The concept of winding up does not exclusively apply to insolvent companies. Solvent companies can also be wound up, on the initiation of the company’s directors and shareholders (for example, as part of a corporate reconstruction or to close down non-operating or redundant entities).
An overview of the two key procedures to effect the dissolution of a solvent Australian company, being Members’ Voluntary Liquidation and Deregistration, is set out below.
What is a Members’ Voluntary Liquidation or MVL?
A Members’ Voluntary Liquidation is the method by which a solvent company is wound up and its assets are distributed to its members (also known as shareholders). The winding up itself is usually conducted by a registered liquidator (typically a chartered accountant from an accounting firm).
The procedure for entering into a Members’ Voluntary Liquidation is contained in Part 5.5 of the Corporations Act 2001 (Cth) (Corporations Act). We describe the basic procedure below.
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