Liquidation Heather
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rotection, Freedom, Commerce rotection, Freedom, Commerce VOLUNTARY LIQUIDATION & THE RIGHTS OF CREDITORS Presented by: 1
description
Company Law in Jamaica - Liquidation of a Company
Transcript of Liquidation Heather
Corporate Governance 1What is Liquidation
“The selling up , paying off and closing down” of the Company
Winding up or liquidation is a procedure whereby the life of the company is brought to an end or dissolved and its property distributed to its creditors and if any remains to the members . The terms winding up or liquidation are used interchangeably.
There are two general modes whereby a company may be wound up:
by the court (compulsory or subject to the supervision of the court);
voluntarily (members or creditors)
A liquidator may be appointed under either mode of liquidation.
The liquidator takes control of the company, collects the assets, pays debts and distributes any surplus among the members of the company in accordance with their rights.
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members; and
Voluntary Liquidation
Based upon section 272 of the Act a company may be voluntarily wound up
when the period, if any fixed for the duration of the company expires;
upon the occurrence of an event which the articles of the company requiring the passing of a resolution in a general meeting to wind up the company;
the company passes a special resolution to wind up voluntarily;
the company passes an extra ordinary resolution that the company cannot by reason of its liabilities continue its business.
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Procedure for Members’ Voluntary Liquidation
The company must give 14 days notice of the meeting to pass the special or extra ordinary resolution. (s. 129 (1) (b) Companies Act 2004) Or any other period of notice specified in the Company’s articles.
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Procedure for Members’ Voluntary Liquidation
The directors of the company must make a declaration of solvency.
The declaration will state that
they have made a full inquiry into the affairs of the company; and
they have formed the opinion that the company will be able to pay its debts within a period not exceeding 12 months from the commencement of the winding up.
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This declaration
has no effect unless
it is made within 5 weeks immediately preceding the resolution to wind up,
it is delivered to Registrar for registration within the same period,
it embodies a statement of the company’s assets and liabilities before the declaration.
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Procedure for Members’ Voluntary Liquidation
Any Director who makes a declaration without having reasonable grounds for the opinion that the company will be able to pay its debts in full within the period specified in the declaration is liable to imprisonment with or without hard labour for a period not exceeding 6 months or to fine not exceeding $50,000 or to both such imprisonment and fine
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Procedure for Members’ Voluntary Liquidation
The voluntary liquidation is deemed to commence at the date of the passing of the resolution to voluntarily wind up the company. (s. 274 Companies Act 2004)
From the date of commencement the company shall cease to carry on business except for winding up.
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The company must within 14 days of the passing of the resolution
publish notice in the gazette; and
notify the Registrar.
Failure to do this will result in the company and every officer being liable to a fine not exceeding $100,000.
Procedure for Members’ Voluntary Liquidation
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The liquidator shall within 21 days of his appointment
publish his appointment in the gazette and one daily newspaper; and
notify the Registrar
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Proof of debts received
Creditors paid
Capital may be returned to contributories after all debts are paid
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Procedure for Members’ Voluntary Liquidation
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Procedure for Members’ Voluntary Liquidation
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Procedure for Members’ Voluntary Liquidation
As soon as the affairs of the company are fully wound up The final meeting is announced with at least 1 months notice in the gazette and a daily newspaper.
Final meeting held and liquidator presents his accounts. These accounts will set out how the winding up was conducted and how the property of the company was disposed of.
A return as to the holding of the meeting and a copy of the liquidator’s accounts are filed with the Registrar within a week of the meeting
The company will be dissolved 3 months after this return has been registered by the Registrar
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Conversion to Creditors Voluntary liquidation
A members Voluntary may be converted to Creditors Voluntary winding up , but this is not automatically so . It cam occur
if the Liquidator is of the opinion that the company will not be able to pay its debts in full as the directors have stated in the declaration .
At this point he is empowered to call at once a meeting of the creditors, laying before them a statement of the companies assets and liabilities. Section 282.
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Conversion to Creditors’
If the liquidator fails to call the final meeting he is liable to fine not exceeding $50,000
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Conversion to Creditors’
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Procedure if conversion Sec 293 and 294
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Procedure if Conversion
At both meetings he shall lay before the meeting an account of his acts and dealings and of the conduct of the winding up during the preceding year ( similar to voluntary winding up)
If he defaults fine not exceeding $50,000
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Procedure if Conversion
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THE COMMITTEE OF INSPECTION
If converted to Creditors Voluntary, the Creditors may appoint a committee of inspection to act with the liquidator .This committee should be made of not more than five persons appointed by the creditors. The company in general meeting may also appoint another 5 persons e
The creditors may however resolve than any or all of persons named by the Company ought not to be members of the committee
Creditors may also resolve that persons named by Company are not qualified to act on the Committee however the court may direct otherwise
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Committee of Inspection
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NEW LIQUIDATOR
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NEW LIQUIDATOR
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NEW LIQUIDATOR
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Court remedies
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COURT REMEDIES
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COURT REMEDIES
Creditor may also apply to have voluntary liquidation continue subject to the supervision of the court
At this juncture the court may appoint an additional liquidator
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COURT REMEDIES
Or intervention from the court in the same manner as if it was being wound up voluntarily
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COURT REMEDIES
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COURT REMEDIES
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COURT REMEDIES
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COURT REMEDIES
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Supplemental Rights/remedies
If winding up does not conclude within a year after its commencement the liquidator must send to the Registrar at intervals a statement with respect to the proceedings and the position of the liquidation. The creditor is entitled to inspect the statement or receive a copy on payment of relevant fees.
