Closing a corporation

There may be different reasons for closing a corporation, such as:

• circumstances change and you no longer need a corporation
• there is no one who wants to keep the corporation going
• the corporation is not making enough money to keep going
• the corporation owes money to people that it cannot afford to pay.

These are the options you can consider as a director or member:

• deregistration
• winding up or liquidation 
• voluntary administration
• small business restructuring

The Registrar or other parties, for example a creditor (a person or entity who is owed a debt by a corporation), can also take steps in relation to the corporation. These include:

• receivership
• winding up or liquidation
• deregistration 

Insolvency

Insolvent means that a corporation cannot pay its debts, as and when they fall due.

If you have concerns that your corporation is trading while insolvent, nearing insolvency, or a creditor is chasing payment from your corporation, there are serious consequences and you should consider obtaining legal advice.

ORIC cannot provide a corporation legal or financial advice as to whether or not it is insolvent. ORIC also cannot provide legal advice on your duties as a director or member if you suspect the corporation is insolvent. 

This is best sought through a licenced professional who can provide advice specific to the circumstances of your corporation’s situation. 

Directors' duties

Even if your corporation has stopped conducting business, it is still registered as a legal entity until it is deregistered. This means directors are still responsible for ensuring the corporation continues to meet its legal obligations, including maintaining records, preparing annual reports, holding meetings, and being responsible for any property or assets of the corporation. 

Members appoint directors to govern the corporation on their behalf. There are 5 directors' duties all directors must comply with under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act).

These are the same duties as required by directors under the Corporations Act 2001.

If a director is found to have breached any of their duties, there could be serious consequences including a criminal liability or a civil liability. This means the directors may have to pay a monetary amount personally.

Under the CATSI Act the duties imposed on directors can extend to other 'officers', such as CEOs, general managers, CFOs, or other employees who are involved in the making of decisions that affect the business of the corporation. 

Read more about legal duties of directors and other officers.