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 620. Circumstances in which company may be wound up voluntarily
(1) Any company may be wound up voluntarily—
(a) when the period, if any, fixed for the duration of the company by the articles expires, or the event, if any, occurs, on occurrence of which the articles provided that the company is to be dissolved and the company in general meeting has passed a resolution requiring the company to be wound up voluntarily ;
(b) if the company resolves by special resolution that the company be wound up.
(2) References in this Act to a “resolution for voluntary winding-up” means a resolution passed under any of the paragraphs of this section.
Section 621. Notice of resolution to wind up voluntarily
(1) If a company passes a resolution for voluntary winding-up it shall, within 14 days after the passing of the resolution, give notice of the resolution by advertisement in the Federal Government Gazette newspapers and to the Commission.
(2) If default is made in complying with this section, the company and each officer of the company who is in default is liable to a penalty in such amount as the Commission may specify in its regulations and for the purposes of this subsection the liquidator of the company shall be deemed to be an officer of the company.
Section 622. Commencement of voluntary winding-up
A voluntary winding-up shall be deemed to commence at the time of the passing of the resolution for voluntary winding-up.
Section 623. Effect of voluntary winding-up on business, etc., of company
In case of voluntary winding-up, the company shall, from the commencement of the winding-up, cease to carry on its business, except so far as may be required for the beneficial winding-up thereof : Provided that the corporate state and powers of the company shall, notwithstanding anything to the contrary in its articles, continue until it is dissolved.
Section 624. Avoidance of transfer, etc., after commencement of voluntary winding-up
A transfer of shares, not being a transfer made to or with the sanction of the liquidator, and any alteration in the status of the members of the company, made after the commencement of a voluntary winding-up, shall be void.
Section 625. Statutory declaration of solvency where proposal to wind up voluntarily
(1) Where on or after the commencement of this Act, it is proposed to wind up a company voluntarily, the directors of the company or, in the case of a company having more than two directors, the majority of the directors, may at a meeting of the directors make a statutory declaration to the effect that they have made a full inquiry into the affairs of the company and that, having done so, they have formed the opinion that the company will be able to pay its debts in full within a period, not exceeding 12 months from the commencement of the winding-up, as is specified in the declaration.
(2) A declaration made under subsection (1) does not have effect for the purposes of this Act unless it—
(a) is made within the five weeks immediately preceding the date of the passing of the resolution for winding-up the company and the statutory declaration and resolution are delivered to the Commission for registration within 15 days after passing the resolution ; and
(b) embodies a statement of the company’s assets and liabilities as at the latest practicable date before making the declaration.
(3) A director of a company making a declaration under this section 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, commits an offence and is liable on conviction to a fine as the Court deems fit or to imprisonment for a term of three months, or to both, and if the company is wound-up under a resolution passed within the period of five weeks after making the declaration, and if its debts are not paid or provided for in full within the period stated in the declaration, it is presumed, until the contrary is shown, that the director did not have reasonable grounds for his opinion.
(4) A winding-up in any case where a declaration has been made and delivered in accordance with this section, shall in this Act be referred to as “a members’ voluntary winding-up” and a winding-up in any case where a declaration has not been made and delivered as aforesaid shall in this Act be referred to as “a creditors’ voluntary winding-up”.
(5) Subsections (1)-(3) shall not apply to a winding-up commenced before the commencement of this Act.
Section 626. Provisions applicable to a members’ voluntary winding-up
Sections 627-633 of this Act, subject to the alternative provision in section 632 of this Act, apply in relation to a members’ voluntary winding-up.
Section 627. Power to appoint liquidators
(1) The company in general meeting shall appoint one or more liquidators for the purpose of winding-up the affairs and distributing the assets of the company, and may fix the remuneration to be paid to him or them.
(2) If a liquidator is appointed under this section, all the powers of the directors shall cease, except so far as the company in general meeting or the liquidator sanctions the continuance thereof.
