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GROUNDS FOR WINDING UP

Section 408 provides that 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 that statutory report to
the commission or in holding the statutory meeting

(c) The numbers of members is reduced below two

(d) The company is unable to pay its debts

(e) The court is of the opinion that is just and equitable
that the company should be wound up.

PERSONS WHO MAY PETITION FOR WINDING UP OF THE
COURT

1. The company by way of resolution under section 408

2. The creditors by way of petitions under section 408(d). The
petitioning creditor may be secured or unsecured. Also a
contingent creditor may bring a petition under section
410nand such a creditor will include one who claims for
unliquidated damages or is entitled to future rents from the
company or who holds a bill of exchange or a debenture not
yet payable but not one whose debt has been paid to the
1
sheriff.
1
Re William Hockley (1962) 1 WLR 555

Receiver if authorized by debenture. The official receiver. among the creditors and contributories of the company. 3. The court may also limit the powers of the provisional liquidator. A contributory who is a person who is liable to contribute to the assets of the company in the event of its being wound up. (if any). Liquidator : Under s. He represents the interest of the creditors and his functions include distributing the assets of the company. in line with the provisions of the Articles of Association of the company. The commission 7. The Trustee or the Personal Representatives. 5. 422 (1) CAMA. by the order appointing him. Included among the key officers are the following: Official Receiver : S. Provisional Liquidator : By s. . Major officers involved during the liquidation of a Company - A number of officers are required by law to participate in the process of conducting the winding up of a company. 422 (2) CAMA a provisional liquidator is appointed by the court after the presentation of the petition and before the making of a winding up order. 419 (1) and (2) of the Company and Allied Matter Act (CAMA) 1990 defines an official receiver to mean the Deputy Chief Registrar of the Federal High Court (FHC) or an officer designated for the purpose by the Chef Judge of the FHC. the FHC may appoint a liquidator to conduct the process of winding up a company and such other business as the court may direct. 4. 6.

according to the type of winding up chosen. stating that. or of the business of the company. not exceeding 12 months from the start of winding up. other than himself. where the members and the . no declaration of solvency is made and separate meetings of the creditors and the members of the company are held. The presence of the above officers ensures the performance of a proper liquidation of the affected company. winding up is categorized into two: Members' Voluntary Winding up and Creditors' Voluntary Winding up. 387 (1) (a) . In the former. his primary duty is to protect an existing right and his appointment is entirely at the discretion of the court which must be satisfied that it is just and convenient to appoint him Special Manager : S. he may apply to the court for an order appointing such a manager to act during such time and with such powers as the court may direct. the creditors' nominee is accepted. 393 (1) and (2) CAMA. where the official receiver becomes the liquidator and he is of the opinion that the nature of the business of the company. By the provisions of SS. For instance. after enquiry into the affairs of the company and in their opinion the company will be able to pay its debts in full within such period. In the latter however.Receiver : Is appointed under ss. the members propose a winding up and make a statutory declaration of "Solvency". 436 (1) CAMA provides that. The difference in the procedure occurs mainly in the principal actors involved and also in the status of the company at the time of liquidation. Procedure - The procedure involved in winding up varies. or the interest of the creditors or contributories of the company require the appointment of a special manager of the estate. Under this situation.(f) and 389 (1) (a)- (b) CAMA. Though the members and the creditors are entitled to nominate liquidators at their separate meetings. the members of the company can choose who the liquidator of the company will be.

instead of making a winding up order. appointed for the purpose of winding up the company.creditors nominated different persons to liquidators. the court may. and make an order directing the cost to be paid by the persons who. However. The company. any member or director or creditor of the company may apply to the court. Any person who intends to appear at the hearing of the petition shall give notice of his intention.470 CAMA] . are responsible for the default: s.464 . by leaving a copy of the petition with any member. the court may dismiss it or adjourn the hearing conditionally or unconditionally or make any interim order or other order it deems fit: s. the petition shall be served upon the liquidator. 411 (1). where no such member or servant is found. direct that the report be delivered or the meeting be held. in the opinion of the court. except presented by the company. by leaving it on the premises or by serving it in such manner as the court may direct.s. any creditor and contributory may attend the hearing of the petition and on the hearing of the petition. shall be served on the company at its registered office or its principal place of business. if any. officer or servant of the company or. The petition. An application for winding up is made by way of petition in prescribed forms with such variations as the circumstances require and shall be verified by affidavit. In cases where the petition is presented on the ground of default in delivering the statutory report to the Commissioner or in holding the statutory meeting. within 7 days after the creditors made their nomination. Where the company is being wound up voluntarily. for an order for the members 'nominee to act instead of or jointly with the creditors' nominee. 411 (3). The procedure for winding up is as follows: (a) Members' Voluntary Winding Up [s.

