CREDITORS VOLUNTARY LIQUIDATION IN AUSTRALIA CHECKLIST FOR LIQUIDATOR FINAL MEETING AND FINALISATION OF LIQUIDATION Peter J Keenan 2010

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1 Prepared by Date Reviewed by Date Page 1 f 7 Name f Client:... (In Liquidatin) NOTES 1 This checklist is a summary and the user shuld nt rely n it as a full descriptin f the issues and prcedures mentined in the checklist. 2 Statutry references, inside [ ], are references t the Australian Crpratins Act 2001, except thse preceded by Reg, which means the Australian Crpratins Regulatins ASIC is an acrnym fr the Australian Securities and Investments Cmmissin. 4 If the cmpany is trustee f a trust, there may be additinal actin required t bring abut the disslutin f the trust r t end its relatinship with the cmpany. The legal essence f the Final Meeting As sn as the affairs f the cmpany are fully wund up, the liquidatr must: (i) make up a final accunt (as described/prescribed in the Act); (ii) cnvene a jint meeting f the creditrs and members fr the purpse f frmally presenting the final accunt and giving any explanatin f the accunt; and (iii) ldge a cpy f the reprt with ASIC. [509] The liquidatr ceases t act nce the reprt f the final meeting is ldged. Hwever, the liquidatr cntinues t have certain duties, such as ldging a final accunt f receipts and payments and retaining the bks and recrds. [539 & 542] The crprate state and crprate pwers f the cmpany, ntwithstanding anything t the cntrary in its cnstitutin, cntinue until it is deregistered. [593] The legal essence f Deregistratin and Finalisatin Three mnths after the Final Meeting, the cmpany will be deregistered, meaning it will cease t exist. But nte: Officers f the cmpany (including the liquidatr) may still be liable fr things dne befre deregistratin. An insurer f a deregistered cmpany may still be held liable. The Cmmnwealth and ASIC have pwer t act n behalf f a deregistered cmpany r its liquidatr. Any remaining cmpany prperty vests in ASIC. In special circumstances the cmpany may be reinstated. Sectins [9], [509(4)], [601AD], [601AH], [601AG], [601AF] Frm the time the cmpany is deregistered, the perid fr which the bks and recrds must be retained begins. By default that perid is 5 years. But with (a) a directin by the cmmittee f inspectin r the creditrs, and (b) the cnsent f ASIC, this perid may be shrtened. [542]

2 Sme Imprtant Preliminary Checks and Prcesses Have all assets been realized? Examples: fixed assets, stck, accunts receivable, lans and advances. Have amunts unpaid n the cmpany s shares been cllected? Have any claims fr vidable transactins [588FA t 588FJ], inslvent trading [588G t 588U], evading emplyee entitlements [Part 5.8A], breach f duty, and the like been identified? If s, has the liquidatr determined whether it is in the interest f creditrs t pursue them? If actin has been taken, has it been cncluded? Has all nerus prperty been disclaimed? Has all litigatin brught by r against the liquidatr been cncluded? Has the liquidatr reprted t creditrs n the reasns fr the inslvent s financial failure and n the results f his r her investigatins? [IPAA Cde f Prfessinal Cnduct.] Have all pst-appintment Business Activity Statements (BAS) been ldged with the ATO, and refunds cllected and/r payments made? If the cmpany traded during the liquidatin: Have all assciated returns and statements been ldged e.g., BAS, Incme Tax, WrkCver, PAYG Withhlding, Payrll Tax, FBT, superannuatin fund. Have all assciated accunts fr services been clsed e.g., telephne, gas, electricity, insurance. Have all assciated csts, expenses, emplyee entitlements, charges, taxes and liabilities been paid? Is the amunt drawn in remuneratin in agreement with the apprval btained? Is there a need fr an increase in apprved remuneratin? Has a clearance ntice been btained frm the ATO? [Sectin 260 in Schedule 1 t the Taxatin Administratin Act 1953.] (Cntinued next page) CheccvlliqFinaMeet_v2 Page 2 f 7

3 Sme Imprtant Preliminary Checks and Prcesses (cnt d) Have all surplus funds been distributed t creditrs? Has the liquidatr met the statutry reprting bligatins as enunciated by ASIC? [533] [ASIC Regulatry Guide 81.] [IPAA Cde f Prfessinal Cnduct.] Has ASIC advised that it will nt be cnducting an investigatin? Has ASIC advised that it will be cnducting an investigatin? If s, has that investigatin been cmpleted? If nt, has ASIC granted the liquidatr written permissin t call a final meeting? If a shrtened perid fr retentin f the bks and recrds has been apprved by creditrs r the cmmittee f inspectin, has ASIC s cnsent been btained? [542(4)] [ASIC accepts applicatins fr the early destructin f bks frm tw mnths befre the cmpany s final meeting. Fr ASIC s plicy, see ASIC Regulatry Guide 81.] Have all unclaimed dividends r ther mney been paid t ASIC? [544(1)(a)]. Nte: These amunts cannt be paid t ASIC until they have remained unclaimed fr 6 mnths. Have all unclaimed r undistributed amunts f mney arising frm the prperty f the cmpany been paid t ASIC? [544(1)(b)] Have all the cmpany s liquidatin bank accunts been clsed? Nte: If necessary r cnvenient this task culd be delayed until nearer t the final meeting date, as it is nt until that meeting is cncluded that the liquidatr ceases t act. Nte that nce the liquidatr has ceased t act he r she may, technically, n lnger have the pwer r authrity t clse the cmpany s accunt. CHECKLIST Determine whether the affairs f the cmpany are fully wund up. [See the preceding ntes.] Set a date fr a jint meeting f creditrs and members. [509] Ntice must appear in the Gazette at least ne mnth befre the meeting. [509(2)] Prpsed date f meeting: Time f meeting:. Place f meeting: CheccvlliqFinaMeet_v2 Page 3 f 7