Section 628. Power to fill vacancy in office of liquidators
(1) If a vacancy occurs by death, resignation or otherwise in the office of a liquidator appointed by the company, the company in general meeting may, subject to any arrangement with its creditors, fill the vacancy and for that purpose a general meeting may be convened by a contributory or, if there were more liquidators than one, by the continuing liquidators.
(2) The general meeting shall be held in the manner provided by this Act or by the articles, or in such manner as may, on application by a contributory or by the continuing liquidators, be determined by the Court.
Section 629. Liquidator to call creditors’ meeting on insolvency
(1) If, in the case of a winding-up commenced after the commencement of this Act, the liquidator is, at any time, of the opinion that the company will not be able to pay its debts in full within the period stated in the declaration under section 625 of this Act, he shall immediately summon a meeting of the creditors, and lay before the meeting a statement of the assets and liabilities of the company.
(2) If the liquidator fails to comply with this section, he is liable to a penalty in such amount as the Commission shall specify in its regulations.
Section 630. Liquidator to call general meeting at end of each year
(1) Subject to the provisions of section 632 of this Act, in the event of the winding-up continuing for more than one year, the liquidator shall summon a general meeting of the company at the end of the first year from the commencement of the winding-up, and of each succeeding year, or at the first convenient date within three months from the end of the year or such longer period as the Commission may allow, and shall lay before the meeting an account of his acts and dealings and of the conduct of the winding-up during the preceding year : Provided that the account shall be sent to all the members of the company not later than 14 days before the date of the meeting.
(2) If the liquidator fails to comply with this section, he is liable to a penalty in such amount as the Commission shall specify in its regulations.
Section 631. Final meeting and dissolution
(1) Subject to the provisions of section 632 of this Act, as soon as the affairs of the company are fully wound up, the liquidator shall prepare an account of the winding-up, showing how the winding-up has been conducted and the property of the company has been disposed of and when the account is prepared, he shall call a general meeting of the company for the purpose of laying before it the account, and giving any explanation thereof.
(2) The meeting shall be called by notice published in the Federal Government Gazette and in two newspapers printed in Nigeria and circulating in the locality where the meeting is being called, specifying the time, place and object of, and published at least one month before the meeting.
(3) Within seven days after the meeting, the liquidator shall send to the Commission a copy of the account, and shall make a return to it of the holding of the meeting, its date and if the copy is not sent or the return is not made in accordance with this subsection, the liquidator is liable to a penalty in such amount as the Commission shall specify in its regulations for every day during which the default continues : Provided that if a quorum is not present at the meeting, the liquidator shall, in lieu of the return hereinbefore mentioned, make a return that the meeting was duly summoned and that no quorum was present and upon such a return being made, the provisions of this subsection as to the making of the return shall be deemed to have been complied with.
(4) The Commission, on receiving the account and the appropriate return, shall forthwith register them, and on the expiration of three months from the registration of the return, the company is deemed dissolved : Provided that the Court may, on the application of the liquidator or of any other person who appears to the Court to be interested, make an order deferring the date at which the dissolution of the company is to take effect for such time as the Court deems fit.
(5) The person on whose application an order of the Court under this section is made shall, within seven days after the order is made, deliver to the Commission a certified true copy of the order for registration, and if that person fails to do so, he is liable to a penalty for every day during which the default continues in such amount as the Commission shall specify in its regulations.
(6) If the liquidator fails to call a general meeting of the company as required by this section, he is liable to a penalty in such amount as the Commission shall specify in its regulations.
Section 632. Alternative provisions as to annual and final meetings in insolvency cases
Where section 629 of this Act has effect, sections 640 and 641 shall apply to the winding-up to the exclusion of the two last foregoing sections, as if the winding-up were a creditors’ voluntary winding-up and not a members’ voluntary winding-up : Provided that the liquidator shall not be required to summon a meeting of creditors under section 640 of this Act at the end of the first year from the commencement of the winding-up, unless the meeting held under section 629 of this Act is held more than three months before the end of that year.
