The sections, word for word
Every section on this subject, exactly as printed in the Official Gazette (Act No. 3 of 2020). The explanation follows beneath.
Section 582. Definition of official receiver
(1) For the purpose of this Act and so far as it relates to the winding-up of companies by the Court, “official receiver” means the Deputy Chief Registrar of the Federal High Court or an officer designated for that purpose by the Chief Judge of the Court.
(2) Any such officer shall, for the purpose of his duties under this Act, be called “the official receiver”.
Section 583. Statement of company’s affairs to be submitted to official receiver
(1) Where the Court has made a winding-up order or appointed a provisional liquidator there shall, unless the court deems fit to order otherwise and so orders, be made out and submitted to the official receiver a statement of affairs of the company in the prescribed form, verified by affidavit, and showing the particulars of its assets, debts and liabilities, the names, residences and occupations of its creditors, the securities held by them respectively, the dates when the securities were respectively given, the list of members and the list of charges and such further or other information as may be prescribed or as the official receiver may require.
(2) The statement shall be submitted and verified by one or more of the persons who are, at the relevant date, the directors and the person who is at that date the secretary of the company, or by the persons mentioned in this subsection as the official receiver, subject to the direction of the Court, may require to submit and verify the statement, of persons who—
(a) are or have been officers of the company ;
(b) have taken part in the formation of the company at any time within one year before the relevant date ;
(c) have been or are in the employment of the company within the said year, and are in the opinion of the official receiver capable of giving the information required ;
(d) are or have been within the said year officers of or in the employment of a company which is, or within the said year was, an officer of the company to which the statement relates.
(3) The statement shall be submitted within 14 days from the relevant date or within such extended time as the official receiver or the Court may, for special reasons, appoint.
(4) Any person making or concurring in making the statement and affidavit required by this section shall be allowed and shall be paid by the official receiver or provisional liquidator, as the case may be, out of the assets of the company such costs and expenses incurred in and about the preparation and making of the statement and affidavit as the official receiver may consider reasonable, subject to an appeal to the Court.
(5) If any person, without reasonable excuse, makes default in complying with the requirements of this section, he commits an offence and is liable to a fine of N100 for every day during which the default continues.
(6) Any person stating himself in writing to be a creditor or contributory of the company is entitled by himself or by his agent at all reasonable times, on a payment of the prescribed fee to inspect the statement submitted under this section, and to a copy of or extract from it.
(7) Any person who falsely states that he is a creditor or contributory is guilty of contempt of court and shall, on the application of the liquidator or of the official receiver, be punished accordingly.
(8) In this section, the expression “the relevant date” means, in a case where a provisional liquidator is appointed, the date of his appointment and in a case where no appointment is made, the date of the winding-up order.
Section 584. Report by official receiver
(1) If a winding-up order is made, the official receiver shall as soon as practicable after receipt of the statement to be submitted under section 583 of this Act or where the Court orders that no statement be submitted, as soon as practicable after the date of the order, submit a preliminary report to the Court—
(a) as to the amount of capital issued, subscribed and paid up, and the estimated amount of assets and liabilities ;
(b) if the company has failed, as to the causes of the failure ; and
(c) whether, in his opinion, further inquiry is desirable as to any matter relating to the promotion, formation or failure of the company.
(2) The official receiver may, if he thinks fit, make further reports stating the manner in which the company was formed and whether, in his opinion, fraud has been committed by any person in its promotion or formation, or by any officer of the company in relation to the company since its formation and the reports may include any other matters which, in his opinion, is desirable to bring to the notice of the court.
(3) If any further report under this section indicates the commission of fraud, the Court shall have the further powers provided in section 613 of this Act (which confers authority to order public examination of certain officials).
Section 585. Appointment, remuneration and title of liquidators
(1) The Court may appoint a liquidator or liquidators for the purpose of conducting the proceedings in winding-up a company and performing such duties in reference to it as the court may impose and where there is a vacancy, the official receiver shall by virtue of his office, act as liquidator until such time as the vacancy is filled.
