Guide to Liquidation

 
 
What is liquidation or companies winding up ?
It is a process whereby the assets of a company are collected and realized in order to pay debts to the creditors. There are two types of winding up namely compulsory and voluntary winding up.
 
Effect of winding up towards the company
  • Cessation of company’s business

    •
  • Termination of contracts of employment
  • Avoidance of disposition of company’s assets
  • Avoidance of transfer of shares
  • Avoidance of uncompleted execution
  • Prohibition on execution action against of company unless obtain leave of court
  • Stay of legal action
 
Effect of winding up towards directors of company.
All the powers of the directors shall cease upon the winding up of a company. The liquidator will take over the administration of the affairs of company’s winding up.
 
Effect of winding up towards contributory of company.
The contributory is not personally liable towards the company’s debts. However, liquidator can directs the contributory to pay any unpaid shares.
 
Duties of ex-directors of company
  • Ex-directors of company must cooperate with the liquidator to provide all of the company’s information such as the company’s assets and creditors. All information provided must be supported by relevant documents.
  • Ex-directors are required to complete a Statement of Affairs form which includes:
    • A brief description of the company's history
    • Trading details
    • Details of the cause of the company's failure
    • All company assets
    • All company liabilities
    • All shareholder information
    • Any legal claims pending by or against the company
 
Duties of liquidator
  • To investigates into the affairs and assets of the company
  • To investigates the conduct of its directors and other related persons and the claims of creditors and third parties;
  • To collect and realize the company's assets at the best possible price and in a manner that is to the best advantage of the company.
 
Winding Up Of Societies
 
Effect of the assets and society that has been cancelled
 
The asset of society will be vested on the DGI who will realize the assets and pay the society’s debts due to the creditors who have filed their claim.
 
Winding Up Of Trade Unions
 
Effect on the assets of Trade Union that has been cancelled
 
The property shall vest on the DGI who will realize the assets and pay the trade union’s debts due to the creditors who have filed their claim.