In last week’s article we dealt with a number of questions that are often asked as it relates to the winding-up or liquidation of a company. This week we will look at the steps that need to be taken if you want to wind up a company or for you to understand the steps that have been taken against you if it is your company being wound up.

The procedure for dealing with the liquidation of a company can be found in the Companies (Insolvency & Receivership) Act No. 3 of 2013 and its Regulation Order No. 111 of 2015.

Section 15(2) provides that the court may appoint  a liquidator, that is, someone to take charge of the assets of the company, if the court is satisfied that:

  • The company is unable to pay its debts; or
  • The company or the directors have persistently or seriously failed to comply with this Act; or
  • It is just and equitable that the company be put into liquidation.

The persons entitled to file for an order for liquidation under section 15 of the Companies Act are:

  1. The company; or
  2. A director of the company; or
  3. A shareholder of the company; or a creditor of the company; or
  4. The Registrar of Companies.

Before any such order can be made under section 15 the party seeking to put the company into liquidation must first file a claim in Form 3 of Schedule 3 to the Regulation. Together with the Claim you must also file a Notice of Proceeding in Form 5 of Schedule 3 along with a sworn statement verifying the facts in your Claim. The sworn statement can either be sworn by you or by someone who knows the facts and has the authority to sign the statement (e.g. a director if that director belongs to the company filing the Claim for liquidation).

That Notice of Proceeding is to be signed by the claimant or the lawyer for the claimant. You must attach to that Notice a memorandum (also found in Schedule 3 to the Regulations) which is to be signed by the Registrar. Both the Notice and the memorandum will state the time and place at which the hearing of the claim will be.

Once this is done the company against whom the claim is made must serve a copy of the claim, sworn statement and Notice of Proceedings and memorandum on the company. Public Notice of the claim must then be made at least 7 days before the hearing. The form for public notice is also provided in the schedule.

A public notice of the claim must contain the following:

  1. The day on which the liquidation claim was filed.
  2. The name and address of the claimant and the claimant’s lawyer if the claimant has a lawyer.
  3. The claimant’s address for service of all documents.
  4. The place, date and time of the hearing of the claim.
  5. State that the claim and sworn statement may be inspected at the Registry of the Supreme Court or the claimant’s address for service.
  6. State that any person, other than the defendant company who wishes to be heard on the hearing date must file an appearance with the court at least 2 days before the hearing.

If the public notice is not given or is not done in accordance with the rule the Registrar of the court must cancel the date of the hearing and the case moved off the court’s list unless the defendant company has been served or the court itself gives other directions.

If you have been filed with such a claim you will have 14 days from the date you received that claim to put in your defence. In addition, any other person who wishes to appear at the hearing does not need to file a defence but must file an appearance in Form 11 of Schedule 3 indicating that he/she intends to appear and either supports or opposes the claim. Any such appearance must be filed at least 2 days before the hearing date. If you do not file a defence as the defendant or an appearance as an interested party you will not be allowed to appear at the hearing unless you have been granted an extension of time by the court.

If the creditor or other party proves his/her claim to the court then the court will make an order to wind-up or liquidate the company.

It is possible, before the hearing for an application to be made to the court to stay or stop the hearing for good reason. Such an application must be done at least 21 days after the date when the claim was served on you. You may apply to stop the publication of the public notice or publication of any other information relating to the claim and may request that the entire matter be temporarily stopped. Such an application can be filed by;

  1. the defendant company;
  2. A creditor of the company with the permission of the court;
  3. The Registrar of Companies.

Depending on the facts of your case it would be advisable to seek more in-depth legal advice from a lawyer as sometimes the matter of liquidating a company can be a long and difficult affair.

Next week we will look at the role of the liquidator after a liquidation order has been made.

DISCLAIMER – This is a legal column to provide basic information on the law and court procedure. It is not to be used as a substitute for legal advice but to be used only as a starting point in understanding what you might need and what you might need to do.     

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