SIGNIFICANCE
AND LEGAL EFFECT OF WINDING-UP
Winding-up is the most common process of bringing a registered
company to an end and distribution of its assets for the benefit of members and
creditors.
Companies are creatures of the law, and therefore, their dissolution
is governed by statutory provisions. The winding-up process terminates the
company’s attribute of perpetual succession which is one of the ways to
dissolve a registered company under the Act. Also, the fact of winding-up of a
company or the appointment of liquidator does not by itself result in the death
of the corporate body thereby removing its legal personality.
It should be noted that a company winding has not died for it is
still alive; it only dies on dissolution – C. S. (Nig.) Plc v. Mbakwe (2002) 3 NWLR
(Pt. 755) 523 at 527 – 528.
During the winding-up process, the assets of the company are
realised, sold and applied to pay off its debts and whatever is left as the
surplus is distributed to the shareholders in accordance with the provisions of
the memorandum and articles of association.
The terms “winding-up” and “liquidation” are usually regarded as
being synonymous and are consequently used interchangeably. In Musa
v. Ehidiamhen (1994) 3 NWLR (Pt. 334) 544, it was stated that both
refer to the process whereby an end is put to the “life” of a company and its
property administered for the benefit of its creditors and members.
TYPES OF WINDING-UP OF COMPANIES
There are three types of winding-up of companies viz –
1.
By the Court (Federal High
Court);
2.
Voluntarily; or
3.
Subject to the supervision of
the court – section 401 of Companies and
Allied Matters Act (CAMA), Cap. C20, LFN 2004.
WINDING-UP BY THE COURT
A company may be wound-up by an order of the court. The court that
has jurisdiction is the Federal High Court whose jurisdiction covers the area
where the registered office or head office of the company is located – section 407(1) of CAMA.
Section 407(2) of CAMA defines “registered office or head office” as the place with the
longest time of registration of the office or head office of the company during
the six (6) months immediately preceding the presentation of the petition for
winding-up. In Medicore (Nigeria) Ltd. v. Labwares (Nigeria) Ltd. (1985) FHCR 240, a
company’s registered office is in Illorin, Kwara State. A petition was brought
in a Lagos court to wind-up the company. It was held that the court that had
jurisdiction to wind-up the company is the court within whose area of
jurisdiction the registered office of the company is situated, which is the
court in Illorin. Therefore, the Lagos court was incompetent to hear the
petition. Also, in IMB Nigeria Ltd. v. Lomay Nigeria Ltd. (1986) FHCR 28, where a
petition was brought for convenience in Lagos against a company whose
registered office is in Jos, the petition was struck out.
Where a company is being wound-up by the court, any attachment,
sequestration, distress or execution put in force against the company after the
commencement of the winding-up shall be void by virtue of section 414 – N.D.I.C
v. Ifediegwu (2003) NWLR (Pt. 800) 56.
GROUNDS FOR WINDING-UP BY
THE COURT
The grounds or circumstances in which a registered company may be
wound-up by the court are –
1.
Where the company has by a
special resolution resolved that the company be wound-up;
2.
Where default is made in
delivering statutory report to the commission or in holding the statutory
meeting;
3.
Where the number of members is
reduced below two;
4.
Where the number of members is
unable to pay its debts; and
5.
Where the court is, of the
opinion that it is just and equitable that the company be wound-up – section 408(a) – (e) of CAMA.
BY SPECIAL RESOLUTION
All that is required for a company to be wound-up under this ground
is that the resolution must be duly passed at a meeting duly and properly
convened and it should require that the company be wound-up by the court. Such
instances are rare because a company would rather pass a special resolution to
wind-up the company voluntarily under section 457(b) of CAMA.
DEFAULT MADE IN DELIVERING
STATUTORY REPORT
This can only be brought by a shareholder and it must be before the
expiration of fourteen (14) days after the last day on which the meeting should
have been held under section 410(2)(b) of CAMA.
