The first step in choosing a way of terminating your business is establishing whether it is solvent or not. If the business is solvent, there are two ways you can voluntary go about this. Winding up and liquidation Winding up and liquidation are the two steps involved in the process of bringing a company to an end. The first step, that is the winding up, is used to terminate any ongoing relationships and obligations. This involves partners, customers, suppliers, and employees. Once this is completed, liquidation may take place. This step involves selling the company’s assets and using the funds to cover any debts. If there are any proceedings, they are divided and distributed among the company’s members. Deregistering Deregistering is a simple way of terminating a solvent business. However, its simplicity is reserved only for businesses which satisfied certain criteria. From the criteria, it is easy to notice that, almost exclusively, only a small business can be closed in the process of deregistration. It is lodged with ASIC for a small fee. What ASIC then does is publish the intention of deregistering in the Government Gazette. There is a period of 2 months allowing the public to make objections against the deregistration. If there are no objections, the company is terminated after the 2 months expire. The criteria dictate that the company must have less than $1000 worth of assets. The process must start as a unified decision of all members provided that - There are no outstanding liabilities - The company is not involved in any legal proceedings - The company has satisfied any obligations imposed by the Corporations Act 2001 - The company has no intention of carrying on business activities Members’ Voluntary Liquidation This type of procedure is available to all solvent companies. The fact that Members Voluntary Liquidation is the common solution is due to a smaller percentage of businesses satisfying the above-stated criteria for deregistration. The decision to terminate a company through MVL must be brought by at least 75% of the company’s members and involves the appointment of a liquidator. ASIC must be informed of this decision and it should be published on the Insolvency Notices Website. Declaration of Solvency Before an MVL is put to vote, the directorsof the company need todeclare that the company is solvent and can pay for its outstanding liabilities within 12 months after the termination process has officially started. They can make this type of declarationthrougha form lodged with ASIC. If there is a need for it, the directors should assess the company’s finances for this particular purpose. Should it happen that ASIC was wrongfully led to believe that the company was solvent there will be legal consequences. The Liquidator After the MVL has been voted, it is the time to choose a liquidator. Members of the company should in a meeting officially appoint a liquidator and notify ASIC of it. Members are free to choose one person to be a liquidator and take control of the company. Even though the liquidator is in control of the company, the members are free and encouraged to monitor the work of the liquidator. Reporting The company is obliged to keep ASIC updated on its progress in the process of termination by lodging report forms at six-month intervals. This is the way of presenting the accounts and statements to ASIC and the way of them seeing that the company is working toward achieving the stated goal. This will also give them an idea of whether the company truly is solvent. The final step With winding up and liquidation in place, the company is ready to be deregistered. Before this, a meeting needs to be held to present a full account of how the process of winding up took place. This meeting should be announced on the Insolvency Notice Website one month in advance. Once the results are presented to ASIC, the company can be deregistered and permanently erased from the list of active businesses. Winding up a solvent company basically requires lodgment with ASIC, covering all outstanding liabilities, terminating all company’s affairs and relationships, and paying the appropriate fees. Bio: David Koller is a passionate blogger and copywriter for Media Gurus, mainly interested in business and Digital Marketing.

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