(2) At any time after the presentation of a petition and before the making of a winding-up order, the appointment shall be provisional and the Court making the appointment may limit and restrict the powers of the liquidator by the order appointing him.
(3) In the application of this section—
(a) if a provisional liquidator is to be appointed before the making of a winding-up order, the official receiver, or any other fit person, may be so appointed ;
(b) on the making of a winding-up order, if no liquidator is appointed, the official receiver shall by virtue of his office become the liquidator ;
(c) the official receiver in his capacity as provisional liquidator shall, and in any other case may, summon meetings of creditors and contributories of the company to be held separately for the purpose of determining whether or not an application is to be made to the court for appointing a liquidator in place of the official receiver ; or
(d) if a person other than the official receiver is appointed liquidator, he is not capable of acting in that capacity until he has notified his appointment to the Commission and given security in the prescribed manner to the satisfaction of the Court.
(4) If more than one liquidator of a company is appointed by the Court, the Court shall declare whether anything by this Act required or authorised to be done by a liquidator is to be done by all or any one or more of them.
(5) A liquidator appointed by the Court may resign, or, on cause shown, be removed by the Court and any vacancy in the office of a liquidator so appointed shall be filled by the Court.
(6) Where a person other than the official receiver is appointed a liquidator, he shall receive salary in an amount, or remuneration by way of percentage or otherwise, as the Court may direct and, if more than one person is appointed as a liquidator, their remuneration shall be distributed among them in such proportions as the Court directs.
(7) Where a liquidator of a company is appointed, he shall, after his individual name—
(a) if he is the official receiver, be described as “official receiver and liquidator of (add here name of the company)” ; and
(b) in any other case be described as “liquidator of (add here name of the company)”.
(8) The acts of a liquidator shall be valid notwithstanding any defects that may afterwards be discovered in his appointment or qualification.
(9) If a liquidator is appointed under this section, all the powers of the directors shall cease, except so far as the Court may by order sanction the continuance thereof.
Section 586. Custody of company’s property
In a winding-up by the Court the liquidator shall take into his custody, or under his control, all the property and choses in action to which the company is or appears to be entitled.
Section 587. Vesting of property of company in liquidator
Where a company is being wound up by the Court, the Court may, on the application of the liquidator, by order direct that all or any part of the property of whatsoever description belonging to the company or held by trustees on its behalf shall vest in the liquidator by his official name, and thereupon, but subject to the requirements of registration under any particular enactment, the property to which the order relates shall vest accordingly and the liquidator may, after giving such indemnity, if any, as the Court may direct, bring or defend in his official name any action or other legal proceeding which relates to that property or which it is necessary to bring or defend for the purpose of effectually winding-up the company and recovering its property.
Section 588. Powers of liquidator
(1) The liquidator in a winding-up by the Court shall have power, with the sanction either of the court or of the committee of inspection to—
(a) bring or defend any action or other legal proceeding in the name and on behalf of the company ;
(b) carry on the business of the company so far as may be necessary for its beneficial winding-up ;
(c) appoint a legal practitioner or any other relevant professional to assist him in the performance of his duties ;
(d) pay any classes of creditors in full ;
(e) make any compromise or arrangement with creditors or persons claiming to be creditors, or having or alleging themselves to have any claim, present or future, certain or contingent, ascertained or sounding only in damages against the company, or whereby the company may be rendered liable ; and (f ) compromise all calls and liabilities to calls, debts and liabilities capable of resulting in debts, and all claims, present or future, certain or contingent, ascertained or sounding only in damages, subsisting or supposed to subsist between the company and a contributory or alleged contributory or other debtor or person apprehending liability to the company, and all questions in any way relating to or affecting the assets or the winding-up of the company, on such terms as may be agreed, and take any security for the discharge of any such call, debt, liability or claim and give a complete discharge in respect of it.
