Chapter 7 - Voluntary liquidation Flashcards
What power of liquidator requires that notice is to be given to liquidation committee?
If liquidator disposes of any company property to a party connected with the company, they must give notice to liquidation committee
What are the powers of a liquidator?
- to make compromises/arrangements with creditor’s or claimants against company
- to bring legal proceedings under S213, 214 ,238, 239, 242, 243 or 423
- to bring or defend any action/legal proceedings in the name and on behalf of the compamy
- to carry on business as may be necessary
- to pay any class of creditor
- sell company property
- execute all documents
- claim in the insolvency of debtor individuals and companies
- appoint an agent
What are the restricted powers of a liquidator between members and creditors appointment of liquidator?
- to take custody or control all of the company’s property
- to dispose of perishable/wasting goods
- to do all things necessary for the protection of the company’s assets
MVL
Meeting of Board of Directors - what actions are decided/passed?
- recommend MVL to the members
- authorise the calling of the GM
- select a director to call the GM
- authorise the swearing of the DoS
- to provide the liquidator with an indemnity for early distribution to shareholders
MVL
What is the notice period for the GM?
What percentage need to agree to waive the notice?
14 days notice of the GM must be sent to all members unless the company articles specify a longer period.
Notice can be waived if at least 95% of those entitled to attend and vote are in favour (90% if a private company)
No requirement to advertise the GM
MVL
What is often the quorum for a GM?
Will be stated in the Company’s articles of association, usually 2 unless it is a single member, then will be reduced to 1
MVL
At the GM, what special resolutions are usually passed?
What is the % for passing them?
Special resolution to wind up the company
Special resolution sanctioning the distribution of assets in specie
Special resolution sanction the exercise of the liquidators powers
75% majority or more of the votes cast at the meeting
MVL
At the GM, what ordinary resolutions are usually passed?
What is the % for passing them?
- ordinary resolution to appoint a liquidator
- ordinary resolution regarding the basis of the liquidators remuneration
Simple majority of over 50% to pass
Where do the Directors resolutions need to be filed and what is the time period?
15 days to file resolution to wind up at CH
14 days to advertise resolution to wind up at Gazette
MVL - 15 days to file DoS with CH
CVL - 5 business days to file SoA
Where does resolutions of liquidator need to sent to and what is the time period?
Notice of liquidators appointment must be :
Advertised in 14 days
Sent to creditors within 28 days
Sent to CH within 14 days
When must declaration of solvency be made? and who does it need to be sworn by?
Declaration of solvency must be made within 5 weeks preceding the date of the passing of the resolution to wind up
If there are two directors, must be sworn by both, if more than two directors, then must be sworn by majority.
Declaration must include details of the company’s assets and liabilities as at the latest practicable date before its making.
S89 what must the declaration of solvency state?
that the directors have:
- made a full enquiry into the company’s affairs
- formed the opinion that the company will be able to pay its debts in full, together with interest at the official rate,
- within such period, not exceeding 12 months from the date of commencement of the winding up.
This includes detailing stat interest for known creditors and a provision for the costs of winding up.
If liquidator becomes aware MVL is no longer solvent, what must they do?
within 7 days of forming opinion that company is insolvent send a statement to creditors as to the affairs of the company
use an appropriate decision procedure to secure appointment of a liquidator in what is now a CVL
Can a liquidator of an MVL that has become insolvent, take the appointment for the CVL?
should consider Insolvency Code of Ethics
- if there has been no significant personal relationship and due consideration paid to ethics, IP can usually accept appointment
- if there as been a significant personal relationship and the IP is of opinion that the company will eventually return to solvency, they may usually accept appointment. HOWEVER, if subsequently appears will not return to solvency then they should resign as liquidators.
IF IP does not believe the company will return to solvency, he should not accept appointment as liquidator.
Dissolution - value of capital that can be drawn under the concession rule, what does this mean?
Up to £25,000 will be treated as income rather than capital distribution for a distribution on dissolution of a company
