247. Modes of winding up

Question 1

247. Modes of winding up

Answer 1

General overview
[247.01] Section 247 provides that a winding up of a company shall be either by the court or voluntary. Basically, the winding up of a company spells the death of a company. The company’s business is closed down, its assets are sold off, the creditors are paid and the surplus, if any, distributed to the members. The company ceases to exist. The grounds for the winding up of a company by the court are set out in s 254(1)(a)–(m). On the other hand, a voluntary winding up of a company may be either a members’ or creditors’ winding up. In the former case, the company shall be solvent whereas in the latter case, the company will be insolvent.

Question 2

Directors functus officio

Answer 2

247.02] Once a company is in liquidation, the board of directors is effectively functus officio.