Seminar Presentation

What is a Company ?
an association of a number of people for some

common object or objects as defined by Gower

A company as a corporate entity is created by way of
incorporation and its corporate life ends upon being
wound up

What is Winding Up ?

It is the process whereby a company is liquidated.

Section 220 of the Companies Act of Fiji states :
A company may be wound up by the court, if(a) the company has, by special resolution, resolved that the company be wound up by the court;
(b) default is made in delivering the statutory report to the registrar or in holding the statutory
meeting;
(c) the company does not commence its business within a year from its incorporation or suspends its
business for a whole year;
(d) the number of members is reduced, in the case of a private company, below 2, or, in the case of
any other company, below 7;
(e) the company is unable to pay its debts;
(f) the court is of opinion that it is just and equitable that the company should be wound up;
(g) in the case of a company incorporated outside Fiji and carrying on business in Fiji, winding-up
proceedings have been commenced in respect of it in the country or territory of its incorporation or
in any other country or territory in which it has established a place of business.

 These can further be narrowed down to 2 categories :

1. Voluntary Winding Up
2. Compulsory Winding Up
For the purpose of this presentation focus is put onto

Compulsory Winding Up by Courts in Fiji and the role

of the Official Receiver and Liquidator
The Companies Act of Fiji (Cap.237) deals with all
matters pertaining to companies, from incorporation
to dissolution.

The Procedure of Winding Up

Creditor of the company who has debt owing is to

issue a demand notice.

Upon receipt of demand notice, if company is unable
to pay the debt, it can opt through special resolution
under section 221(7) of Companies Act to voluntarily
wind up the company.
However if no such resolution is made then the
creditor can proceed and file a petition in the High
Court seeking that the company be compulsorily
wound up

Litigation Procedure
Winding Up action is initiated at the High Court level

upon filing a Winding Up Petition.

The petition specifies the nature of incorporation of
the company, the assets belonging to it, the debt owed
to the creditor and the orders sought.
Petition is put forward to the Chief Registrar for
Indorsement and assignment of a call date.
Affidavit Verifying Winding Up Petition has to be filed
within 4days from the date of issuance of the petition
by the court, failure to do which would result in the
petition being deemed abandoned.

 The petition has to be served upon the Company at its

registered office.
Advertisement has to be made in the Local Newspaper
and the Fiji Islands Government Gazette to inform the
public and invite supporting creditors and those who
oppose the winding up to show their intention in
writing.
Matter is called before the Chief Registrar, documents
are checked to see if in order, and timeline is provided
to comply with rules if any applicable and direction
given to file a Memorandum of Due Compliance, the
matter is given a returnable date

 Once all documents are in order, matter is listed before

the Master of the High Court (or in his absence a Judge

of the High Court of Fiji).
The petitioning creditor has to prove that the company
falls within the definition of Inability to Pay under
section.221 of the Companies Act for a winding up
order to be granted.
Upon Winding Up order being granted solicitors for
the petitioning creditor then have to file and seal a
court order and have the same served upon the
company and the Official Receiver

What Happens when the Court

Orders Winding Up?
Notification is sent to the official receiver to notify of

the winding up petition being granted and the Official

Receiver being appointed as provisional liquidator
under section.235 of the Companies Act until a
liquidator is appointed.
Section 240 of the Companies Act empowers the
liquidator to take control of all property that the
company owns and is entitled to.

Role of the Official Receiver and

Liquidator :
When the affairs of the Company is vested unto the

liquidator, the company does not seize to exist, instead it

operates under the control of the liquidator.
If the directors of the company or their agents fail to
cooperate with the liquidator during the liquidation
process ,an order under section.241 of the Companies Act
can be sought whereby any and/or all property belonging
to the company and trustees on behalf of the company can
be transferred under the Official Receivers name in his
official capacity being the Liquidator ,so that the
Liquidator can be put in a position to effectually wind up
the company and recover all its properties.

