Company Removals
Grange Associates Ltd - 15 June 2015
We have recently gone through the end of another financial year, and we now turn our minds to looking forward and
where to from here. As part of this process, it is worthwhile looking at your business’s structure and whether it
needs a ‘spring clean’. It is surprising how often companies are set up for specific purposes, but later when there
is no longer a need for that company, nothing is done and it just hangs around.
There are basically three options to ‘kill’ a solvent New Zealand
company:
• ‘short-form removal’ from the companies register,
• ‘solvent liquidation’, or
• do nothing, i.e. don’t file the annual return with the Companies Office.
The third option is included for completeness, but it is not generally
recommended. The first two are discussed below.
Short-form removal
A short-form removal request can be completed online at www.business.govt.nz/companies by
providing:
• A shareholder or director resolution providing for the company
to be written off because:
- it has ceased trading, its debts have been paid and its assets have been distributed (in accordance with the
Companies Act 1993 and the company constitution), or
- it has no assets and no creditor is seeking to liquidate the company.
• Written notice from the IRD stating that the Commissioner has no objection to the company being removed from
the register (once the final tax return(s) and a business cessation form has been lodged).
The Registrar of Companies will then publish a public notice of the intention to remove the company from the
register (in the New Zealand Gazette and another newspaper). Once a 20 day notice period has expired the Registrar
will remove the company from the register if no objections are received.
Solvent liquidation A liquidator is appointed by
shareholder resolution. The liquidator then consents to the appointment and gives notice of it to the
Companies Office. The directors must pass a resolution as to the solvency of the company and file it with the
Companies Office within 20 working days of appointing the liquidators.
A notice of appointment and notice to creditors to claim (minimum 10
working days’ notice) is published in the New Zealand Gazette and one other newspaper. The liquidators’ first
statutory report is filed at the Companies Office with copies to the shareholders and any
creditors.
When the notice period for creditors to claim has expired and assets
distributed and liabilities discharged, the liquidation is completed by the filing of the liquidators’ final
statutory report at the Companies Office, with copies to shareholders and all known
creditors.
A final public notice of intention to remove the company from the
register is published in the New Zealand Gazette and one other newspaper (minimum 20 working days’ notice for
objections to the removal). Provided that no objections have been received, the company is removed from the
register at the expiry of the period of notice.
Summary
As illustrated, there are different processes and benefits under each method. Generally, the short-form removal
process is best suited to a company that has one or more of the following features - has little trading history,
has held few assets, is subject to low commercial risk, and no contingent
liabilities.
A solvent liquidation involves slightly more paperwork and generally
costs more than a short-form removal. However, if the most important consideration is to minimize the risk of
the company being reinstated through creditor claims after the company is struck off from the register, then
the best option will be to complete a ‘solvent liquidation’.
All information is correct at the date of article
publication. Please note we provide the information as a service only. Accordingly, the contents are
not intended as a substitute for specific professional advice and should not be relied upon for that
purpose. |
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