Dictionary

  • Books and records (in the context of company liquidation)

    When a company is placed in liquidation, pursuant to section 530A of the Corporations Act 2001 (Cth), company officers must, as soon as practicable deliver to the appointed liquidator all the books in their possession that relate to the company. Further to this obligation, a liquidator has the right under section 530B of the Corporations Act 2001 (Cth) to access the books and records of a company.
    The definition given to “books” held or controlled by a company under the Corporations Act 2001 (Cth) includes:

    • A register; and
    • Any other record or information; and
    • Financial reports or financial records, however compiled, recorded or stored; and
    • A document.

    Further to the definition provided above, section 9 of the Corporations Act 2001 (Cth) defines financial records as including:

    • Invoices, receipts, orders for the payment of money, bills of exchange, cheques, promissory notes and vouchers; and
    • Documents of prime entry;
    • Working papers and other documents needed to explain;
    • The methods by which financial documents are made up; and
    • Adjustments be made in preparing financial statements.

    Pursuant to section 286 of the Corporations Act a company must keep written financial records and they must be retained for 7 years. Failing to keep financial records is a strict liability offence under the Corporations Act 2001 (Cth).

    The liquidator when they are appointed will first request that the former company officers provide to them the books and records of the company that has been placed into liquidation. If a former company officer fails to deliver to the liquidator the company’s books or financial records (of which the company is entitled) a liquidator can make an application to the Court to order that the books and records be delivered (see section 483(1) of the Corporations Act 2001 (Cth)).

    ASIC have compiled a list of books and records that a company should keep and of which a liquidator will be entitled to have access to when a company goes into liquidation:

    • Financial statements
    • General ledgers and journals
    • Electronic copies of important documents
    • Cash records
    • Bank statements and loan documents
    • Sales and debtor records
    • Unpaid invoices
    • Minutes of director’s meetings
    • All relevant company registers
    • Deeds.

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