(2) The liquidator in winding-up by the Court shall have power to—
(a) sell the property of the company of whatever nature by public auction or private contract, with power to transfer the whole thereof to any person or company or to sell the same in parcels ;
(b) do all acts and to execute, in the name and on behalf of the company, all deeds, receipts and other documents, and for that purpose to use, when necessary, the company’s seal (where the company has a seal) ;
(c) prove, rank and claim in the bankruptcy, insolvency or sequestration of any contributory for any balance against his estate, and to receive dividends in the bankruptcy, insolvency or sequestration in respect of that balance as a separate debt due from the bankrupt or insolvent, and ratably with the other separate creditors ;
(d) draw, accept, make and indorse any bill of exchange or promissory note in the name and on behalf of the company with the same effect with respect to the liability of the company as if the bill or note had been drawn, accepted, made or indorsed by or on behalf of the company in the course of its business ;
(e) raise on the security of the assets of the company any money requisite ; (f ) take out in his official name, letters of administration to any deceased contributory, and to do in his official name any other act necessary for obtaining payment of any money due from a contributory or his estate which cannot be conveniently done in the name of the company, and in all such cases the money due shall, for the purpose of enabling the liquidator to take out the letters of administration or recover the money, be deemed to be due to the liquidator himself ;
(g) appoint an agent to do any business which the liquidator is unable to do himself ; and
(h) do all other things as may be necessary for winding-up the affairs of the company and distributing its assets.
(3) The exercise by the liquidator in a winding-up by the Court of the powers conferred by this section shall be subject to the control of the Court, and any creditor or contributory may apply to the Court with respect to any exercise or proposed exercise of any of those powers.
Section 589. Liquidator to give information to official receiver
If during the winding-up of a company by the court a person other than the official receiver is appointed liquidator, he shall give the official receiver such information and access to and facilities for inspecting the books and documents of the company, and generally any aid requisite or necessary for enabling that officer to perform his duties under this Act.
Section 590. Exercise and control of liquidator’s powers
(1) Subject to the provisions of this Act, the liquidator of a company being wound up by the Court shall, in the administration and distribution of the assets of the company among its creditors, have regard to directions given by resolution of the creditors or contributories at any general meeting, or by the Committee of Inspection and directions given by the creditors or contributories at any general meeting shall, in case of conflict, override directions given by the Committee of Inspection.
(2) The liquidator may summon general meetings of the creditors or contributories for the purpose of ascertaining their wishes, and it shall be his duty to summon meetings at such times as the creditors or contributories by resolution either at the meeting appointing the liquidator or otherwise, may direct, or whenever requested in writing to do so by one tenth in value of the creditors or contributories, as the case maybe.
(3) The liquidator may apply to the Court in the manner prescribed for directions in relation to any particular matter arising under the winding-up.
(4) Subject to the provisions of this Act, the liquidator shall use his own discretion in the management of the estate and its distribution among the creditors.
(5) Any person aggrieved by an act or decision of the liquidator, may apply to the Court for such order as it deems just and the Court may confirm, reverse, or modify the act or decision.
Section 591. Payments by liquidator into companies’ liquidation account
(1) Every liquidator of a company being wound up by the Court shall, in such manner and at such times as the Commission directs, pay moneys received by him into the public fund of the Federation kept by the Commission for the purposes of this Act known as “the Companies Liquidation Account”, and the Accountant-General of the Federation shall furnish him with a certificate of receipt for the money so paid.
(2) If the Committee of Inspection satisfies the Commission that for the purpose of carrying on the business of the company or of obtaining advances, or for any other reason, it is for the advantage of the creditors or contributories that the liquidator should have an account with any bank, the Commission shall, on the application of the Committee of Inspection, authorise the liquidator to make his payments into and out of such bank in Nigeria as the committee may select, and thereupon those payments shall be made in the prescribed manner.