C.A. as soon as the winding up is completed. or at the first convenient date within three months from the year or such other date the C. where the liquidator is of the opinion that the company will not be able to pay up its debt within the period stated in the solvency declaration. and within 7 days. shall allow. the powers of the directors shall cease. except as far as the company in general meeting or the liquidator sanctions the continuance thereof 14.of the conduct of winding up and how the property was disposed 19 . when the affairs of the company have been wound up.The company calls a general meeting where one or more liquidators are appointed 13 . subject to any arrangements with its creditors. a statement of the assets and liabilities of the company 16 . send a copy of the account to the C. the liquidator shall call a general meeting by notice published in gazette and in some newspaper printed in Nigeria and circulating in the locality where the meeting is being called. where the winding up will continue for more than one year. an account of his dealings and the conduct of the winding up during the preceding year 18 . Here. the liquidator shall . he is obliged to summon a meeting of the creditors and lay before them. if they be more than one 15 .C. laying before the meeting.A. the liquidator is obliged to 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.giving an explanation thereof . the winding up will be treated as if it were a creditors' winding up 17 . and lay an account . 20 . after the appointment of the liquidator. the company is empowered to fill any vacancy that occurs in the position of the liquidator by reason of the death or resignation or otherwise of the liquidator. A general meeting for the purpose of filling the vacancy may be called by any contributories or by the continuing liquidators.

financial accounts showing the conduct of the winding up and the results of any trading done by the company.A. Thereafter. copies of the account and a statement of the meeting and the date it was held 22 . the company. and also that the accounts were in accordance with the books and records and gave all the information required by the CAMA and also gave a true and fair view of the matters stated in such accounts 23 .prepare and send to every member of the company. who are obliged to also annex a report to the effect that. prior to the laying of the accounts before the general meeting. and within 28 days after the meeting. the liquidator is to keep the books and the papers of the company and of the liquidator for a period of 5 years from the dissolution of the company.C.s. or for the next day following. and by notices sent by post simultaneously to the creditors and the members of the company. summon a meeting of the creditors of the company for the same day as that on which the meeting for the members shall be held. The directors shall appoint one of their number to preside at the meeting 25 .472 .C. directs otherwise 24 . such documents may be destroyed. for registration. (b) Creditors' Voluntary Winding up [s. except the C.478CAMA] For the purpose of proposing a voluntary winding up. in their opinion and to the best of their information. they obtained all the information necessary for the audit. and proper records were maintained by the liquidator. the creditors' choice for a liquidator is accepted. forward to the C. though any member or director or creditor of the court . the account should be audited by the auditor (s) of the company. shall by notice published once in the gazette and at least once in two newspapers printed in Nigeria and circulating in the district where the registered office or principal place of business is located.A. where the members and the creditors nominate different persons to be liquidator. and convene a general meeting to lay before the members and explain the accounts 21 .

s. send a copy of the account to the Commission 29 . or at the first convenient date within 3 months form the year or such other date as the Commission shall allow. within 7 days after the creditors made their nomination.may apply to the court. except the liquidator was appointed by the court or under the direction of the court 26 . provided that if a quorum is not present at the meeting.486 . the liquidator shall make a return that the meeting was duly summoned and that no quorum was formed.490 CAMA] A company may pass a resolution to voluntarily wind up a . the liquidator is to 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. by notice published in the gazette and in some newspaper printed in Nigeria and circulating in the locality where the meeting is being called. it registers them and at the expiry of 3 months after the registration of the accounts and the returns. where the winding up will continue for more than one year. a vacancy occurring in the office of the liquidator. by reason of the death or resignation or otherwise of the liquidator.giving an explanation thereof . and within 7 days. the liquidator shall call a general meeting. when the Commission receives the account and the return. laying before the meeting. (c) Winding Up Subject to the Supervision of the Court [s. and lay an account . for an order for the person nominated by the members as liquidator to act instead of or jointly with the person nominated by the creditors. as soon as the affairs of the company have been wound up.of the conduct of the winding up and how the property was disposed of 28 . the company is deemed to be dissolved 30 . may be filled by the creditors. an account of his dealings and the conduct of the winding up during the preceding year 27 .