Section 633. Books and accounts during members’ voluntary winding-up
(1) The liquidator in a members’ voluntary winding-up shall—
(a) keep—
(i) proper records and books of account with respect to his acts and dealings, the conduct of the winding-up, and
(ii) all receipts and payments by him ; and
(b) if he carries on the business of the company, keep a distinct account of the trading.
(2) In the event of the winding-up continuing for more than a year, the liquidator shall summon a general meeting of the company at the end of the first year from the commencement of the winding-up and of each succeeding year, or at the first convenient date within three months of the end of the year or such longer period as the Commission may allow, and shall lay before the meeting an account of his acts and dealings and of the conduct of the winding-up during the preceding year and of the trading during such time as the business of the company has been carried on, and within 28 days thereafter shall send a copy of such accounts to the Commission for registration.
(3) As soon as the affairs of the company are fully wound up, the liquidator shall prepare and send to every member of the company final accounts of the winding-up showing how the winding-up has been conducted, the result of the trading during such time as the business of the company has been carried on, and how the property of the company has been disposed of, and thereupon shall convene a general meeting of the company for the purpose of laying before it such accounts and of giving an explanation thereof.
(4) Within 28 days after the meeting referred to in the immediately preceding subsection, the liquidator shall send to the Commission for registration copies of the accounts laid before the meeting and a statement of the holding of the meeting and of its date : Provided that if a quorum was not present at the meeting the liquidator, in lieu of the statement hereinbefore mentioned, shall send a statement that the meeting was duly convened and that no quorum was present thereat.
(5) The records, books and accounts referred to in this section shall be in such form, if any, as the Commission may prescribe and shall give a true and fair view of the matters therein recorded and of the administration of the company’s affairs and of the winding-up.
(6) The accounts referred to in subsections (2) and (3), shall be audited by the auditor of the company prior to being laid before the company in general meeting in accordance with such subsections and the auditors shall state in a report annexed thereto whether, in their opinion and to the best of their information—
(a) they have obtained all the information and explanations necessary for the purpose of their audit ; and
(b) proper books and records have been maintained by the liquidator in accordance with this Act, and such accounts are in accordance with the books and records and give all the information required by this Act in the manner therein required and give a true and fair view of the matters stated in such accounts : Provided that such audit and auditors’ report shall not be required if—
(i) the liquidator, or one of the liquidators if more than one, is duly qualified under the provisions of this Act for appointment as auditor of a public company, and
(ii) on or after his appointment as liquidator, the company resolved by special resolution that the accounts shall not be audited in accordance with this subsection.
(7) Meetings required to be convened under this section or subsection (6), shall be convened and held, in accordance with the provisions of this Act and the regulations of the company relating to general meetings.
(8) The liquidator shall preserve the books and papers of the company and of the liquidator for five years from the dissolution of the company but thereafter may destroy such books and papers unless the Commission shall otherwise direct, in which event he shall not destroy the same until the Commission consents in writing.
(9) If a liquidator fails to comply with any of the provisions of this section, he is liable to a penalty for each in such amount as the Commission shall specify in its regulations.
Section 634. Provisions applicable to creditors’ winding-up voluntarily
The provisions of sections 635-641 of this Act apply in relation to a creditors’ voluntary winding-up.
Section 635. Meeting of creditors
(1) The company shall cause a meeting of the creditors of the company to be summoned for the day, or the day next following, on which there is to be held the meeting at which the resolution for voluntary winding-up is to be proposed, and shall cause the notices of the meeting of creditors to be sent by post to the creditors simultaneously with the sending of the notices of the meetings of the company.
(2) The company shall cause notice of the meeting of the creditors to be published once in the Federal Government Gazette and once at least in two daily newspapers printed in Nigeria and circulating in the district where the registered office or principal place of business of the company is situate.
(3) The directors of the company shall—
(a) cause a full statement of the position of the company’s affairs, including—
(i) particulars of the company’s assets,
(ii) debts and liabilities together with a list of the creditors of the company, and
(iii) the estimated amount of their claims to be forwarded to each creditor not later than 14 days before the date of the meeting to be held by the directors and at which the statement shall be laid ; and
(b) appoint one of them to preside at the meeting.