The court may, instead of making a winding-up order, direct that a
meeting be held or the report be delivered, and make orders as to costs as it
thinks fit – section 411(3) of CAMA. This
ground is only applicable to public companies – section 211(1) of CAMA.
REDUCTION OF MEMBERS BELOW
TWO
A company cannot be incorporated with less than two persons which is
the legal requirement – section 18 of
CAMA. A company which is in default of this would be wound-up by the court
in addition to other sanctions as to liability – section 93 of CAMA. This is one of the cases where a contributory
is expressly authorised to bring a petition for winding-up – section 410(2) of CAMA.
INABILITY TO PAY DEBT
Section 409 of CAMA makes provision in relation to when a company is deemed to be unable
to pay debts. These are –
1.
If the company owes a creditor
a sum exceeding N2,000 (Two thousand
naira) which is due for payment and a demand has been made on the company for
payment with the company not being able to pay, secure or compound the debt to
the satisfaction of the creditor for three (3) weeks after the demand has been
made.
2.
Where execution has been levied
or other process issued against the company in respect of a judgment debt and
it is returned unsatisfied in whole or in part.
3.
If the court is satisfied that
the company is unable to pay its debts after taking into account any contingent
or prospective liability of the company.
The courts often apply strict rules in granting an application for
winding-up based on the ground since it is often abused. Thus, the debt must be
disputed. In Re London & Paris Banking Corporation (1874) LR 19 Eq 444 at 644, per Jessel
M. R stated thus –
“... I should be bound to hold that if the debt is bona fide contested
and there is no evidence other than non-compliance with the statutory notice to
show that the company is insolvent, and the company denies this insolvency, I
ought to dismiss the petition”.
In such a case, a petition based on inability to pay debt was
dismissed because the debt was disputed. Also, in Re Brighton Club & Norfolk
Hotel Co. Limited (1865) 35 Beav. 205, a petition for winding-up was
based on failure to pay debt after a demand has been made for same. The
petition was not granted because there was no bona fide dispute as to the exact amount that was due. In Tandy
and Freeman v. Harmony House Furniture Co. Ltd. (1972) NCLR 163, the
Supreme Court granted a petition for the winding-up of a company on the basis
of her inability to pay her debt.
For a petition for winding-up to be successful on the ground of
inability to pay debt, a demand must have been made on the company after which
the company defaults in settling same within three weeks after the demand. In Nigerian
Commercial & Industrial Enterprises Ltd. v. Registrar of Companies (1973) 1
FRCR 249, it was held that a demand made by the solicitor to a company
for payment of debt was not a demand by an officer of the company.
JUST AND EQUITABLE GROUND
This ground is based entirely on the discretion of the court and is
also popular with applicants. However, the courts would consider a lot of
factors before coming to the conclusion that a company should be wound-up on
just and equitable ground. Whether it is just and equitable to wind-up a company
depends on the facts which are available to the court at the time of hearing of
the application as set out in the petition – Re Wondoflex Textiles Property
Ltd. (1951) VLR 458.
Petitions have succeeded generally on the basis of this ground in
cases of oppression of the minority by the majority – Ebrahimi v. Westbourne Galleries
Ltd. (1972) 2 All ER 492, loss of substratum – Re Yenidije Tobacco Ltd. (1916) 2
Ch. 426, and deadlock amongst members.
In The Matter of the Stevedoring (Nig.) Co. Ltd. (1962) LLR 164, it
was held that it was just and equitable to wind-up a small company where there
was a disagreement between the members and directors and disagreement has
adversely affected the business of the company. However, a petition on just and
equitable ground should not be dismissed basically because the petitioner has
some other remedies since the motive of the petitioner is irrelevant – Obasi
v. Pureway Corporation (Nig.) Ltd. (1878) 4 FRCR 214. The petitioner is
not entitled to a winding-up order on the just and equitable ground if his
object is not a company purpose but the pursuit of a selfish advantage in a
question between himself and other shareholders – Anglo American Brush Corporation
Ltd. v. Scottish Brush Co. Ltd. (1882) 9 R. 972.
