Members’ voluntary liquidation: how to wind up a solvent company
A members’ voluntary liquidation (MVL) is how the shareholders of a solvent company close it. A majority of the directors declare that the company can pay all its debts in full within 12 months, the shareholders pass a special resolution to wind it up and appoint a liquidator, and the liquidator pays creditors, distributes what remains to shareholders and has the company deregistered.
When an MVL is used
An MVL is for a company that can pay all its debts but is no longer needed. While a company stays registered with ASIC, it must keep meeting its legal obligations, even if it has stopped trading. Winding it up ends those obligations in an orderly way.
MVL, voluntary deregistration or creditors’ voluntary liquidation?
| Process | Suits a company that… |
|---|---|
| Voluntary deregistration | has assets worth less than $1,000, no outstanding liabilities, is not trading or involved in legal proceedings, has paid all ASIC fees and penalties, and whose members all agree. |
| Members’ voluntary liquidation | is solvent but does not meet the voluntary deregistration criteria, for example because it still holds assets that need to be dealt with. |
| Creditors’ voluntary liquidation | cannot pay its debts as and when they fall due. |
If the company is insolvent, an MVL is not available. See company liquidation in Australia for the options.
The steps in an MVL
ASIC sets out seven main stages.
- Declaration of solvency. At a meeting of directors, a majority of directors declare they believe the company can pay all its existing debts in full within 12 months of the winding up starting (Form 520). It is an offence under the Corporations Act 2001 to make a false declaration.
- Lodge the declaration with ASIC. This must happen before notice of the members’ meeting is sent.
- Notify members. Every member must receive notice of the meeting at least 21 days beforehand, unless members agree to a shorter period.
- Members’ meeting. Held within five weeks of the declaration of solvency. Members pass a special resolution to wind up the company and appoint one or more liquidators. The winding up begins on the date the resolution is passed. The liquidator notifies ASIC of the appointment within 14 days (Form 505).
- Tell ASIC about the resolution within seven days (Form 205).
- Publish the resolution on ASIC’s Published notices website by the end of the business day after the liquidator is appointed.
- Winding up and deregistration. The liquidator realises assets, pays creditors and distributes the surplus to shareholders.
What the liquidator does
The liquidator takes over the company’s affairs and winds them up. If the liquidation runs past its anniversary, the liquidator must lodge an annual administration return with ASIC (Form 5602) within three months of each anniversary. Within one month after the winding up ends, the liquidator lodges an end of administration return (Form 5603). The company is deregistered three months after that form is lodged.
If the company turns out to be insolvent
If the liquidator forms the view that the company will not be able to pay its debts within 12 months, ASIC states the liquidator must hold a meeting of creditors, appoint a voluntary administrator or apply to the court for the company to be wound up in insolvency. The process then moves out of the members’ hands.
Taking the declaration of solvency seriously
Because a false declaration is an offence, directors should have a reliable picture of every debt the company owes, including amounts that are disputed, contingent or not yet invoiced, before signing. If there is doubt about solvency, take advice before the declaration is made, not after.
Common questions
What is a members’ voluntary liquidation?
A members’ voluntary liquidation is the process for winding up a solvent company. A majority of directors declare the company can pay its debts in full within 12 months, shareholders pass a special resolution, and a liquidator winds up the company’s affairs and has it deregistered.
What is a declaration of solvency?
It is a declaration, made by a majority of directors at a directors’ meeting and lodged with ASIC on Form 520, that the directors believe the company can pay all its existing debts in full within 12 months of the winding up starting. Making a false declaration is an offence.
How soon must the members’ meeting be held?
The members’ meeting to pass the special resolution must be held within five weeks of the declaration of solvency. Members must receive at least 21 days’ notice of the meeting unless they agree to a shorter period.
What happens if the company cannot pay its debts after all?
If the liquidator thinks the company will not be able to pay its debts within 12 months, the liquidator must hold a meeting of creditors, appoint a voluntary administrator or apply to the court to have the company wound up in insolvency.
When is the company deregistered?
The company is deregistered three months after the liquidator lodges the end of administration return (Form 5603) with ASIC.
Can I deregister the company instead of liquidating it?
Voluntary deregistration is a simpler ASIC application, but it is only available if the company has assets worth less than $1,000, no outstanding liabilities, is not trading or in legal proceedings, has paid all ASIC fees and penalties, and all members agree.
Sources: ASIC, Wind up a solvent company; ASIC, Voluntary deregistration of a company. This page is general information, not advice about your circumstances. Last reviewed: 16 October 2026.
Written by John Chand, Principal and Registered Liquidator. John has more than 17 years’ insolvency experience. Meet the team.