(4) It is the duty of the director so appointed to attend and preside over the meeting.
(5) If the meeting of the company at which the resolution for voluntary winding-up is to be proposed, is adjourned and the resolution is passed at an adjourned meeting, any resolution passed at the meeting of the creditors held under subsection (1) shall have effect as if it had been passed immediately after the passing of the resolution for winding-up of the company.
(6) If default is made by—
(a) the company in complying with subsection (1) or (2) ;
(b) the directors of the company in complying with subsection (3) ;
(c) any director of the company appointed to preside, in complying with subsection (4), the company, directors or director, as the case may be, shall be liable to a penalty in such amount as the Commission shall specify in its regulations and in the case of default by the company, each officer of the company is liable to the like penalty.
Section 636. Appointment of liquidator and cesser of directors’ powers
(1) The creditors and the company at their respective meetings mentioned in section 635 of this Act may nominate a person to be liquidator for the purpose of winding-up the affairs and distributing the assets of the company, and if the creditors and the company nominate different persons, the person nominated by the creditors shall be liquidator, and if no person is nominated by the creditors the person if any, nominated by the company, shall be liquidator : Provided that in the case of different persons being nominated, any director, member or creditor of the company may, within seven days after the date on which the nomination was made by the creditors, apply to the Court for an order directing that the persons nominated as liquidator by the company shall be liquidator instead of or jointly with the person nominated by the creditors, or appointing some other person to be liquidator instead of the person appointed by the creditors.
(2) On the appointment of a liquidator, all the powers of the directors shall cease, except there is a Committee of Inspection, or if there is no such committee, the creditors shall sanction the continuance.
Section 637. Appointment of committee of inspection
(1) The creditors, at the meeting to be held under section 635 of this Act or at any subsequent meeting, may, if they think fit, set up a Committee of Inspection consisting of not more than five persons, and if such a committee is set up, the company may, either at the meeting at which the resolution for voluntary winding-up is passed or at any time subsequently in general meeting, appoint such number of persons as they think fit to act as members of the committee not exceeding five in number : Provided that the creditors may, if they think fit, resolve that all or any of the persons so appointed by the company shall not be members of the Committee of Inspection, and if the creditors so resolve, the persons mentioned in the resolution shall not, unless the Court otherwise directs, be qualified to act as members of the committee, and on any application to the Court under this provision the Court may, if it thinks fit, appoint other persons to act as such members in place of the persons mentioned in the resolution.
(2) Subject to the provisions of this section and to general rules made under this Act, the provisions of section 597 of this Act (except subsection (1)), shall apply with respect to a committee of inspection appointed under this section as they apply with respect to a Committee of Inspection appointed in a winding-up by the Court.
Section 638. Fixing of liquidators’ remuneration
The Committee of Inspection, or if there is no such committee, the creditors, may fix the remuneration to be paid to the liquidator or liquidators.
Section 639. Power to fill vacancy in the office of liquidator
If a vacancy occurs, by death, resignation or otherwise, in the office of a liquidator, other than a liquidator appointed by the direction of the Court, the creditors may fill the vacancy.
Section 640. Liquidator to call meetings of company and others at the end of each year
(1) Where the winding-up continues for more than one year, the liquidator shall summon a general meeting of the company and a meeting of the creditors at the end of the first year from the commencement of the winding-up, and of each succeeding year, or at the first convenient date within three months from the end of year, or such longer period as the Commission may allow, and shall lay before the meetings an account of his acts and dealings and of the conduct of the winding-up during the preceding year.
(2) If the liquidator fails to comply with the provisions of this section, he is liable to a penalty in such amount as the Commission shall specify in its regulations.
Section 641. Final meeting and dissolution
(1) As soon as the affairs of the company are fully wound up, the liquidator shall prepare an account of the winding-up, showing how the winding-up has been conducted and the property of the company has been disposed of, and thereupon he shall call a general meeting of the company and a meeting of the creditors for the purpose of laying the account before the meetings and giving any explanation thereof.
