Who can act as a liquidator

At Dissolve we specialise in company liquidations and we are not part of a large accounting or audit practice. So you can be sure that we can act as Liquidator as we have NO CONFLICTS OF INTEREST. If you are considering using your auditor as your liquidator you are approaching a potentially complicated area. At Dissolve we say it is best not to use your auditor as your liquidator. But if you are considering that, read on to see who can legally act as the liquidator of your company.

The Corporations Act dictates who can act as the liquidator of a company. The general rule is that a liquidator must:

• be a natural person;
• be a registered liquidator with ASIC;
• not owe the company more than $5,000;
• not be owed by the company more than $5,000;
• not be an auditor of the company or a partner of the auditor;
• not be an employee or “officer” of the company, that is, not a Director, Secretary, or receiver and manager of the company;
• not be an officer of any company that is a mortgagee of property of the company;
• not be a partner or employee or employer of an officer of the company.

Where the company to be liquidated is a proprietary company, many of the above provisions do not apply. In the case of a proprietary company the liquidator must:

• be a natural person;
• not owe the company more than $5,000;
• not be owed by the company more than $5,000.

So the legislation relating to the members' voluntary liquidation of a proprietary company is liberal in that a liquidator does not require any specific qualifications. However, the practicalities are quite different in that the process could involve the movement of large sums of money and there is a need to be concerned about a number of statutes such as the Income Tax Assessment Act, Fringe Benefits Tax Assessment Act and the Stamp Duties Act. Therefore, in practice, in the vast majority of cases the process is handed over to a registered company liquidator who will have the relevant experience.

In the past it was common practice for a company to turn to its auditor to act as liquidator of a company within the group. In recent years there have been a number of laws and ethical pronouncements of professional bodies that restrict the services an auditor can provide to an audit client. The pronouncements of the professional bodies and the laws of various jurisdictions are quite complex. Dissolve has the following view:

• If a subsidiary company is being liquidated and it has assets of any value then neither the auditor nor a partner of the auditor should act as the liquidator. The principle underlying this view is that an auditor should never conduct transactions on behalf of an audit client or enter into transactions with an audit client as the counterparty.
• If a company is registered with the SEC in the USA then an accounting firm that is the auditor of the group should not allow another partner of that firm to act as liquidator irrespective of the value of any assets remaining in the company.

Any proposed liquidator should make themselves very familiar with the full range of responsibilities and powers of a liquidator and the stringent duties imposed on the liquidator.

At Dissolve our appointees are Registered Liquidators with a wealth of experience and NO CONFLICTS OF INTEREST. CALL US NOW for CONFIDENTIAL FREE ADVICE.

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