Members voluntary winding up
A process initiated by company members who wish to enter into liquidation, where the directors have made a declaration of solvency, and where the company has remained solvent prior to the winding-up. The declaration of solvency includes a statement from the majority of directors that they have inquired into company affairs and believe that the company can pay its debts in full within 12 months from the date of commencement of the winding-up. This declaration must be lodged with the ASIC, and making a false declaration is an offence under the Corporations Act 2001 (Cth).
A members voluntary winding up may occur where:
- A third party purchases the company’s assets or they are transferred, and the company may not intend to operate further as a result. In this case, a members voluntary winding up is an alternative to deregistration.
- Large corporations/groups wishing to restructure choose to voluntarily wind up subsidiaries where they are no longer required and assets need to be distributed.
Once the members have voted for the voluntary winding-up/liquidation, they may then vote to appoint a liquidator and commence the process of liquidation.