(2) Each such meeting shall be called by notice published in the Federal Government Gazette and in two daily newspapers printed in Nigeria and circulating in the locality of the registered office of the company, specifying the time, place and object thereof, and published one month at least before the meeting.
(3) Within seven days after the date of the meeting, or if the meetings are not held on the same date, after the date of the later meeting, the liquidator shall send to the Commission a copy of the account, and shall make a return to it of the holding of the meetings and of their dates, and if the copy is not sent or the return is not made in accordance with this subsection, the liquidator shall be liable to a penalty for every day during which the default continues in such amount as the Commission shall specify in its regulations : Provided that, if a quorum is not formed at either such meetings the liquidator shall, in lieu of the return, make a return that the meeting was duly summoned and that no quorum was present, and upon such a return being made the provisions of this subsection as to the making of the return are, in respect of that meeting, deemed to have been complied with.
(4) The Commission, on receiving the account, and, in respect of each such meeting, either of the returns mentioned above, shall forthwith register them, and on the expiration of three months from the registration thereof, the company shall be deemed to be dissolved : Provided that the Court may, on the application of the liquidator or of any other person who appears to the Court to be interested, make an order deferring the date at which the dissolution of the company is to take effect for such time as the Court thinks fit.
(5) A person on whose application an order of the Court under this section is made shall, within seven days after the making of the order, deliver to the Commission a certified true copy of the order for registration, and if that person fails to do so he is liable to a penalty as prescribed in the regulation for every day during which the default continues.
(6) If the liquidator fails to call a general meeting of the company or a meeting of the creditors as required by this section, he is liable to a penalty as prescribed in the regulation.
Section 642. Provisions applicable to every voluntary winding-up
The provisions of sections 643 - 648 of this Act, apply to every voluntary winding-up, whether a members’ or a creditors’ winding-up.
Section 643. Distribution of property of company
Subject to the provisions of this Act as to preferential payments, the property of a company shall, on its winding-up, be applied in satisfaction of its liabilities pari passu and, subject to such application shall, unless the articles otherwise provide, be distributed among the members according to their rights and interests in the company.
Section 644. Powers of liquidator in every voluntary winding-up
(1) The liquidator may—
(a) in the case of a members’ voluntary winding-up, with the sanction of special resolution of the company, and, in the case of a creditors’ voluntary winding-up, with the sanction of the court or, the committee of inspection or if there is no such committee, a meeting of the creditors, exercise any of the powers given by section 588 (1) (d), (e) and (f ) of this Act to a liquidator in a winding-up by the Court ;
(b) without sanction, exercise any of the other powers given by this Act to the liquidator in a winding-up by the Court ;
(c) exercise the power of the Court under this Act of settling a list of contributories, and the list of contributories shall be prima facie of the liability of the persons named therein to be contributories ;
(d) exercise the Court’s power of making calls ;
(e) summon general meetings of the company for the purpose of obtaining the sanction of the company by special resolution or for any other purpose he may think fit.
(2) The liquidator shall pay the debts of the company and shall adjust the rights of the contributories among themselves.
(3) Where several liquidators are appointed, any power given by this Act may be exercised by such one or more of them as may be determined by any number not less than two of the liquidators.
Section 645. Power of Court to appoint liquidator
If, in any voluntary winding-up, there is no liquidator acting, the Court may appoint a liquidator and in any case the Court may, on cause shown, remove a liquidator and appoint another liquidator.
Section 646. Power to apply to Court to determine questions or exercise powers
(1) The liquidator or any contributory or creditor may apply to the Court to determine any question arising in the winding-up of a company, to exercise, as respects the enforcing of calls or any other matter, all or any of the powers which the Court might exercise if the company were being wound up by the Court.
(2) If the Court is satisfied that the determination of the question or the required exercise of power is just and beneficial, it may give effect wholly or partially to the application on such terms and conditions as it deems fit, or make such other order as the case may require.
(3) A copy of an order made under this section staying the proceedings in the winding-up, shall forthwith be forwarded by the company, or otherwise as may be prescribed, to the Commission, which shall make a minute of the order in its books relating to the company.