(3) If the liquidator of a company being wound up, at any time retains for more than 10 days an amount in excess of either N50,000 or such other amount as the Commission may approve, and fails to satisfy the Commission as to the need for the retention of that amount beyond that time, the liquidator shall pay interest on the amount so retained in excess, at the rate of 20% per annum, and shall be liable to—
(a) disallowance of the whole or such part of his remuneration as the Commission deems fit ; and
(b) removal from office, and in addition, he shall be liable to pay any expenses occasioned by the retention.
(4) A liquidator of a company which is being wound up by the Court shall not pay any sums received by him as liquidator into his private banking account.
Section 592. Audit of liquidator’s account
(1) Every liquidator of a company being wound up by the Court shall, at such times as may be prescribed, but not less than twice in each year during his tenure of office, send to the Commission an account of his receipts and payments as liquidator.
(2) The account shall be in duplicate in the prescribed form, and shall be verified by a statutory declaration in the prescribed form.
(3) The Commission shall cause the account to be audited, and for the purpose of the audit, the liquidator shall furnish the Commission with such vouchers and information as the Commission may require, and the Commission may at any time require the production of, and may inspect, any book or account kept by the liquidator.
(4) When the account has been audited, one copy shall be filed and kept by the Commission, and the other copy shall be with the Court and each shall be open to inspection by any creditor or other person interested, on payment of the prescribed fee.
(5) The Commission shall cause the account when audited, or a summary of it, to be printed, and shall send a printed copy of the account or summary by post to every creditor and contributory.
Section 593. Books to be kept by liquidator
Every liquidator of a company which is being wound up by the Court shall, in the manner prescribed, keep proper books in which he shall cause to be made entries or minutes of proceedings at meetings and of other matters as may be prescribed, and a creditor or contributory may, subject to the control of the Court, personally or by his agent inspect the books.
Section 594. Release of liquidator
(1) Where the liquidator of a company being wound up by the Court has realised all the property of the company, or so much of it as may, in his opinion, be realised without needlessly protracting the liquidation, and has distributed a final dividend, if any, to the creditors, adjusted the rights of the contributories among themselves, and made a final return, if any, to the contributories, has resigned, or has been removed from his office, the Commission shall, on the application of the liquidator, cause a report on the accounts of the liquidator to be prepared.
(2) The Commission shall consider the report referred to in subsection (1) together with any objection that may be raised by a creditor, contributory, or person interested against the release of the liquidator, and may grant or withhold the release as it deems fit subject to an appeal to the Court.
(3) If the release of a liquidator is withheld, the Court may, on the application of any creditor, contributory, or person interested, make such order as it deems just, charging the liquidator with the consequences of any act or default which he may have done or made contrary to his duty.
(4) An order of the Commission releasing the liquidator shall discharge him from all liability in respect of any act done or default made by him in the administration of the affairs of the company, or otherwise in relation to his conduct as liquidator, and the order may be revoked on proof that it was obtained by fraud, suppression or concealment of any material fact.
(5) Where the liquidator has not previously resigned or been removed, his release shall operate as a removal from his office.
Section 595. Control over liquidators
(1) The Commission shall take cognisance of the conduct of liquidators of companies which are being wound up by the Court and if a liquidator does not faithfully perform his duties and duly observe all the requirements imposed on him by any enactment, or other- wise with respect to the performance of his duties, or if any complaint is made to the Commission by a creditor or contributory in that regard, the Commission shall inquire into the matter, and may take such action thereon as it deems fit, including the direction of a local investigation of the books and vouchers of the liquidator.
(2) The Commission may, at any time, require the liquidator of a company being wound up by the Court to answer any inquiry in relation to any winding-up in which he is engaged and if the Commission deems fit, it may apply to the Court to examine the liquidator or any other person on oath concerning the winding-up.
