voluntary administration

Shareholders and voluntary administration
A voluntary administrator isn’t required to report to shareholders on the progress or outcome of the
voluntary administration. Shareholders don’t get to vote on the future of the company.

A transfer of shares in a company or alteration of status of shareholders during a voluntary
administration will not be effective unless the voluntary administrator gives their written consent or
the court permits. The voluntary administrator or the court will need to be satisfied that the transfer of
shares, or the alteration in the status of shareholders, is in the best interest of the company as a whole
and does not breach other sections of the Corporations Act that deal with the rights of shareholders.
When giving written consent to a transfer of shares in a company or alteration of status of
shareholders, the voluntary administrator can impose conditions which must be satisfied before the
transfer or alteration is effective. In the case of a transfer of shares, the current shareholder, the
prospective shareholder, or a creditor, may apply to the court to set aside any or all of these conditions.
Similarly, a shareholder or a creditor may apply to the court to set aside any or all conditions that must
be satisfied for an alteration in the status to have effect. A shareholder or a creditor may also apply to
the court to authorise an alteration in the status of shareholders if the voluntary administrator refuses
the alteration.
Shareholders are bound by a deed of company arrangement approved by creditors. Also, the deed
administrator may transfer shares in the company with the written consent of the shareholder or with
the court’s permission. A shareholder, a creditor, ASIC or any other interested person can oppose an
application to the court by the deed administrator to approve a share transfer.
If a deed administrator makes a written declaration that they have reasonable grounds to believe there
is no likelihood that shareholders will receive any further distribution at any time in the future,
shareholders can realise a capital loss. To realise a loss, the shares in the company must have been
purchased on or after 20 September 1985.

ASIC.GOV.AU