Section 647. Costs of voluntary winding-up
All costs, charges and expenses properly incurred in the winding-up, including the remuneration of the liquidator, shall be payable out of the assets of the company in priority to all other claims.
Section 648. Saving of rights of creditors and contributories
The voluntary winding-up of a company shall not bar the right of any creditor or contributory to have it wound up by the Court, but where the applicant for winding-up is a contributory, an order shall not be made unless the Court is satisfied that the rights of contributories shall be prejudiced by the members’ or creditors’ voluntary winding-up, as the case may be.
Section 649. Power to order winding-up subject to supervision
If a company passes a resolution for voluntary winding-up, the Court may on petition order that the voluntary winding-up shall continue but subject to such supervision of the Court, and with such liberty for creditors, contributories, or others to apply to the Court, and generally on such terms and conditions, as the court deems fit.
Section 650. Effect of petition for winding-up subject to supervision
A petition for the continuance of a voluntary winding-up subject to the supervision of the Court shall, for the purpose of giving jurisdiction to the Court over actions, be deemed to be a petition for winding-up by the Court.
Section 651. Application of sections 576 and 577
A winding-up subject to the supervision of the court shall, for the purposes of sections 576 and 577 of this Act, be deemed to be a winding-up by the Court.
Section 652. Power of Court to appoint and remove liquidators
(1) Where an order is made for a winding-up subject to supervision, the Court may, by the same or any subsequent order, appoint an additional liquidator.
(2) A liquidator appointed by the Court under this section shall have the same powers, be subject to the same obligations, and in all respects stand in the same position, as if he had been duly appointed in accordance with the provisions of this Act with respect to the appointment of liquidators in a voluntary winding-up.
(3) The Court may remove any liquidator so appointed by the Court or any liquidator continued under the supervision order, and may fill any vacancy occasioned by the removal, or by death or resignation.
Section 653. Effect of supervision order
(1) Where an order is made for a winding-up subject to supervision, the liquidator may, subject to any restrictions imposed by the Court, exercise all his powers, without the sanction or intervention of the Court, in the same manner as if the company were being wound up voluntarily : Provided that the powers specified in section 588 (1) (d), (e) and ( Act shall not be exercised by the liquidator except with the sanction of the Court or, in a case where before the order for the winding-up was a creditors’ voluntary winding-up, with the sanction of the Court or the committee of inspection, or (if there is no such committee) a meeting of the creditors.
(2) A winding-up subject to the supervision of the Court shall not amount to a winding-up by the Court for the purpose of the provisions of this Act as specified in the Twelveth Schedule to this Act (dealing with provisions which do not apply in the case of winding-up subject to the supervision of the Court) but, subject to this, an order for a winding-up subject to supervision shall for all purposes be an order for winding-up by the Court : Provided that where the order for winding-up subject to supervision of the Court was made in relation to a creditors’ voluntary winding-up in which a Committee of Inspection had been appointed, the order shall be deemed to be an order for winding-up by the Court for the purposes of section 597 of this Act, (except subsection (1) of that section) unless the operation of that section is excluded in a voluntary winding-up by general rules made under this Act.
What this means
Short answer
A company can be wound up voluntarily if its duration expires and the members resolve to wind up, or if it passes a special resolution (section 620). It must give notice within 14 days (section 621). It is a members’ winding up if the directors made a declaration of solvency, and otherwise a creditors’ winding up (section 625(4)).
Starting a voluntary winding up
- Grounds. A company can be wound up voluntarily if the period fixed in its articles expires, or an event occurs that the articles say triggers dissolution, and the company in general meeting resolves to wind up. Or it can pass a special resolution to wind up (section 620).
- Notice. Within 14 days of the resolution, the company advertises it in the Federal Government Gazette or two daily newspapers and notifies the Commission (section 621).
- Commencement. It starts when the resolution is passed (section 622).
- Effect. From then the company stops carrying on business except as needed for a beneficial winding up, but keeps its corporate status and powers until dissolved (section 623). A share transfer after commencement, other than one made to or with the liquidator’s sanction, and any alteration in members’ status, is void (section 624).