PETITION FOR WINDING UP
An application that the company be wound-up by the court shall be by
petition and can be presented by –
1.
The company itself.
2.
A creditor, including a
contingent or prospective creditor of the company.
3.
The official receiver.
4.
A contributory (which includes
past and present members). See section
92 of CAMA.
5.
A trustee in bankruptcy to, or
a personal representative of a creditor or contributory.
6.
The Corporate Affairs
Commission.
7.
A receiver if authorised by the
instrument under which he was appointed.
8.
All or any of those parties,
together or separately – section 410(a)
– (h) of CAMA.
PROCEDURE FOR WINDING-UP
BY THE COURT
An
application shall be made to the court for the winding up of a company which
must be in the form of a petition. Every petition
shall be in any of the Forms 2, 3, or 4
in the Appendix to the Rules with such variations as the circumstances may
require – Rule 15 of the Winding-Up Rules,
1983. The following is necessary –
1.
Filing of the Petition for winding-up – Rule 16 of the
Winding-Up Rules.
2.
Filing of the Affidavit verifying the Petition – Rule 18 of the
Winding-Up Rules.
3.
Service of the Petition and Affidavit of Service – Rule 17 of the
Winding-Up Rules.
4.
Advertisement of the Petition –
Rule 19 of the Winding-Up Rules.
5.
Filing of Memorandum of Compliance.
6.
Filing of Notice of Intention to Appear – Rule 23 of the
Winding-Up Rules.
7.
Appointment of Provisional Liquidator – Rule 21 of the
Winding-Up Rules.
8.
Filing of Affidavit in Opposition and Affidavit in Reply – Rule 25 of the
Winding-Up Rules.
9.
Summons for Security for Costs.
10. Filing of List of
Persons Appearing – Rule 24 of the Winding-Up Rules.
11. Hearing of Petition – Rule 22 of the
Winding-Up Rules.
12. Making of winding-up order
– section 415 of CAMA.
13. Service of winding-up
order – section 416 of CAMA.
14. Delivery of Statement
of affairs.
15. Official Receiver's
Preliminary Report – section 421 of CAMA.
16. First Meeting of
Creditors and Contributories – section
422(3)(c) of CAMA.
17.
Appointment of Liquidator – section 422 of CAMA.
APPOINTMENT
OF LIQUIDATOR
The court may appoint a liquidator for the purpose of
conducting the proceedings in winding-up a company – section 422(1) of CAMA. On the making up of a winding-up order, if
no liquidator is appointed, the official receiver shall by virtue of his office
become the liquidator – section
422(3)(b) of CAMA.
The liquidator must, within fourteen (14) days after his
appointment publish in the Gazette and in two (2) daily newspapers and deliver
to the commission for registration a notice of his appointment – section 491 of CAMA.
DISQUALIFICATION
FOR APPOINTMENT AS LIQUIDATOR
The following are persons who are incompetent to be
appointed or to act as liquidator in a winding-up by the court –
1.
An infant.
2.
An unsound mind.
3.
A body corporate.
4.
An undischarged bankrupt.
5.
Any director of the company
under liquidation.
6.
Any person convicted of any
offence involving fraud, dishonesty, official corruption or moral turpitude and
in respect of whom there is a subsisting order to restraint fraudulent persons
– section 509(1) of CAMA.
Any appointment made in contravention of the above shall
be void – section 509(2) of CAMA.
POWERS
OF A LIQUIDATOR
The liquidator, in a winding-up by court, exercises some
powers, but the powers must be sanctioned by the court or the committee of
inspection – section 425(1) of CAMA. These
powers include –
1.
The power to bring or defend
any action in the name and on behalf of the company;
2.
The power to carry on the
business of the company as may be necessary for the purpose of the beneficial
winding-up;
3.
