Corporate Streamlining: How to reduce cost, mitigate risk, and become deal-ready in 2025

Cleaning up a corporate structure is often put in the “too-hard” basket by business owners and CFOs. McGrathNicol estimates that, even for the simplest group, it can cost between $4,000 and $10,000 per entity per year in compliance costs, with costs rising even further for listed groups where the corporate governance burden is greater.

Recurring costs associated with the preparation of financial statements, annual solvency resolutions, income tax returns, business activity statements and, in some cases, audits, can quickly accumulate, particularly where there are several dormant or unnecessary corporate entities. In addition, dormant or non-trading entities (particularly following merger or divestment activities) can add unnecessary compliance and business risk.

If a corporate streamlining exercise is one of your New Year’s resolutions, we encourage you to consider Members’ Voluntary Liquidation (MVL). This regime can efficiently reduce cost and risk in a timely manner. It can also make a corporate structure more “deal-ready” ahead of any potential M&A activity.

What is the MVL regime?

A MVL is a formal process of winding up a solvent company via disbursement of assets to a company’s shareholders and ultimately, deregistration of the company with ASIC. As a one-stop elimination process for a company, the MVL process offers the following benefits:

• shifts risk and management to a Liquidator so that CFOs and executives can continue to focus on the day-to-day business;

• draws out and resolves any creditor claims or contingent liabilities;

• provides tax benefits via distributing profits, capital reserves and pre-CGT assets for the benefit of shareholders;

• offers Directors’ certainty that superfluous entities are deregistered with ASIC and their statutory duties, filing responsibilities and risk have come to an end;

• allows for the destruction of books and records earlier than the statutory requirement;

• returns capital appropriately to shareholders; and

• the process can generally be undertaken in a short period of time (i.e. 4-6 months).

A corporate streamlining exercise can be undertaken via a scheme of arrangement or deregistration / dissolution. However, we consider that in most cases, the MVL regime provides better certainty of outcome. This process results in a more streamlined corporate structure with both reduced recurring costs and risk for Directors and shareholders. We often work with clients and their tax and legal advisors in the corporate sector to complete corporate streamlining projects. We are truly independent, know how to identify off-balance sheet assets and liabilities that may pose a risk to a successful deregistration, and deliver value to clients even if they are time or resource constrained.

For further information on how McGrathNicol can assist you with a corporate streamlining process this year, please contact a member of our team.