We all know that life is governed by time and
season. A time to be born and A time to
die.
In a nutshell winding-up is a measure of last
resort. It is a process by which a company is liquidated and dissolved
N.B:
the company at the stage of liquidation is still alive although by virtue of
Section 20(3) it cannot join in the formation of a company. HOWEVER a
company that is dissolved is dead, its asset would have being distributed.
In
the case of KWARA INVESTMENT CO LTD V GARUBA, it was held that
‘’Where a corporation is a creation
of statute, only a statute can bring to an end its existence’’
APPLICABLE
LAWS IN WINDING UP DISSOLUTION
1. Companies
and Allied Matters Act
2. Companies
winding up rules
3. Companies
proceeding rules
4. FHC
civil procedure rules
5. Investment
and securities act
6. Banks
and other financial commission rules.
7. National
insurance Act.
We will be considering the procedure under PART A
& B & C of CAMA
PART
A OF CAMA
The Modes of winding Up by virtue of SECTION 401
are;
1. By
the court (Compulsory)
2. Voluntarily
(Member or Creditors)
3. Subject
to the supervision of the court.
N.B:
Another way the existence of a company can come to an end is by the Application
of SECTION 525 CAMA; Striking off the name of a company from the Register by CAC (Check our post on Power
of CAC to strike off Names)
VOLUNTARY
WINDING UP
Member’s
Voluntary Winding Up
If you read SECTION 457 CAMA provides for the
circumstances in which company may be wound up voluntarily.
OPTION
ONE (SECTION 457(a)
Where the period if any fixed for the duration of
the company by its Articles expires OR the event if any occurs on occurrence
of which the articles provided that the company be dissolved.
The best example for this is a CONSORTIUM, however
be guided, SECTION 457 simply says period fixed in its articles, but
if you check the Companies Regulation 22, the consortium company will not only
state it in its article but also;
a) Memorandum
of association
b) Statutory
declaration to wind up and
c) Article.
So under the first option, the company will pass a
Special Resolution. This is in accordance with Regulation 44 of the Companies
Regulation.
OPTION
TWO (Section 457 (b)
The company may by itself resolves by SPECIAL
RESOLUTION, that the company be wound up voluntarily.
THE
DRAFTING
What are we to draft, two documents;
1. Special
Resolution to wind up voluntarily and appointment of liquidator
2. Statutory
declaration of solvency
WHY
1. For
the Purpose of BAR PART 2 (Do not write this in exam)
2.
Special
resolution to wind up after being passed, within 14 days the company
will give notice of the resolution by advertisement in the Gazzette or two
daily newspaper and to the commission (SECTION 458 CAMA)
3. the
Statutory declaration is required for a voluntary winding up and it must be
made
a) within
5 weeks immediately preceding the date of the passing of the resolution for
winding up AND
b) it
is delivered to the commission for registration before that date (SECTION 462
CAMA)
THE SPECIAL RESOLUTION
ABC PLC
RC NO:CAC/1229/PDS
No 1 Law School drive, victoria island Lagos
080138765200, 09086547524
Abc2020@gmail.com
Our Ref.. Your Ref…..
SPECIAL
RESOLUTION PURSUANT TO SECTION 457 AND 464 COMPANIES AND ALLIED MATTERS ACT CAP
C20 LFN 2004
At an Extra Ordinary General Meeting of the company
held on the 10th day of March, 201 at the Civic Center, Ikeja, Lagos
State. It was resolved as follows;
1. That
the company be wound up by members Voluntary winding up
2. That
Mr Ibrahim Musa a Chartered Accountant of Fisrt Bank Plc ikoyi, Lagos State be
appointed as a liquidator
3. That
the board be authorized to fix the remuneration of the liquidator
Dated
____ day of ____ 2017
______ _______ Derin
Sola Director
Director
ABC PLC
RC NO:CAC/1229/PDS
No 1 Law School drive, victoria island Lagos
080138765200, 09086547524
Abc2020@gmail.com
Our Ref.. Your Ref…..
DECLARATION OF
SOLVENCY EMBODYING A STATEMENT OF THE ASSETS AD LIABILITIES PURSUANT TO
SECTION 462 OF THE COMPANIES AND ALLIED MATTERS ACT 2004
We, John Bui of ….. and
BambaAudu of …… being all the Directors of the above company, solemnly declare
that we have made a full enquiry into the affairs of this company and that
having done so, we have formed the opinion that the company will be able to pay
its debt in full within a period of
twelve (12) months from the commencement of the winding up, and we append a
statement of the company’s assets and liabilities as at the 10 day of January
2016 being the latest practicable date before making this declaration.
