this removes any potential delays by mail. You need to create an online account to apply online.”

It can take up to two weeks for ASIC to process your voluntary deregistration application and publish a ‘strike off action in progress’ notice on its website detailing its approval status. Should it be successful, the company and its ABN will officially deregister when notified by ASIC. This usually happens approximately two months after approval, though may take longer.

Are there other deregistration options?

If you fail to meet the criteria for voluntary deregistration, there are other deregistration options that may be considered by either officeholders or authorities, including:

  • Winding up a solvent companyappropriate in instances where the company is solvent but fails to meet the eligibility criteria for voluntary deregistration e.g. has assets totalling over $1000;
  • Winding up an insolvent company – often involves the appointment of an administrator or liquidator, who is designated to settle outstanding company debts or obligations according to ASIC regulations;
  • ASIC-initiated deregistration – ASIC may independently assess the business to have ceased trading and choose to commence the deregistration process externally;

Safeguard against insolvency with CreditorWatch

While you may eventually choose to deregister your company voluntarily, you must ensure that it’s accomplished on your terms. Doing this involves being active in your debtor management, diligent in your data keeping, and conscientious with your monitoring and alerts. Chasing high-risk debtors with overdue invoices may quickly result in the onset of insolvency proceedings, bringing an end to the trading lifespan of your business far earlier than desired.

To proactively manage your debtors, and safeguard that vital cash flow, speak to our CreditorWatch team today.

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