LEGISLATIVE GUIDE TO WINDING UP PROCESS

(1) Compulsory Winding Up

Grounds: s.220 (a) (e)
Five in all - most common found at s.220 (d) and (e) inability to pay debts and the
just and equitable ground
Inability to pay debts: s.221 and note s.221 (e) broad definition if proved to the
satisfaction of the court that the company unable to pay its debts
Procedure: s.222 by petition for a winding up order by company, creditors,
contributories (in certain circumstances by the Minister and by the Trustee in
Bankruptcy) and note the proviso to s. 222 generally
Commencement: s.227 on presentation of the petition except where before that
resolution passed for a voluntary winding up
Provisional Liquidator: s.235 allows court to appoint one after presentation of
petition May be Trustee or any fit person
Effect of Winding Up Order: s.228-229 Copy order to be sent to company and
Registrar of Companies (ROC) no actions allowed against company except by
leave of court- (N.B. at common law order operates to terminate employment of
employees and agents of company and the office of directors their power to act on
companys behalf ceases )
Appointment of Liquidator : s.234 power of court to appoint liquidator may be
done at same time as winding up order N.B. s.235 no body corporate may be
liquidator N.B. also events/prohibitions /actions activated by appointment of
provisional liquidator under s.235 or making of winding up order actions stayed
(s.229), statement affairs due (s.232), custody of companys property taken (s.239)
Liquidators: s.236 Trustee becomes provisional liquidator (Different position to that
which he may hold under s.235 above after presentation of petition) Trustee to
summon meetings of creditors and contributories to determine whether application
to be made to court re appointment of another person as liquidator Court makes
order re appointment and if contributories and creditors differ court decides which
where no liquidator appointed by court, Trustee becomes the liquidator
Conditions Precedent to Acting as Liquidator: s.237 applies to other liquidators
other than Trustee cannot act until notice of appointment sent to Registrar and
security given
Report by Trustee : s.233 where winding up order made Trustee to submit
preliminary report to court on companys capital, assets liabilities, and if company
has failed, causes of failure, whether he is of the opinion that further inquiry into
company desirable may also make further reports giving his opinion on whether
fraud committed

Notification that Company in Liquidation: s.327

Settlement of list of contributories: s.252
Collection of Assets & Discharge of Liabilities: s.252 court charged with
responsibility but N.B. s.268 (delegation to liquidator)
Powers of Liquidator: s.241 some exercised with sanction of court or committee of
inspection all subject to overall control of court
Influence of Creditors and Contributories: s.242 in administration of assets and
distribution among creditors, liquidator to have regard to directions given by
resolution of creditors or contributories or committee of inspection. Liquidator may
summon meetings to ascertain wishes and may also apply to court for directions
Administrative Duties of Liquidator: ss.243-245 to keep proper books with minutes
of proceedings at meetings, etc to pay money received into court directed bank
not less than twice per annum, to send account of receipts and payments to ROC
Proving of Debts: s.309
Ranking of Claims: s.310 as in bankruptcy
Preferential Payments: s.311
Invalidity of Fraudulent Preferences: s.312
Invalidity of Certain Floating Charges: s.314
Winding Up Taking Over 1 Year: s.331 at intervals liquidator must send statement
re proceedings in and position of liquidation to ROC
Dissolution: s.269 When affairs completely wound up liquidator may apply to court
for dissolution order. Company dissolved from date of order- within 14 days
liquidator to forward order to ROC
Release of Liquidator: s.247 (see basic description of liquidation process here) on
completion or practical completion of same, liquidator may apply to ROC to be
released
(2) Members Voluntary Winding Up
Definition: s.277 (4)
Circumstances in which company may be wound up voluntarily: s.272 - in particular
by special resolution (s.272 (1)(b))
Notice of Resolution: s.273 within 14 days to Gazette and ROC

Commencement: s.274 on passing of resolution

Declaration of solvency: s.277 by directors must be made no earlier than 5
weeks before passing special resolution and delivered to ROC for registration within
that time must contain statement of companys assets and liabilities as at last
practicable date before declaration
Appointment of Liquidator: s.279 - by company in general meeting all directors
powers cease except so far as company in general meeting or liquidator sanctions
continuance thereof (Note s. 325 liquidator may not be a body corporate)
Notice of Appointment: s.299 within 21 days to Gazette, daily newspaper, ROC
Effect of Winding Up on Business/Status of Company: s.275 Company ceases to
carry on business save as required for beneficial winding up
Company Found to be Insolvent: s.282 if liquidator is of such opinion must
summon creditors meeting and present statement of companys assets and
liabilities
Distribution of Companys Property: s.296 subject to provision re preferential
payments property to be applied in satisfaction of liabilities pari passu and subject
to articles, distributed among members in accordance with their rights and interests
in company
Powers of Liquidator: s.297 some powers exercisable with sanction of
extraordinary resolution of company
Winding Up Continues for More Than 1 Year: s.283 liquidator must summon
general meeting of company at end of 1st year or within 3 months from them and
each succeeding year and present account of acts and dealings and conduct of
winding up during year
s.331 liquidator must send statement to
ROC containing particulars with respect to proceedings in and position of liquidation
Proof of Debts: s.309
Costs of Winding Up: s.302
Ranking of Claims: s.370
Preferential Payments:

s.311

Fraudulent Preferences: s.312

Floating Charges: s.314
Notification that Company in Liquidation: s.327

Final Meeting and Dissolution: s.284 when affairs wound up, liquidator to make up
account of winding up showing how conducted and property of company disposed
of. Copy account and return of meeting sent to ROC (N.B. procedure for calling
meeting set out) on receiving account and return, ROC registers them on
expiration of 3 months from registration of return company dissolved
(3) Creditors Voluntary Winding Up
Definition: s.277(4)
Circumstances in which Company may be So Wound up: s.272(1)(c) extraordinary
resolution by reason of liabilities advisable to wind up insolvent
Notice of Resolution: s.273 within 14 days notice by advertisement in gazette
and in writing to ROC
Commencement: s.274 upon passing of resolution
Meeting of Creditors: s.287 company to cause creditors meeting to be summoned
for day or day following meeting to pass resolution to wind up notices to creditors
to go same time notices of meeting of company notice of creditors meeting to be
advertised in Gazette and daily newspaper full statement of companys affairs and
list of creditors and established amount of their claim to be laid before meeting of
creditors by directors
Appointment of Liquidator: s.288 creditors and company nominate person to be
liquidator if different persons nominated the creditors nominee shall be liquidator
subject to right of any creditor, director or member of company to apply to court for
an order directing that nominee of company should be liquidator or act jointly with
creditors choice of liquidator or that someone else altogether should be liquidatorremuneration of liquidator fixed by committee of inspection (if there is one) or by
creditors ( if there is none)(s.290)
Appointment of Committee of Inspection: s.289 meeting of creditors (either 1st
one or subsequent meeting) may appoint 5 persons on a committee of inspection
if so appointed, company may , either at meeting where resolution passed or at
subsequent meeting, appoint up to 5 persons as members of committee creditors
can object to company appointees subject to direction of court same rules apply to
this committee as to one in a compulsory winding up (s.249)
Powers of Directors: S.290 cease on appointment of liquidator except so far as
committee, or if no committee, the creditors, sanction continuance
Powers of Liquidator: s.297 Same as in members voluntary winding up except
some powers exercised with sanction of court or committee instead of company in
general meeting
Distribution of Company Property: s.296

Costs of Winding Up: s.302 constitute pre-preferential debts -payable out of assets
of company in priority to all other claims
Proof of Debts: s.309
Preferential Payments: s.311
Fraudulent Preferences: s.312
Floating Charges: s.314
Notification That Company in Liquidation: s.327
If Winding Up Continues for More Than 1 Year: s.302 In addition to calling meeting
of company must also call meeting of creditors to lay account before them and do
same as for members voluntary under s.283 (see also s.331 information as to
pending liquidations)
Final Meeting and Dissolution: s.294 when affairs wound up liquidator makes up
account of winding up, calls general meeting of company and creditors meeting to
lay account before them and give explanations (NB procedure for calling meetings)
within one week of meetings liquidator to send ROC copy of account and return of
meetings. On receiving account and returns ROC registers them and 3 months
thereafter company deemed dissolved.

2012. 03. 14
Cameal Neal slides on winding up
The 14 days notice is for the extraordinary and 21 days for the special resolution
page 6 of slide
Firstly liquidation/winding up
The process whereby we terminate the life of a company; a corporate person
was born so termination requires that formalities be observed upon its termination.
Secondly liability to members in a winding up
If limited by shares limited by unpaid shares; limited by guarantee limited to the amount guaranteed; if limited by guarantee with a share capital
limited to both unpaid shares and amount guarantee.
Thirdly what must exist for a court to do a winding up?
Company is unable to pay its debts what evidence will the court use
s221
o Company indebted to a creditor in the sum of $500k and
creditor served notice of payment and company unable to pay
the sum after 3 weeks
o Judgment decreed against the company and bailiff could only
partially satisfy the debt
o Contingent and prospective liabilities of the company
Company no longer wants to continue the business
5

Just and equitable forms a very significant part of persons who

petition the court
o Look to case law for just and equitable examples include
Deadlock between members
Directors are also controlling shareholders and are
mismanaging the company 213a
Loss of mutual trust and confidence between members
Fourthly - who has the locus standi
Creditors
Contributors
Company the directors acting for the company passes resolution;
(singly or jointly)
S340 (1) UK 1949 Winding Up Rules apply
Fifthly how should the Petition be brought?
The Winding Up Rules dictate the procedure
o Rule 26 states how the Petition should be done
o Rule 28 service and publication of the Petition
Sixthly winding up by the court
The Trustee in Bankruptcy is official Liquidator
when the court makes the order the court may make an order that a
statement of affairs be sworn to and served on the Trustee in Bankruptcy
After receipt of S of A starts proceedings for winding up
o Take into custody and control all assets
o Advertise for creditors
Seventhly voluntary winding up
3 types of voluntary winding up
1.
2.
3.
Procedure