And we make
this solemn declaration, conscientiously believing the same to be true by
virtue of the Oaths Act.
1.
John Bui
………………….
2.
BambaAudu ………………….. Deponents
Sworn to at the Federal High Court Registry,
Lagos
This …day of ……. 2016.
BEFORE ME
COMMISSIONER OF
OATHS
POSER:
WHEN DOES A VOLUNTARY WINDING UP COMMENCE?
A voluntary winding up shall be deemed to commence
at the time of the passing of the resolution for voluntary winding up SEE SECTION 459 CAMA
POSER:
EFFECT OF VOLUNTARY WINDING UP
By virtue of Section 460 and 461 of CAMA,
1. The
company shall from the commencement of the winding up cease to carry on
business except so far as may be required for the benefit of the winding up
2.
Avoidance
of transfer; any transfer of shares made without the sanction of the liquidator
sand any alteration in the status of the member of the company, made after the commencement
of a voluntary winding up shall be void
THE PROCEDURE FOR
MEMBER’S VOLUNTARY WINDING UP
1. Directors
in board of directors meeting make statutory declaration and delivers same to
CAC within 5 weeks.
2. Directors
issue notice of general meeting of the company
3. A
special resolution for voluntary winding up within 5 weeks of making statutory
declaration is passed at the general meeting
4. The
company at the general meeting 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 – s. 464(1)
5. Upon
appointing liquidator(s), powers (all) of the directors ceases except the
company in general meeting or liquidator sanctions the continuance – s. 464(2)
6. Notices
of special resolution and appointment of a liquidator(s) are given to CAC
within 14 days of its being passed or appointment. Also advertisement in the
gazette or two daily newspaper – s. 458(1)
7. Liquidator(s)
calls or summon a meeting of creditors if the company in its opinion would not
be able to pay its debts within 12 months and lay before the meeting a
statement of the assets and liabilities of the company – s. 466(1)
8. Where
winding up will be more than one year, the liquidator summons a general meeting
of the company at the end of the first year and lay before the meeting an
account of his acts and dealings and of the conduct of winding up during the
preceding year – s. 461(1). A copy of the accounts is to be delivered to CAC
within 28 days for registration
9. Where
the affairs of the company is fully wound up, the liquidator shall prepare and
send to every member of the company, final accounts and convene a meeting of
the company for the purpose of laying before it such accounts. The meeting is
to be convene by notice in the gazette and some newspaper circulating in the
locality where the meeting will be held – s. 468(2). It should specify the
time, place and object and be published at least one month before the meeting.
10. If
quorum was present at the meeting, a copy of the account shall be sent to CAC
within 7 days of the meeting. If no quorum, return to the effect that the
meeting was duly summoned but no quorum would be delivered to CAC within 7 days
– s. 468(3)
11. The
CAC on receiving the account and appropriate return, register them and on the
expiration of 3 months from the registration of the return, the company shall
be deemed to be dissolved – s. 468(4)
TAKE
NOTE
THE
REGULATION FURTHER PROVIDES REQUIREMENTS FOR MEMBER’S VOLUNTARY WINDING UP TO
INCLUDE THE FOLLOWING;
- Statutory declaration of solvency duly signed by majority of the directors and embodying statement of the company’s asset and liabilities.
- Special resolution for voluntary winding up signed by a director and secretary or two directors
- Publication of notice of resolution in the gazette or two daily newspaper
- Resolution for appointment of liquidator
- Publication of notice of appointment of liquidator in the gazette or two daily newspaper
- Liquidator’s notice of his appointment
- Publication of notice of final meeting in the gazette and at least two newspaper, on which must circulate in the locality where the meeting is being called
- Return of final meeting and account of liquidation as laid before and approved by the meeting
- Original certificate of registration (or certified true copy where applicable) for cancellation
- Updated annual return
- Payment of fees
SEE REGULATION 44 OF THE COMPANIES REGULATION
TO
BE CONTINUED!!!!!!
READ
HARD
EAT
HARD
REST
HARD
PRAY
HARD………..
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