the liquidator is obliged to publish in the gazette and in 2 daily newspapers. When one liquidates their company. and with such liberty for creditors. Liquidation is almost always heard with a dreadful expression. or bankruptcy has been declared. or distribution sector of the business.company and may petition the court to supervise the winding up. in every mode of winding up. After all. or buy newer. contributories and others to apply to the court. because liquidation companies know how best to deal with such situations in the most economical and efficient possible way. In this case. a bird in hand is worth two in the bush. a petition for the continuance of a voluntary winding up subject the supervision of the court shall be deemed to be a petition for winding up by the court. and you acquire money to put to better use. Lesser known. Such stocks increase storage costs. the liquidation company will make sure that the inventory that you want to get rid off is not anywhere close to the shelves that have your newest stock. although it is not anything quite so heartbreaking. According to the wishes of the . retailing. and are most of the time hired when firms are closing. by the provision of section 491 (1) CAMA. a notice of his appointment and deliver the same notice to the Commission for registration. the court may so order. and use up space that could be put to better use. This means that the inventory has been taken off your hands. or else buy a fixed asset that will go on to earn them profits. it is a common knowledge to have some inventory left lying around that was not sold. Liquidation in reality is an important aspect for businesses. The most important advantage of a liquidation company is that when you hire them. Liquidation helps to get rid of such unnecessary stocks. and fast selling stock. is the fact that these companies can also be hired to provide solutions for everyday inventory issues. Firms could pay off debts. and if they hire a liquidation company to do the job for them. It should be noted that. Compulsory liquidation has to be taken when you are forced to liquidate by law. in such form as the Commission may from time to time require. Liquidation companies provide numerous services. they give you cash in an upfront way. within 14days. Voluntary liquidation occurs when the management of a firm agrees that they need more cash available for day to day transactions. If one is in the manufacturing. Liquidation can be voluntary or a necessity. and generally on such terms and conditions as the court thinks fit 31 . for the purposes of conferring the court with jurisdiction.

Any unsecured debt is written off through the process of Liquidation. .com/?expert=Bobby_Dazzler The Advantages and Disadvantages . Legal Action is stopped. there are advantages and disadvantages to Liquidation. If you want the assets of the company then you are going to have to buy them. and hire them to sell their products. Article Source: http://EzineArticles. they handle the logistic costs. including any tax liabilities.. and sell according to your corporate identity. while the liquidation companies will take your product to new markets. Bobby Dazzler is a financial consultant. services and ideas. of Liquidating your Company As within anything in business.uk. When a liquidation firm handles liquidation. you can without the debt holding you back. although this can sometimes be done in installments. Directors in most cases are able to just get on with their lives. province.. Disadvantages of Liquidating your Company You may have to buy the assets.co. added to this. Generally. If you want to go back into business. You will need a new company.beesley. as soon as they hear from you. . this method is chosen when the conventional markets do not provide you with a favourable response that you require from them. In essence. and according to your advertisement campaign that is already up and running. as if it had not happened. If the business is closing down. The old company will obviously be closed down. then you can. or out of city.. and even out of the country. many liquidation companies also offer packing and relocating help as well. and get to work. they find another profitable market for you. Due to the nature of Voluntary Liquidation. Another advantage of liquidating the company is that the liquidating agents make sure that they advertise. You can take his advice on company liquidation and legal steps in getting liquidation at his recommended website at http://www. liquidation companies take your stock out of your general marketed area. The reason that Voluntary Liquidation is so popular is that its advantages far outweigh its disadvantages. This way your brand image remains intact. the bonus is that there are no additional worries for the creative department. The numerous worries that they help with only proves that the businesses could take a new step with them. Sometimes liquidation companies are also used as marketers. Advantages of Liquidating your Company Debt is written off.. legal action is stopped as the company closes.. It has no bearing on the Directors.. and so you will need a new company if you are intending to go back into business. and find a niche for them.business. If you want to start again.

call 0800 094 43 49 now. Also a contingent creditor may bring a petition under section 410nand such a creditor will include one who claims for unliquidated damages or is entitled to future rents from the company or who holds a bill of exchange or a debenture not yet payable but not one whose debt has been paid to the sheriff. The petitioning creditor may be secured or unsecured. 8. The creditors by way of petitions under section 408(d).. Next Steps.You can’t keep doing it. 1. The petitioning creditor may be secured or unsecured. Also a contingent creditor may bring a petition under section 410nand such a creditor will include one who claims for 2 Re William Hockley (1962) 1 WLR 555 The creditors by way of petitions under section 408(d). eventually someone will suggest that you may want to find a job instead. The petitioning creditor may be secured or unsecured. The creditors by way of petitions under section 408(d). Also a contingent creditor may bring a petition under section 410nand such a creditor will include one who claims for unliquidated damages or is entitled to future rents from the company or who holds a bill of exchange or a debenture not yet payable but not one whose debt has been paid to the 2 sheriff. . Make a fresh start in Business today . If you keep Liquidating companies in quick succession..

The petitioning creditor may be secured or unsecured. unliquidated damages or is entitled to future rents from the company or who holds a bill of exchange or a debenture The creditors by way of petitions under section 408(d). 3 Re William Hockley (1962) 1 WLR 555 4 Re William Hockley (1962) 1 WLR 555 . not yet payable but not one whose debt has been paid to the 4 sheriff. 2. Also a contingent creditor may bring a petition under section 410nand such a creditor will include one who claims for unliquidated damages or is entitled to future rents from the company or who holds a bill of exchange or a debenture not yet payable but not one whose debt has been paid to the 3 sheriff.