Section 596. Power to appoint committee of inspection after meeting of creditors and others
(1) Where a winding-up order is made by the Court, the separate meetings of creditors and contributories summoned for the purpose of determining whether or not to apply to the court for an order appointing a liquidator in place of the official receiver, shall determine whether or not an application should be made to the court for the appointment of a Committee of Inspection to act with the liquidator, and to determine who are to be members of the Committee, if the appointment is made.
(2) The Court may make any appointment and order required to give effect to any determination under this section and if there is a difference between the determinations of the meetings of the creditors and contributories in respect of the matters aforesaid, the court shall decide the difference and make any order it deems necessary.
Section 597. Powers, etc. of committee of inspection
(1) A Committee of Inspection appointed under this Act shall consist of creditors and contributories of the company or persons holding general powers of attorney from creditors or contributories in the proportions as may be agreed on by the meetings of creditors and contributories or as, in case of difference, may be determined by the Court.
(2) A Committee of Inspection shall meet at the time appointed, and there shall be a meeting at least once in every month during its existence, but the liquidator or any member of the Committee may convene a meeting as and when necessary.
(3) A meeting of a Committee of Inspection shall be deemed convened if a majority of members are present, and at the meeting of the Committee of Inspection may act by a majority of the members present.
(4) A member of the Committee of Inspection may resign by notice in writing signed by him and delivered to the liquidator.
(5) If a member of the Committee of Inspection becomes bankrupt, compounds or arranges with his creditors, is absent from five consecutive meetings of the Committee of Inspection without leave of those members who, together with himself, represent the creditors or contributories, as the case may be, his office shall thereupon become vacant.
(6) A member of the Committee of Inspection may be removed by an ordinary resolution at a meeting of creditors if he represents creditors, or of contributories if he represents contributories, of which seven days’ notice has been given, stating the object of the meeting.
(7) On a vacancy occurring in the Committee of Inspection, the liquidator shall immediately summon a meeting of creditors or contributories, as the case may require, to fill the vacancy, and the meeting may, by resolution, reappoint the same or appoint another creditor or contributory to fill the vacancy : Provided that if the liquidator, having regard to the position in the winding-up, is of the opinion that it is unnecessary for the vacancy to be filled he may apply to the court and the Court may make an order that the vacancy shall not be filled, or shall be filled in the circumstances as may be specified in the order.
(8) The continuing members of the Committee of Inspection, if not less than two, may act notwithstanding any vacancy in the Committee of Inspection.
Section 598. Powers where no committee of inspection is appointed
Where, in the case of winding-up, there is no Committee of Inspection, the Commission may, on the application of the liquidator, if it deems fit, do any thing or give any direction or permission which is by this Act authorised or required to be done or given by the Committee of Inspection.
Section 599. Power to appoint special manager
(1) Where the official receiver becomes the liquidator of a company, whether provisionally or otherwise, he may, if satisfied that the nature of the estate or business of the company, interests of the creditors or contributories generally, require the appointment of a special manager of the estate or business of the company other than himself, apply to the Court for an order appointing a special manager to act during such time as the Court may direct, with the powers, including those of a receiver or manager, as may be entrusted to him by the Court and the Court may make any order necessary.
(2) A special manager appointed under this section shall receive remuneration as fixed by the Court and shall give security and account in such manner as the Commission directs.
Section 600. Official receiver as receiver for debenture holders
Where application is made to the Court to appoint a receiver on behalf of the debenture holders or other creditors of a company being wound up by the Court, the official receiver may be so appointed.
What this means
Short answer
In a winding up by the court, the official receiver, who is the Deputy Chief Registrar of the Federal High Court or a designated officer, receives the company’s statement of affairs within 14 days (section 583) and reports to the court (section 584). The court appoints a liquidator, whose appointment ends the directors’ powers (section 585(9)).
