Liquidation is the process by which the life of a company is usually bought to a closure. The liquidation is managed by a liquidator and commences from the moment a liquidator is appointed. Liquidation can occur through a number of ways, they are:
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Shareholders Resolution; or
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Board of Directors Minute; or
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Creditors Petition
A brief explanation of the differences and process are discussed below.
Shareholder Resolution:
This process can be used for solvent or non-solvent liquidations. In both cases this would normally occur upon a recommendation by the directors to the shareholders. The law requires that at least 75% of the shareholders must sign the resolution of appointment of liquidator, alternatively the resolution be signed by the chairperson certifying all required matters are correct.
Our form ‘Minutes of Special Shareholders Meeting’ meets all legislative requirements and may be downloaded by clicking the following link. Minutes of Special Shareholders Meeting
Norrie & Daughters must consent in writing to be the liquidator therefore we recommend you contact us first and discuss the situation.
Board of Directors Minute
This method of appointment of a liquidator is restricted to an event occurring that has been specified in the company’s constitution.
An example of an event could be the winding up of a company that has ceased trading and is solvent.
Creditors Petition
A creditor’s petition to the High Court is normally preceded by the serving of statutory demand on the debtor company which remains unsatisfied at the time petition is filed in Court.
This leaves the debtor company with a number of options;
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Under a shareholders resolution appoint a liquidator of its choice, but this must be done within 10 working days from the date of service of notice of petition to the Court.
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Immediately obtain legal advice about objecting to the Court appointing a liquidator upon strong evidence that the appointment of a liquidator is unwarranted.
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Do nothing and await the outcome of the Court hearing into the petition.
Creditors may also by way of a resolutions passed at a watershed meeting appoint a liquidator.
