Winding Up Flashcards
Define liquidation & dissolution
Liquidation
-process of closing down a company
Dissolution
-occurs when a company is removed from companies register / ceases to exist / no capacity / relationship between company & members ends
Outline Voluntary Members Liquidation
+solvent company (able to pay its debts within next 12 months)
+directors make statutory declaration of solvency / includes statement of firms assets & liabilities / fail to issue statement directors liable for debts
+special resolution passed by members to commence liquidation;
- copy delivered to gazette (14 days) / official newspaper record in U.K / London gazette for companies incorporated by England & Wales
- copy delivered to registar (15days)
+appointment of liquidator in general meeting for purpose of winding up companies affairs (pay creditors & distribute assets) / directors powers cease to exist
+liquidator prep set of accounts re wind up
& sends report to registar & company dissolved within 3 months
Outline voluntary liquidation of creditors
+insolvent company (unable to pay debts within 12 months)
+directors prep statement of affairs
+special resolution passed by members;
- copy to gazette (14 days)
- copy to registar (15 days)
+meeting of creditors held within 14 days of passed resolution / 7 days notice given/ 75% of creditors must be in favour of scheme of repayment (avoid court) / meeting notified to gazette & 2 local papers
+appointment of liquidator
+liquidator must submit statement to registar 7 days of creditors meeting
+liquidator prep accounts for receipts of payments over 12 months to registar / then send reports every 12 months till Company dissolution complete
Outline compulsory liquidation
Occurs when Company ordered to wind up by the courts
Rare occurrence now common for court to force shares to be brought by another
SI22 insolvency act
Wound up if; Special resolution passed One year business not commenced Unable to pay debts over £750 Reduced members to fewer than 1 AGM fails to hold one Change of address / fail to notify registar Public company no trading cert year after registration Just & equitable grounds
+petition to wind up by court published in gazette / court order granted
+official receiver appointed (qualified insolvency practitioner) duty to investigate company’s affairs & cause of failure
+final meeting of creditors receiver notifies them & court of decision
+notice of winding up complete, registar removes company from register & publishes dissolution in gazette
Outline concept of voluntary striking off
Application sent to registar by directors on behalf of company/ contains prescribed info
Copy of application given to members, employees, directors & creditors (7 days)
Registar publishes notice in gazette stating it can exercise power under this section & invites anyone to show cause against
Company struck off within 3 months
Dissolution occurs after publication in gazette
Companies house charge £10 for this service
Outline circumstances companies offshore struck off
No direct costs / no action required by members & directors
Occurs when company fails to file AR on set date
(Popular dissolution when Trust Company fees not settled or lose contract with BO)
Directors liability continues
Once name struck off, assets become BONA VACANTIA - belong to crown because without legal owner
Companies can be restored by invested parties (directors, members) if court satisfied company was carrying business at time of strike off / continue to exist once dissolution & AR fee paid
Outline corporate redomiciliaton
Process company moves domicile from one jurisdiction to another by changing country under whose laws it’s regulated, while maintaining same legal identity