The official receiver
Section 582 defines the official receiver as the Deputy Chief Registrar of the Federal High Court or an officer designated by the Chief Judge. After a winding-up order or the appointment of a provisional liquidator, the directors and secretary, or other people the official receiver requires, must submit a statement of affairs verified by affidavit. It shows assets, debts and liabilities, creditors and their security, members and charges. It is due within 14 days of the relevant date, with default punishable by a fine of ₦100 for every day (section 583). The official receiver then submits a preliminary report to the court on issued and paid-up capital, estimated assets and liabilities, causes of failure, and whether further inquiry is desirable. Further reports can address fraud (section 584).
Appointing the liquidator
- The court can appoint a liquidator. After a petition and before an order, the appointment is provisional and the powers can be limited. If there is no liquidator after a winding-up order, the official receiver becomes liquidator by virtue of his office (section 585).
- A liquidator who is not the official receiver cannot act until he notifies the Commission and gives security to the court’s satisfaction (section 585(3)(d)).
- The court fixes the remuneration of a liquidator who is not the official receiver (section 585(6)).
- Once a liquidator is appointed, all the directors’ powers cease unless the court sanctions their continuance (section 585(9)).
- A liquidator can resign or be removed by the court for cause (section 585(5)).
- Those who cannot be liquidator include a minor, a person of unsound mind, a body corporate, an undischarged bankrupt, a director of the company, and certain convicted persons. An appointment made against these rules is void, and a body corporate, bankrupt, director or convicted person who acts commits an offence (section 676).
What a liquidator can do
The liquidator takes custody of the company’s property (section 586), and the court can vest it in him (section 587). With the sanction of the court or the committee of inspection, he can bring or defend actions, carry on the business so far as needed for a beneficial winding up, appoint professionals, pay classes of creditors in full, and compromise claims and calls. Without that sanction he can, for example, sell the company’s property, execute documents, prove in a contributory’s bankruptcy, raise money on the assets, and appoint agents (section 588). A creditor or contributory can apply to the court about the exercise of any of these powers. The liquidator follows directions from general meetings of creditors or contributories, which override the committee of inspection, and must call a meeting when one-tenth in value of creditors or contributories asks in writing (section 590).
Money, accounts and release
- Money received goes into the Companies Liquidation Account kept by the Commission. If a liquidator keeps more than ₦50,000, or another approved amount, for over 10 days without satisfying the Commission, he pays interest at 20% a year and risks losing remuneration and office (section 591).
- He must send the Commission an account of receipts and payments at least twice a year, which the Commission audits, and keep proper books of the proceedings (sections 592 and 593).
- On finishing, or on resigning or removal, he can ask the Commission for release. Release discharges him from liability for his conduct, but can be revoked if obtained by fraud or concealment (section 594). The Commission also oversees liquidators’ conduct and can inquire into complaints (section 595).
Committee of inspection and special manager
After a winding-up order, separate meetings of creditors and contributories decide whether to apply for a liquidator in place of the official receiver and for a committee of inspection (section 596). The committee consists of creditors and contributories and meets at least monthly. A member’s office becomes vacant on bankruptcy or absence from five consecutive meetings without leave, and he can be removed by ordinary resolution on seven days’ notice (section 597). If there is no committee, the Commission can give the directions the committee would give (section 598). The official receiver can apply for a special manager to run the estate or business (section 599), and can be appointed receiver for debenture holders (section 600).
Questions and answers
Who is the official receiver?
The Deputy Chief Registrar of the Federal High Court or an officer the Chief Judge designates (section 582).
How long does the company have to give a statement of affairs?
14 days from the relevant date, which is the date of the provisional liquidator’s appointment or the winding-up order (section 583(3) and (8)).
What happens to the directors’ powers when a liquidator is appointed?
They cease, except so far as the court sanctions their continuance (section 585(9)).
Where does a liquidator put the money he collects?
Into the Companies Liquidation Account kept by the Commission, not a private bank account (section 591).
Who cannot act as a liquidator?
A minor, a person of unsound mind, a body corporate, an undischarged bankrupt, a director of the company, and certain convicted persons (section 676).
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