Ending a company limited by guarantee
A company limited by guarantee ceases to exist when it is “deregistered” (removed from the register of companies). The register of companies is maintained by ASIC (a Commonwealth government body). A company can apply to ASIC to be deregistered if it meets certain criteria and sometimes ASIC will itself deregister a company in certain specified circumstances. But usually a company is deregistered after it has been “wound up”.
‘Winding up’ involves the appointment of a person (usually a specially qualified accountant) called a ‘liquidator’ who takes over the running of the company, gets control of the company’s assets and then sells or distributes those assets to pay of the company’s creditors. If there are any funds left over after the creditors are paid, the liquidator will pay or distribute those funds in accordance with the company’s constitution.
Beware!
If you are considering ending your organisation because you are concerned that your organisation is struggling to meet its day to day expenses, you must act quickly to arrange either a voluntary winding up, an application to a court for winding up or the appointment of a voluntary administrator. Each of these options is explained in the information sheets below. If the board (directors) of a company allow the company to continue to incur new expenses when they suspect that it cannot meet all its existing liabilities, all of the directors may be personally liable to repay those new expenses.
Two ways for ending a company limited by guarantee
Under the Corporations Act, companies limited by guarantee can be ended up in two ways:
- voluntarily - when the members of the organisation make a decision to end the company, or
- compulsorily - when a court orders that the organisation must end.
For general information about the process involved in voluntary and compulsory winding up, go to:
Note
Ending an organisation can be a highly technical process. The information that PilchConnect has produced is intended to provide a general summary of the options open to an organisation and what is involved in each of those options. It should not be relied on as a complete guide to undertaking a winding up or any of the other options discussed. Your organisation may need to seek specific legal advice.
Ending a company limited by guarantee - FAQs
For answers to questions about ending a company limited by guarantee and DGR, whether you can wind up part of an organisation, how people know the organisation has ended and whether you can re start an organisation after winding it up, go to: