How to close a business: deregistration, MVL or CVL?

If you've decided to shut down your company, the practical question of how to close a business comes next.

In Australia, there are three main options: voluntary deregistration, members' voluntary liquidation (MVL) and creditors' voluntary liquidation (CVL). The right path comes down to one key question: Is your company solvent – able to pay all its debts – or not?

Whether you're retiring, wrapping up a project company, or dealing with debts you can't pay, this guide walks you through each option and helps you work out which applies to you.

Facing insolvency? Get a broad overview of your options:
Voluntary administration vs liquidation

The three ways to close a company

To help guide you down the right route, here's a quick rundown of the three options and their suitability:

Choosing the wrong option, or not closing properly, can create real problems. 

An improperly closed company:

• Keeps attracting ASIC annual review fees

• Remains subject to ongoing legal obligations

• Can leave you personally liable – even after deregistration – for unpaid goods and services tax (GST), pay as you go (PAYG) withholding and superannuation, creating a personal tax liability under the ATO's director penalty regime

Common mistake: Many directors attempt deregistration when their company is actually insolvent. This isn't allowed. If your company can't pay its debts, CVL is the correct path.

#1 Voluntary deregistration (Simple, solvent closure)

Voluntary deregistration is the simplest, lowest-cost way to close a company, but it's only available in certain circumstances. 

It's an administrative process managed by the Australian Securities & Investments Commission (ASIC) that formally removes your company from the register.

Deregister company eligibility criteria (all must be met):

• All shareholders agree to deregistration

• Company has stopped trading

• No outstanding liabilities

• No business assets, or assets worth less than $1,000

• Not involved in any legal proceedings

• All ASIC fees, penalties and financial reports are up to date

Before applying, there are several key tasks to complete: lodge final tax returns and ensure all tax obligations are settled, cancel your GST registration, PAYG and Australian Business Number (ABN), and close any business bank accounts. 

Plus, check whether any liability insurance policies need to be cancelled or transferred.

How to deregister a company in Australia 

Lodge Form 6010 with ASIC and pay the small fee. ASIC publishes a notice in the Gazette and allows two months for objections. If none are raised, your company is deregistered – typically within 2–3 months.

#2 Members voluntary liquidation (for solvent companies)

Members’ voluntary liquidation is a formal process for genuinely solvent companies. Because of solvency, it’s usually less complex and time-consuming than a CVL.

Directors must sign a declaration of solvency to confirm their company can pay all its debts in full within 12 months.

MVL suitability checklist

• Company is solvent with assets worth distributing

• Multiple shareholders requiring formal distribution

• Clean, legally certain closure is the priority

If you're considering MVL, it's worth understanding the tax implications before proceeding. Speak with a registered insolvency practitioner – the solvency declaration isn't just a formality; it's a legal document that carries risk.

If you sign it and your company later can't pay its debts within 12 months, you can be personally liable for those debts. 

How members voluntary liquidation works

You, the directors, initiate the process by appointing an ASIC-registered liquidator to wind up your business affairs, pay all creditors and distribute any surplus to shareholders.

 #3 Creditors voluntary liquidation (for insolvent company)

Creditors’ voluntary liquidation (CVL) is a formal, director-initiated process for companies that are insolvent.

It’s the right path for most directors with businesses that can’t pay their debts as and when they fall due – and is the most common formal way to wind up a company for Australian SMEs.

CVL suitability checklist 

• Company is insolvent – can’t pay outstanding debts when due

• Directors and shareholders acknowledge the company can’t continue 

• Business is no longer sustainable

Acting quickly and entering CVL is always the preferable way to close business where you still have the option. It puts you in control and limits the risks that come from continuing to trade while insolvent.

These insolvent trading risks include:

• Personal liability for insolvent trading debts, outstanding wages and penalties

• Creditors forcing a court liquidation – losing control and facing higher costs and scrutiny

• ATO director penalty notices for unpaid PAYG, GST and super

• Reputational damage and future director restrictions

How creditors voluntary liquidation works

Here’s a quick summary of the CVL process:

• Step 1 – Directors pass a resolution to wind up and set a closing date

• Step 2 – You appoint a registered liquidator 

• Step 3 – Liquidator issues written notice to creditors and ASIC

• Step 4 – Directors complete a Report as to Affairs (RATA)

• Step 5 – Liquidator investigates the company's financial affairs

• Step 6 – Assets are realised and lease agreements assessed and terminated 

• Step 7 – Funds are distributed to creditors in priority order, including owed entitlements to employees

• Step 8 – Company is deregistered with ASIC

Most CVLs wrap up within 3–6 months. Liquidator fees are covered by asset realisations. If your company has no assets, you may need to contribute personally.

For a full breakdown of the steps involved: Creditors' voluntary liquidation process

Choose based on your situation

Whatever your situation, there’s a clear path to closing your business.

If you’re solvent, deregistration or members’ voluntary liquidation (MVL) are both viable options depending on the circumstances.

If you’re insolvent, creditors’ voluntary liquidation is the clearest and most controlled way to shut down. Importantly, the earlier you act, the more options you have.

Closing a business can feel like an obvious next step, a relief, a moment of sadness, or all three – but for most directors, it's a welcome reset and the start of something new.