As an insolvency practitioner, I occasionally see the impact that shadow and de facto directors can have on companies.
Section 461(k) of the Corporations Act 2001 (Cth) is a discretionary power of the court to order the winding
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A members’ voluntary liquidation (MVL) is a process by which a solvent company is wound up and its assets are distributed to its shareholders. The process is typically used when a company has fulfilled its purpose or is no longer needed, and its shareholders want to realise their investment in the company in a tax effective way.
The process of a members’ voluntary liquidation involves a number of steps, including:
- Planning and decision-making: The first step in an MVL is for the company’s stakeholders to agree to adopt the MVL process. this involves liaising with the company’s pre-existing taxation accountant to forecast the outcomes and returns of the MVL process for each shareholder.
- Solvency declaration: Once the decision to wind up the company has been made, the directors of the company must sign a Declaration of Solvency. This is a statement that the company is able to pay all of its debts in full within 12 months of the liquidation commencing.
- Appointment of a Liquidator: The shareholders must then pass a special resolution to wind up the company and appoint a Liquidator. The Liquidator will be responsible for winding up the company’s affairs, realising its assets and distributing the proceeds to the shareholders.
- Realisation of assets: The Liquidator will then begin the process of realising the company’s assets. This may involve selling any property or assets owned by the company and collecting any outstanding debts owed to the company. The Liquidator will then use the proceeds from the sale of assets to pay off any outstanding debts owed by the company.
- Tax clearance: A key step in the MVL process is to obtain a taxation clearance from the Australian Taxation Office. The Liquidator often works with the pre-existing taxation accountant to attend to outstanding lodgements as part of this process.
- Distribution of proceeds: Once all of the company’s debts have been paid and the tax clearance has been obtained, the Liquidator will distribute any remaining proceeds to the shareholders in accordance with their shareholdings. This is typically done by way of a final dividend payment.
- Deregistration: Once the liquidation is complete, the company can be deregistered and cease to exist. This involves filing the necessary documents with the Australian Securities & Investments Commissions to have the company removed from the register.
To speak with us further regarding whether a Members’ Voluntary Liquidation may be appropriate in your situation, please contact us on 08 9215 7900 for a cost and obligation free consultation.