The declaration of solvency
Directors, or the majority where there are more than two, can make a statutory declaration after full inquiry that the company will be able to pay its debts in full within a period of not more than 12 months from commencement. It must be made within the five weeks before the resolution, include a statement of assets and liabilities, and be delivered to the Commission with the resolution within 15 days after the resolution is passed. A director who makes it without reasonable grounds commits an offence punishable by a fine, three months’ imprisonment, or both, and if the debts are not paid within the stated period it is presumed he lacked reasonable grounds (section 625). With a valid declaration it is a members’ voluntary winding up. Without one it is a creditors’ voluntary winding up.
Members’ voluntary winding up
- The company in general meeting appoints the liquidator and fixes his remuneration, and the directors’ powers cease unless sanctioned (section 627).
- If the liquidator thinks the company cannot pay its debts in full within the declared period, he must immediately call a creditors’ meeting with a statement of assets and liabilities, and the winding up then follows the creditors’ rules (sections 629 and 632).
- If it lasts more than a year, he calls a general meeting each year to lay before it an account of his acts (section 630). When fully wound up, he calls a final meeting by notice published in the Gazette and two newspapers at least one month before, then sends the account and a return of the meeting to the Commission within seven days. The company is deemed dissolved three months after the Commission registers the return, unless the court defers it (section 631).
- The accounts are audited by the company’s auditor unless the liquidator is qualified as a public company auditor and the company resolves by special resolution that no audit is needed. Books and papers are kept for five years after dissolution (section 633).
Creditors’ voluntary winding up
- The company must call a creditors’ meeting for the day of, or the day after, the meeting that proposes the winding-up resolution, with notices posted at the same time and published in the Gazette and two daily newspapers (section 635).
- The directors send creditors a statement of the company’s affairs at least 14 days before the meeting and one of them presides (section 635(3) and (4)).
- Both meetings can nominate a liquidator. If they differ, the creditors’ nominee prevails, but a director, member or creditor can apply to the court within seven days (section 636).
- Creditors can set up a committee of inspection of up to five people, and the committee or the creditors fix the liquidator’s pay and fill vacancies (sections 637 to 639).
- Annual and final meetings are held for both the company and the creditors, and the company is deemed dissolved three months after the Commission registers the return (sections 640 and 641).
Rules for every voluntary winding up
The company’s property is applied to its liabilities equally among creditors, subject to the rules on preferential payments, and any surplus is distributed among members according to their rights (section 643). The liquidator can exercise most powers without sanction, but needs a special resolution (members’ winding up) or sanction of the court, committee or creditors’ meeting (creditors’ winding up) for paying classes of creditors in full and for compromises (section 644). The court can appoint or remove a liquidator (section 645). Costs and the liquidator’s remuneration are paid in priority to all other claims (section 647). A voluntary winding up does not stop a creditor or contributory from petitioning for a winding up by the court (section 648).
Winding up subject to the supervision of the court
After a voluntary winding-up resolution, the court can order on petition that the winding up continue under its supervision, on terms it decides (section 649). The liquidator can then exercise his powers without the court’s sanction, except for paying classes of creditors in full and compromises (section 653).
Questions and answers
How does a company start a voluntary winding up?
By special resolution, or by a general meeting resolution once the period or event in its articles has occurred (section 620). Notice goes to the Gazette or two daily newspapers and the Commission within 14 days (section 621).
What is a declaration of solvency?
A statutory declaration by the directors, made within five weeks before the winding-up resolution, that the company can pay its debts in full within not more than 12 months (section 625).
What is the difference between a members’ and a creditors’ voluntary winding up?
A members’ winding up follows a valid declaration of solvency. Without one, it is a creditors’ winding up, where creditors have a meeting and can choose the liquidator (sections 625 and 635).
When is the company dissolved after a voluntary winding up?
Three months after the Commission registers the liquidator’s account and return, unless the court defers it (sections 631 and 641).
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