We have experience in handling all modes of liquidation namely
- » Members’ Voluntary Liquidation
- » Creditors’ Voluntary Liquidation
- » Compulsory Winding Up
- » Effects of Compulsory Winding Up
- » Reasons for Termination of Company’s Existence
- » Striking off from Registry of Companies
Members’ Voluntary Liquidation
The members of the company may convene an EGM and pass Special/Ordinary Resolution that the company should be wound up pursuant to Section 290 (1)(b) and appointment of liquidator to conduct the winding up and fixe his remuneration. This mode of winding up is applicable where the company is able to pay its debts in full within 12 months after the passing of resolution for the winding up. Winding up shall commence at the time of passing of the resolution.
Creditors’ Voluntary Liquidation
If the company is unable to meet its liabilities, the company may convene a meeting of its creditors for the purposes set out in Section 296, 297 & 298 of the Companies Act. If a Winding Up Special Resolution is passed in favour of the Creditors’ Voluntary Winding Up, the company will shall nominate a liquidator. However, the creditors may have the choice of appointing their preferred liquidator.
Compulsory Winding Up
Under Section 253 of the Companies Act (Cap 50), the company itself, creditors, contributories, liquidator, judicial manager or the Minister may present a petition to the High Court for the winding up of the company. The grounds to support a petition for compulsory winding up are found at Section 254. Compulsory winding up commences at the date of presentation of petition [Section 255(2)].
Effects of Compulsory Winding Up
The Company Liquidation of an insolvent company is a process of collective enforcement of debts for the benefit of general body of creditors. Although it is not a process of execution because it is not for the benefit of a particular creditor, it is nevertheless akin to execution because its purpose is to enforce, on a pari passu basis, the payment of the admitted or proved debts of the company. Therefore, when a company goes into liquidation, a process is initiated which, for all creditors, is similar to the process which is initiated, for one creditor, by execution.
Reasons for Termination of Company’s Existence
- Company has ceased all business activities;
- Management deadlock;
- Oppression – shareholders dispute Section 216 of the Companies Act (Cap 50);
- Corporate or financial restructuring of the group to which the company belongs;
- Minimise tax liabilities or maximise tax advantages for the group to which the company belongs;
- Breach of statutory provisions, including offences committed;
- Company acting outside its scope of activities.
Striking off from Registry of Companies
In the event that a company is dormant and the directors and shareholders do not wish to maintain the company, they can request for their company to be struck off under Section 344 of the Companies Act with the Registry of Companies.
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