The power to appoint relevant
professionals or legal practitioner to assist him in the performance of his
duties;
4.
The power to pay all classes of
creditors in full;
5.
The power to make any compromise
or arrangement with creditors or persons claiming to be creditors; and
6.
The power to compromise all
calls, debts and liabilities capable of resulting in debts.
In Agbaoye v. Chief Federal Land Officer (1976)
2 FCRC 33, it was held that a liquidator must obtain a sanction
(consent) from either the court or committee of inspection before instituting
or defending an action in the name and on behalf of the company.
There are also further powers of a liquidator which are provided under section 425(2) of CAMA –
1.
The power to sell the property
of the company by public auction or private arrangement.
2.
The power to do all acts and to
execute in the name and on behalf of the company, all deeds, receipts and other
documents.
3.
The power to prove, rank and
claim in the bankruptcy, insolvency or sequestration of any contributory.
4.
The power to draw, accept, make
and indorse any bill of exchange or promissory note in the name and on behalf
of the company.
5.
The power to raise any money
required on the security of the assets of the company.
6.
The power to appoint an agent
to do any business which the liquidator is unable to do himself.
DISSOLUTION
When the winding-up is completed, the liquidator may
apply to the court which then makes a dissolution order; the company shall be
dissolved accordingly from the time of the order – section 454(1) of CAMA.
The liquidator is required to send a copy within fourteen
(14) days (from the day the order was made) to the Commission who shall make in
its books a minute of the dissolution of the company – section 454(2) of CAMA. Failure to comply with the provision by the
liquidator will attract a fine of N25
(Twenty five naira) daily of the breach – section
454(3) of CAMA.
Once a company is fully wound-up and dissolved, it loses
its legal entity and ceases to exist in law – CBCL (Nig.) Ltd. v. Okoli (2009)
5 NWLR (Pt. 1135) 446.
Under section 454(1) and (2), a company dies once the
court orders the dissolution of the company. However, the revocation of the
license of the company and order of court winding-up same does not indicate the
death of a company. The appointment of a liquidator is for the purpose of
ensuring the smooth burial of the company – Progress Bank (Nig.) Plc. v. O.K
Contact Point Ltd. (2008) 1 NWLR (Pt. 1069) 514 at 531 – 532; Nzon v. Jinadu
(1987) 1 NWLR (Pt. 51) 533; C.C.B (Nig.) Ltd. v. Onwuchekwa (2000) 3 NWLR (Pt.
647) 65.
VOLUNTARY
WINDING-UP
A company may be voluntarily wound-up under two
situations namely –
1.
When the period fixed for the
duration of the company by the articles expires or an event provided for
occurs, on occurrence of which the articles for the dissolution of the company
occurs and the company has passed a resolution that the company be wound-up
voluntarily; and
2.
Where the court has passed a
special resolution that the company be wound-up voluntarily – section 457 of CAMA.
Where a resolution has been passed for voluntary
winding-up, a notice of the resolution shall be given to the public and the
Commission within fourteen (14) days of the passing of the resolution advertisement
in the Gazette or two daily newspapers – section
458(1) of CAMA. Default in the publication of the notice as required
attracts a penalty against the company and every officer of the company in
default – section 458(2) of CAMA.
In a voluntary winding-up, the process is deemed to have
commenced when the resolution for winding-up is passed – section 459 of CAMA. The effect is that the company shall
immediately cease to do business except a business that facilitates a
beneficial winding-up of the company – section
460 of CAMA.
TYPES
OF VOLUNTARY WINDING-UP
Voluntary winding-up is of two types, namely –
1.
Members voluntary winding-up;
and
2.
Creditors voluntary winding-up.
MEMBERS
VOLUNTARY WINDING-UP
This is where a statutory declaration of solvency shall
be made by the directors to the effect that they have made a full inquiry into
the affairs of the company and have formed an opinion that the company is able
to pay its debt in full within a period not exceeding twelve (12) months from
the commencement of the winding-up process – section 462(1) of CAMA.