 Though the liquidator is granted discretion in the

decision making relating to the company, its discretion

is not absolute and upon application to court by an
aggrieved person, the decisions of the liquidator may
be conformed, reversed or modified.
{Refer : Section 243(4) Companies Act, Section 243(5) Companies Act.}

 Any liquidator apart from the Official Receiver, upon

receipt of payment on behalf of the company has to

pay the same to the official receiver for credit of the
Companies Liquidation Account, failure to do which
would result in a fine at the rate of twenty percent of
the amount per annum, a liquidator is also not allowed
by virtue of law to pay into his own bank account
monies received on behalf of the company in
liquidation.
{Refer: Section 245(1) Companies Act, Section 245(2) Companies Act.}

 Every Liquidator apart from the Official Receiver is at

all times supposed to keep a record of the accounts of

the company and at prescribed intervals provide
audited reports of the same. The official receiver
oversees the conduct of liquidators to assure that
duties bestowed upon the liquidator is performed
faithfully, if the official receiver thinks fit, he may
apply to the court to examine any liquidator or his
representative under oath.
{ Refer: Section 246 Companies Act, Section 247(1) Companies Act,
Section 247(2) Companies Act.}

 In its opinion if a liquidator has realized all properties

of the company being wound up, and after distribution

of final dividends and adjusting the rights of all
contributories and upon presentation of a final report
and providing accounts of the said company and
complying with the requirements set by the court, the
liquidator will be released from his role.
{ Refer: Section 248 Companies Act.}

The liquidator however if had made decisions and

performed actions contrary to his duties, he would

instead be charged.
{ Refer: Section 248(2) Companies Act.}

 A release would discharge the liquidator of any

liabilities arising from his actions in the role as

liquidator
{ Refer: Section 248(3) Companies Act. }

 At any given time, either before the making of a

winding up order or after it is made, if a director,

trustee or any other contributory is about to abscond
Fiji to avoid examination in relation to the company or
to dispose of any property or to conceal any property
for evading payments, a departure prohibition order
and an/or an order for arrest of the absconding person
along with seizure of his/her moveable property, books
and records can be sought.
{ Refer: Section 267 Companies Act. }

 Upon all the affairs of the company being wound up,

the court on application by liquidator, and granting

release to the liquidator would make an order
dissolving the company. A copy of the said order
within fourteen days of its issuance has to be served on
the Registrar of Companies for registration. Failure to
do so would result in the liquidator being fined as per
provisions of the Companies Act.
{ Refer: Section 270(1) Companies Act, Section 270 (2) Companies Act. }

Example of a Winding Up Case

Copy of proceedings of Winding Up Case Proceedings

Provided
Suva High Court Winding Up Action HBE 51/2009 In The
Matter of Vanua Designs and Associates Company
Limited.
Ministry of Education as Creditor Petitioned the Court to
wind up the Company for debt owed in the sum of
$104,664-oo and solicitors costs $225-00
Matter was listed before the Chief Registrar on 5th August
2009.
Affidavit Verifying Petition was in place.
Creditor was ordered to file Memorandum of Due
Compliance

 Case listed Before Hon. Justice Pathik on 31st August

2009.
Winding Up order was granted and the court ordered
the Official Receiver to be appointed Provisional
Liquidator.
Order was made that the costs of the Petitioning
creditor was to be paid out of the assets of the
company.

Conclusion
From the overall perspective it can be said that the

Companies Act of Fiji provides various situations in

which a company can be wound up. Moreover the
statute is quite clear on the roles and duties of the
Official Receiver and the Liquidator in compulsory
winding up situations and the penalties that exist for
non-conformation with the legislation and through
the effectiveness of the law a company cannot escape
from paying its debts.

Bibliography
References were made to:
Gower,

L.C.B Principles of Modern

Company Law, Sweet and Maxwell,
London, 1999.
Companies Act, Chapter 247, Laws of
Fiji.
Winding Up Action HBE 51/2009