VOLUNTARY WINDING UP
VOLUNTARY WINDING UP
1. Voluntary
winding up either in two ways:
- Members’ voluntary
winding up - when the company is solvent
- Creditor’s voluntary
winding up – when the company is insolvent
2. Members Voluntary Winding Up
n The process is triggered by
a special resolution of the company’s members in general meeting.
n It is a member’s winding up
where declaration has been made and lodged in pursuant of sec 257 – after
declaration of solvency
n Members in general meeting
then appoint a liquidator: s 258.
n Before a members' voluntary
winding up can proceed, the directors must make a written declaration to the
effect that they have made an inquiry into the affairs of the company and are
of the opinion that it will be able to pay its debts in full, within a period
of 12 months after the commencement of the winding up.
n If the company is solvent
and the directors intend making a declaration of solvency, it must be made and
lodged with the Registrar before the date on which the notices of the meeting
at which the resolution for winding up is to be proposed, are sent out
3. Creditors Voluntary Winding Up
n A creditors' voluntary
winding up is only appropriate when the company is insolvent
n A creditors' voluntary
winding up, despite its name, cannot be initiated by the creditors.
n A members' voluntary
winding up is converted into a creditors‘ voluntary winding up, if the company
is insolvent.
n This occurs in one of two
ways.
·
No declaration of solvency
·
After appointment of liquidator by members
n The liquidator is of the
opinion that the company is unable to pay its debts.
4. A
voluntary winding up shall commence:
Where
a provisional liquidator has been appointed before the resolution for voluntary
winding up was passed, and in any other case, at the time of passion of the
resolution for voluntary winding up. S 255(6)
5. The
resolution may be of two types: s 254(1)
- Ordinary resolution- it is passed when
the articles provide that the company is to be wound up when a specified
purpose has been achieved or a specified period has elapsed.
- Special resolution- it requires no
ground for winding up and is used in any other case such as a solvent liquidation.
VOLUNTARY WINDING UP
Reviewed by Kamaruddin Mahmood
on
11:14:00 PTG
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