PROCEDURE
FOR MEMBERS’ VOLUNTARY WINDING-UP
1.
Declaration of solvency – For the
declaration of solvency to be effective under the Act, it must be made within
five (5) weeks immediately preceding the date of the passing of the resolution
for voluntary winding-up and must be delivered to the Corporate Affairs
Commission for registration. It must also embody a statement of the company’s
assets and liabilities as at the latest date before the making of the
declaration – section 462(2) of CAMA.
2.
Special resolution – A general meeting
of the members of the company shall be called to pass a special resolution that
the company be wound up – section 457(b)
of CAMA.
3.
Appointment of liquidator – At the
general meeting, members shall also pass a special resolution appointing a liquidator.
Once a liquidator is appointed, the directors will cease to act – section 464 of CAMA.
4.
Notice of special resolution to the Corporate Affairs Commission – A notice of special resolution shall be given to the public and the
Commission within fourteen (14) days of the passing of the resolution
advertisement in the Gazette or two daily newspapers – section 458(1) of CAMA.
5.
Notice of appointment of liquidator to the Corporate Affairs
Commission – A notice of appointment of the
liquidator shall be given to the public and the Commission within fourteen (14)
days of the passing of the resolution advertisement in the Gazette or two daily
newspapers – section 458(1) of CAMA.
6.
Liquidator shall call a meeting each year – In the event of the winding-up continuing for more than one (1)
year, the liquidator shall summon a general meeting of the company at the end
of the first year from the commencement of the winding-up, and of each
subsequent year and shall lay before the meeting an account of the conduct of
the winding up – section 467(1) of CAMA.
7.
Final meeting – As soon as the affairs
of the company are fully wound-up, the liquidator shall prepare an account of
the winding-up, showing how the winding-up has been conducted and thereupon the
liquidator shall call a general meeting of the company for the purpose of
laying the account before the meeting – section
468(1) of CAMA.
8.
Dissolution – The Commission on receiving the account and, in respect of the meeting
of the creditors and the company shall register them, and on the expiration of
three (3) months from the registration, thereof, the company shall be deemed to
be dissolved - – section 468(4) of CAMA.
CREDITORS’
VOLUNTARY WINDING-UP
This is where
the directors are not able to make a declaration of solvency. The directors
must call the meeting of all its creditors – section 471(1) of CAMA. At the meeting, the directors must place
before the creditors’ meeting a full statement of the company’s affairs
together with a list of their claims – section
471(3)(a) of CAMA. A liquidator must be appointed and on the appointment of
the liquidator, all the powers of the directors shall cease forthwith.
PROCEDURE
FOR CREDITORS’ VOLUNTARY WINDING-UP
1.
Meeting of company and creditors – The
company shall cause a meeting of the creditors of the company to be summoned
for the day, or the day next following the day, on which there is to be held
the meeting at which the resolution for voluntary winding-up is to be proposed,
and shall cause the notice of the said meeting of creditors to be sent to the
creditors simultaneously with the sending of the notices of the meeting of the
company – section 472(1) of CAMA.
2.
Notice of meeting – The notice is to be
published in the Gazette and two newspapers; the publication of the notice is
tantamount to a declaration of insolvency – section 472(2) of CAMA.
3.
Chairman of the creditors’ meeting – The
meeting of the creditors is to be presided over by one of the directors who
shall be appointed from one of them – section
472(3) of CAMA.
4.
Special resolution to wind-up – If the
meeting of the company at which the resolution for voluntary winding-up is to
be proposed is adjourned and the resolution is passed at an adjourned meeting,
any resolution passed at the meeting of the creditors shall have effect as if
it had been passed immediately after the passing of the resolution for winding-up
of the company – section 472(5) of CAMA.
5.