Penalty of $500 each day if liquidator defaults
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“The selling up , paying off and closing down” of the Company
Winding up or liquidation is a procedure whereby the life of the company is brought to an end or dissolved and its property distributed to its creditors and if any remains to the members . The terms winding up or liquidation are used interchangeably.
There are two general modes whereby a company may be wound up:
by the court (compulsory or subject to the supervision of the court);
voluntarily (members or creditors)
A liquidator may be appointed under either mode of liquidation.
The liquidator takes control of the company, collects the assets, pays debts and distributes any surplus among the members of the company in accordance with their rights.
Protection, Freedom, Commerce
members; and
Voluntary Liquidation
Based upon section 272 of the Act a company may be voluntarily wound up
when the period, if any fixed for the duration of the company expires;
upon the occurrence of an event which the articles of the company requiring the passing of a resolution in a general meeting to wind up the company;
the company passes a special resolution to wind up voluntarily;
the company passes an extra ordinary resolution that the company cannot by reason of its liabilities continue its business.
Protection, Freedom, Commerce
Procedure for Members’ Voluntary Liquidation
The company must give 14 days notice of the meeting to pass the special or extra ordinary resolution. (s. 129 (1) (b) Companies Act 2004) Or any other period of notice specified in the Company’s articles.
Protection, Freedom, Commerce
Procedure for Members’ Voluntary Liquidation
The directors of the company must make a declaration of solvency.
The declaration will state that
they have made a full inquiry into the affairs of the company; and
they have formed the opinion that the company will be able to pay its debts within a period not exceeding 12 months from the commencement of the winding up.
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This declaration
has no effect unless
it is made within 5 weeks immediately preceding the resolution to wind up,
it is delivered to Registrar for registration within the same period,
it embodies a statement of the company’s assets and liabilities before the declaration.
Protection, Freedom, Commerce
Procedure for Members’ Voluntary Liquidation
Any Director who makes a declaration without having reasonable grounds for the opinion that the company will be able to pay its debts in full within the period specified in the declaration is liable to imprisonment with or without hard labour for a period not exceeding 6 months or to fine not exceeding $50,000 or to both such imprisonment and fine
Protection, Freedom, Commerce
Procedure for Members’ Voluntary Liquidation
The voluntary liquidation is deemed to commence at the date of the passing of the resolution to voluntarily wind up the company. (s. 274 Companies Act 2004)
From the date of commencement the company shall cease to carry on business except for winding up.
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The company must within 14 days of the passing of the resolution
publish notice in the gazette; and
notify the Registrar.
Failure to do this will result in the company and every officer being liable to a fine not exceeding $100,000.
Procedure for Members’ Voluntary Liquidation
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The liquidator shall within 21 days of his appointment
publish his appointment in the gazette and one daily newspaper; and
notify the Registrar
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Proof of debts received
Creditors paid
Capital may be returned to contributories after all debts are paid
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Procedure for Members’ Voluntary Liquidation
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Procedure for Members’ Voluntary Liquidation
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Procedure for Members’ Voluntary Liquidation
As soon as the affairs of the company are fully wound up The final meeting is announced with at least 1 months notice in the gazette and a daily newspaper.
Final meeting held and liquidator presents his accounts. These accounts will set out how the winding up was conducted and how the property of the company was disposed of.
A return as to the holding of the meeting and a copy of the liquidator’s accounts are filed with the Registrar within a week of the meeting
The company will be dissolved 3 months after this return has been registered by the Registrar
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Conversion to Creditors Voluntary liquidation
A members Voluntary may be converted to Creditors Voluntary winding up , but this is not automatically so . It cam occur
if the Liquidator is of the opinion that the company will not be able to pay its debts in full as the directors have stated in the declaration .
At this point he is empowered to call at once a meeting of the creditors, laying before them a statement of the companies assets and liabilities. Section 282.
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Conversion to Creditors’
If the liquidator fails to call the final meeting he is liable to fine not exceeding $50,000
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Conversion to Creditors’
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Procedure if conversion Sec 293 and 294
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Procedure if Conversion
At both meetings he shall lay before the meeting an account of his acts and dealings and of the conduct of the winding up during the preceding year ( similar to voluntary winding up)
If he defaults fine not exceeding $50,000
*
Protection, Freedom, Commerce
Procedure if Conversion
*
THE COMMITTEE OF INSPECTION
If converted to Creditors Voluntary, the Creditors may appoint a committee of inspection to act with the liquidator .This committee should be made of not more than five persons appointed by the creditors. The company in general meeting may also appoint another 5 persons e
The creditors may however resolve than any or all of persons named by the Company ought not to be members of the committee
Creditors may also resolve that persons named by Company are not qualified to act on the Committee however the court may direct otherwise
Protection, Freedom, Commerce
Committee of Inspection
*
NEW LIQUIDATOR
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NEW LIQUIDATOR
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NEW LIQUIDATOR
*
Court remedies
*
COURT REMEDIES
*
COURT REMEDIES
Creditor may also apply to have voluntary liquidation continue subject to the supervision of the court
At this juncture the court may appoint an additional liquidator
*
COURT REMEDIES
Or intervention from the court in the same manner as if it was being wound up voluntarily
*
COURT REMEDIES
*
COURT REMEDIES
*
COURT REMEDIES
*
COURT REMEDIES
*
Supplemental Rights/remedies
If winding up does not conclude within a year after its commencement the liquidator must send to the Registrar at intervals a statement with respect to the proceedings and the position of the liquidation. The creditor is entitled to inspect the statement or receive a copy on payment of relevant fees.
Penalty of $500 each day if liquidator defaults
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