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Close a solvent company and return the funds

We will help you close a solvent company properly, and get the value out in the most tax-effective way.

A company does not close because you stop using it. Left alone it stays on the register, keeps accruing ASIC fees, and keeps its directors exposed. A members voluntary liquidation is the formal way to end a solvent company. That means one that can pay everything it owes and still has value to distribute. It needs a solvency declaration from the directors, a registered liquidator, and distributions made in the right order. We advise on whether it is the right route, and run the legal side of it.

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Directors who are properly advised

Everyone signing the solvency declaration understands what it commits them to.

Value out on the best terms

Distributions are structured with your accountant before any money moves.

Nothing left on the register

Contracts, guarantees and registrations are closed off, so nothing reopens later.

What is a members voluntary liquidation and when is it used?

A members voluntary liquidation, usually called an MVL, is a solvent wind-up started by the shareholders rather than by creditors. The directors declare that the company can pay its debts in full within twelve months. A registered liquidator is then appointed to realise the assets, pay the liabilities and distribute what is left to shareholders.

It is used when a business has stopped trading or a structure is no longer needed. It is also used when shareholders want accumulated profits out of the company. The tax treatment is usually the reason people choose it. Distributions made in the course of a liquidation can be taxed more favourably than dividends. That is why an MVL is often preferred to simply deregistering. Voluntary deregistration is only available to very small companies and does not produce the same result.

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What is the tax advantage of an MVL over just deregistering?

Distributions made in a liquidation can be treated as capital rather than as dividends, which often produces a lower tax bill for shareholders. The advantage depends on the company’s reserves and each shareholder’s position, so it should be confirmed with your accountant before you commit.

What is a declaration of solvency and what does it commit the directors to?

It is a formal statement by the directors that the company can pay all its debts in full within twelve months. It has to be made on reasonable grounds after reviewing the company’s affairs. A director who signs one without that review can be personally exposed if the company turns out to be insolvent.

Do we need a liquidator, and what will it cost?

Yes. An MVL requires a registered liquidator, and their fee is separate from legal costs. For a straightforward company with cash and few creditors, the liquidator’s work is limited. We will tell you early whether the tax saving justifies the total cost.

How long does an MVL take?

Usually two to four months for a simple company, from the shareholders’ resolution to deregistration. It takes longer where there are assets to sell, a property to transfer, or an outstanding tax matter. The main delay is almost always waiting on final tax clearance.

Closing it properly is worth more than closing it quickly

Tell us what the company holds and what you want to achieve by closing it. We will tell you whether an MVL is the right route and what it would return to shareholders.

A company you have stopped using is still a company

The trading has stopped but the company has not. There are still assets to distribute, a register to clear, and annual review fees that keep arriving. How you take the remaining value out decides how much tax is paid on it, and the difference between the routes can be significant.

There is also the directors’ position. Signing a declaration of solvency is a personal statement, and it carries consequences if the company turns out not to be solvent.

We will advise on whether an MVL is the right way to close your company.
We will prepare the directors' declaration of solvency and advise on what it means.
We will prepare the shareholders' resolutions and coordinate the liquidator's appointment.
We will work with your accountant so distributions are made in the most effective form.
We will deal with outstanding contracts, leases, guarantees and employee entitlements.

The company has done its job and you want it closed

The business has wound down, or the assets have been sold, or the structure was set up for something that has now finished. What is left is cash, perhaps a property, and years of accumulated profits. You would like the money in shareholders’ hands and the company off the register. Someone has told you that deregistering it will cost more tax than doing it properly. You are not sure who is right.

What's included in your MVL service

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Advice on whether an MVL, a deregistration or an asset sale suits the company.
Directors' declaration of solvency, with advice to each director.
Shareholders' resolutions and liquidator appointment coordination.
Distribution structuring in conjunction with your tax adviser.
Contract, lease, guarantee and employee entitlement closure.
Deregistration confirmation.

What happens to companies that are just abandoned

Companies that are left rather than closed cause problems for years. The company stays registered, so ASIC annual review fees keep falling due, and eventually it is deregistered for non-payment. Any asset still held by the company at that point vests in ASIC, and recovering it means an application to reinstate the company.

The directors carry the rest. A solvency declaration signed without proper advice, on a company that later cannot pay a liability somebody forgot about, exposes the directors personally. Shareholders who take distributions without confirming the treatment first can find the payment taxed as a dividend. That is usually a materially worse outcome than a capital distribution. None of this is hard to avoid. It is only hard to fix afterwards.

How we close it and leave nothing behind

We check the position first. Whether the company really is solvent, what it holds, and what it might still owe. Then whether an MVL beats a deregistration or a straightforward sale of the assets. If it is not the right route, we say so before any fees are incurred.

If it is, we prepare the directors’ declaration of solvency and advise each director on what they are signing. We prepare the shareholders’ resolutions and coordinate the appointment of a registered liquidator. We then work with your accountant on how the distributions should be made, and in what order. We deal with the loose ends that otherwise reopen later: outstanding contracts, leases, guarantees and employee entitlements. When it finishes, the company is deregistered, the value is in shareholders’ hands, and there is nothing left to come back.

How the company gets closed

The value reaches the shareholders and the company leaves the register.

Test the position

We confirm the company is solvent, work out what it holds, and tell you whether an MVL is the right route.

Declare and appoint

We prepare the solvency declaration and shareholder resolutions, and coordinate the appointment of a registered liquidator.

Distribute and close

We work with your accountant on the order and form of distributions, then see the company through to deregistration.

Lawyers who close solvent companies without leaving the directors exposed

Winding up a company you built is an odd kind of administrative task. It reads as paperwork and it feels like something else, particularly where the company carried the family name or the business ran for thirty years. Most people want it done properly rather than quickly, and that is the right instinct.

One of our lawyers holds the ARITA Advanced Certificate in Insolvency and is a member of the Australian Restructuring Insolvency and Turnaround Association. We work alongside registered liquidators regularly, and we know what they need and when. We will also tell you plainly if your company does not need an MVL at all.

Our great lawyer guarantee

Six principles we hold to, whatever you bring us and however long it takes.

Take the time

We listen carefully to understand what you want to achieve, then step you through the advice and the documents.

Share our knowledge

We pass on as much as we can, so you can make your own informed decisions.

Stick to our knitting

We only do what we are good at, so you never pay for our learning.

Work as one team

Someone is always available to answer your question or point you the right way.

Fair pricing

A fixed or capped quote for advice and documents, so you do not carry the price risk.

It is your show

We are in it for a front row seat to witness your success, not for our egos.

Close it properly and be done with it

Tell us what the company still holds and what you want out of closing it. We will tell you whether an MVL is worth the cost and what the shareholders would receive. We will also tell you what the directors are being asked to sign.

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