An accountant asked me the other day about how to wind up a company when directors and shareholders are no longer getting along. Under these circumstances, without consensus and cooperation, a voluntary appointment cannot be made.
This situation is not that uncommon and a company does not need to be insolvent for it to be wound up. In cases where there is an unresolvable dispute or a breakdown in trust at director or shareholder level, a party can make an application for the company to be wound up under section 461 of the Corporations Act 2001 (“the Act”).
Under these provision of the Act, a Court can pass an order to wind up a company if it is satisfied that –
- Directors have conducted affairs of the company in their own interests rather than in the interests of the shareholders as a whole;
- Affairs of the company are being conducted in a manner that is unfairly prejudicial or oppressive to, or unfairly discriminatory against, a shareholder or group of shareholders; and
- The court is of the opinion that it is just and equitable that the company be wound up.
So if you have any clients facing these sorts of challenges, feel free to get in touch with us and we can explore their situation further.
About the author
Greg Quin is a Partner and Registered Liquidator at HLB Mann Judd Insolvency WA and has been with the team for 12 years. Greg oversees the daily operations of the many insolvency appointments managed by the HLB Insolvency team and looks after the operations of the practice.
If you have any queries about insolvency matters, please feel free to contact Greg on 08 9215 7900, 0402 943 091 or via email to firstname.lastname@example.org.