WINDING UP OF A COMPANY

WINDING UP OF A COMPANY

Perpetual succession is one of the distinguishing characteristics of a company: s 16(5). This means that a company continues to exist even though its members may die and its membership may alter from time to time.

A company continues to exist until its registration is cancelled and it is dissolved. Cancellation of registration or dissolution of a company usually occurs after the process of liquidation or winding up is completed. The terms "winding up" and "liquidation" have the same meaning.

A winding up involves an insolvency practitioner (liquidator) selling off a company’s assets and distributing the proceeds among the company’s creditors and members (if any fund left over). The end result is that the company’s existence will come to an end – will be deregistered

A company may be wound up either by court (compulsorily) or voluntarily. The difference between a winding up by a court and voluntary winding up (VWU) lies in the manner in which the winding up is initiated.  To initiate a VWU, a resolution of the members must be passed (even in the case of creditors VWU). A winding up by the court is initiated by the presentation of a petition to the court by a party who is entitled to do so, based upon one of the grounds set out in the Act.