4 T appear a mnth befre the meeting Place advertisement in the Gazette. [509(2)] Date placed: Date advertisement t appear:. Prepare liquidatr s final accunt/reprt. [509(1)]. {CONDITIONAL} If GEERS advances have been made, supply GEERS with a cpy f the accunt/reprt. GEERS Operatinal Arrangements 15/12/2008, Part 4, 17(h). Reprt sent:... {OPTIONAL} Give written ntice f the meeting and a cpy f the liquidatr s final accunt/reprt t the ATO. Ntice sent n: {OPTIONAL} Give written ntice f the meeting t creditrs and directrs. Include a cpy f the liquidatr s final accunt. Include a prxy frm. 14 days ntice is custmary. Ntice sent n: Hld the meeting at the appinted time. Fr qurum requirements see 509(4); If a qurum is nt present, clse the meeting. Meeting date:.. Within 7 days after the meeting Ldge within ne mnth after the meeting Within 7 days after the meeting If a qurum was present: (a) ldge with ASIC a return f the hlding f the meeting tgether with a cpy f the accunt/reprt presented. [509(3)] Nte: ASIC Frm 523 may be ldged via the liquidatr s prtal. Return ldged n: (b) prepare minutes f the meeting and ldge them with ASIC. [Reg ] Nte: Cpy minutes may be ldged via the liquidatr s prtal with ASIC Frm Minutes ldged n:.. If a qurum was nt present, ldge with ASIC a return stating that the meeting was nt held because f a lack f a qurum, tgether with a cpy f the accunt/reprt prepared. [509(4)] Nte: Frm 523 may be ldged via the liquidatr s prtal. Return ldged n: NOTE: ASIC must deregister the cmpany at the end f the 3 mnth perid after this return is ldged. N applicatin by the liquidatr is required. [509(5)] {OPTIONAL} Give written ntice f the utcme f the meeting t creditrs and directrs. Include a cpy f the liquidatr s final accunt/reprt. Ntice sent n: CheccvlliqFinaMeet_v2 Page 4 f 7

5 Apply t Tax Office and Australian Business Register fr cancellatin f GST, PAYG, etc., registratin and the cmpany s ABN. See frm NAT2955, available frm the ATO. The phne cntact is Within ne mnth after ceasing t act (which ccurs at the end f the final meeting) Make up a final accunt f receipts and payments in the prescribed frm and ldge it with ASIC. [539] [Frm 524]. Nte: Frm 524 may be ldged via the liquidatr s prtal. Return ldged n :. If a shrtened perid fr retentin f bks and recrds has been apprved by creditrs r the cmmittee f inspectin, apply fr ASIC s cnsent t early destructin. [542(4)] (The applicatin must address several issues, which are specified in ASIC Regulatry Guide 81.] See my sample frm CVL_ApplPermDestBk. A fee is payable (currently $34.00 Oct 2010). Applicatin made: Final cnsent letter btained:.. Apply fr cancellatin f cmpany s GST registratin. Applicatin made: Cancellatin granted:.. Apply fr cancellatin f cmpany s ABN. Applicatin made: Cancellatin granted:.. Use ABR & ATO frm NAT 2955: Applicatin t cancel registratin. {OPTIONAL} {HIGHLY RECOMMENDED} If a shrtened perid fr retentin f the bks and recrds is authrised and that perid is less than, say, 3 years - cnsider nevertheless cllecting and retaining fr a lnger perid the cre bks and recrds f the liquidatin. In deciding what are the cre bks and recrds, the liquidatr shuld exercise prudence, take int accunt particular events and prblems ccurring during the liquidatin, and bear in mind the nrmal prfessinal respnsibility t pssess evidence supprting transactins and justifying decisins. Such cre bks and recrds may include: Liquidatr s accunting recrds, e.g., bank statements, EFT transactin statements, cheque bks/stubs, payment and receipt vuchers, emplyee and pay recrds, jurnals and ledgers. Liquidatr s checklists, diaries, prject management tls, wrking papers and timesheets. Liquidatr s lists f bks and recrds received, shwing als where they are stred. Liquidatr s ntes f significant telephne cnversatins and CheccvlliqFinaMeet_v2 Page 5 f 7

6 events at meetings. Imprtant written cntracts. Accident and wrker s cmpensatin recrds. Minutes f meetings, attendance registers and prxies. Prfs f debt. Stre and keep these selected bks and recrds fr an apprpriate perid beynd the sanctined perid. CheccvlliqFinaMeet_v2 Page 6 f 7

7 After the early destructin date set by creditrs and sanctined by ASIC, arrange fr destructin f the nn-cre bks and recrds. Date destryed:. END CheccvlliqFinaMeet_v2 Page 7 f 7