Appointment of liquidator – The
creditors and the company at their respective meetings may nominate (that is, appoint)
a person to be a liquidator for the purpose of winding-up of the company, and
if the creditor and the company nominate different persons, the person
nominated by the creditors shall prevail and such person shall be the
liquidator. However, a director, member or the company may apply tom court for
an order that the person nominated by the company shall be the liquidator – section 473 of CAMA.
6.
Notice to the Corporate Affairs Commission – The resolution to wind-up the company and appointment of liquidator
are given to the Corporate Affairs Commission and published in the Gazette and
two newspapers within fourteen (14) days.
7.
Liquidator call meeting each year – In
the event of the winding-up continuing for more than one year, the liquidator
shall summon a general meeting of the company and a meeting of the creditors at
the end of each of the first year from the commencement of the winding-up, and
of each subsequent year and shall lay before the meeting an account of the
conduct of the winding-up of the company – section
477(1) of CAMA.
8.
Final meeting – As soon as the affairs
of the company are fully wound-up, the liquidator shall prepare an account of
the winding-up showing how the winding-up has been conducted and thereupon, the
liquidator shall call a general meeting of the company and a meeting of the
creditors for the purpose of laying the account before the meetings and any
explanation – section 478(1) of CAMA.
9.
Dissolution – The commission on
receiving the account, and in respect of the meeting of the creditors, and the
company shall register them, and on the expiration of three (3) months from the
date of registration thereof, the company shall be deemed to be dissolved – section 478(4) of CAMA.
COMMITTEE
OF INSPECTION
Under section
474(1) of CAMA, it is provided that the creditors at their meeting, if they
think fit, shall appoint a committee of inspection consisting of not more than
five (5) persons, and if such a committee is appointed, the company may at a
general meeting appoint such number of persons as they think fit not exceeding
five (5) persons to join as members of the committee of inspection. However,
the creditors, may, if they think fit, resolve that all or any person appointed
by the company shall not be members of the committee of inspection, and if the
creditors so resolve, the persons mentioned in the resolution shall not unless
the court otherwise direct, be qualified to act as members of the committee.
CONSEQUENCES
OF A VOLUNTARY WINDING-UP
The consequences of a voluntary winding-up are –
1.
The company shall cease to
carry on its business except so far as may be required for the beneficial
winding-up thereof.
2.
The corporate status and
corporate powers of the company shall however continue notwithstanding anything
to the contrary in its articles, until it is dissolved – section 460 of CAMA.
3.
Any transfer of shares not made
with the sanction or approval of the liquidator shall be void.
4.
Any alteration in the status of
members of the company made after the commencement of the voluntary winding-up
shall also be void – section 461 of
CAMA.
WINDING-UP
SUBJECT TO THE SUPERVISION OF THE COURT
This is provided for under sections 486 to 490 of CAMA. Where the company has passed a resolution for
voluntary winding-up, the court may make an order that the voluntary winding-up
be subject to the supervision of the court on the strength of a petition or
application made to the court – section
486 of CAMA. The court’s order shall be with such liberty for creditors,
contributories, or others to apply to the court on such terms and conditions as
the court thinks fit.
A winding-up subject to the supervision of the court is
deemed to be a winding-up by the court for the purposes of sections 413 and 414
– section 488 of CAMA. Under this
type of winding-up, the court may appoint a liquidator by the order or by a
subsequent order – section 489(1) of
CAMA. The liquidator is usually in addition to the one appointed by the
directors and their powers are the same – section
489(2) of CAMA.
The court is also empowered to remove any liquidator so
appointed by the court and may fill any vacancy, occasioned by the removal,
resignation or death – section 489(3) of
CAMA.
EFFECT
OF SUPERVISION ORDER
An order for winding-up subject to the supervision of
the court has the following effects –
1.
The liquidator so appointed is
free to exercise all his powers without the sanction or intervention of the
court in the same manner as if the company is being wound-up voluntarily – section 490(1) of CAMA.
2.
The liquidator shall not
exercise the powers specified in paragraphs (d), (e) and (f) of section 425(1)
of CAMA, that is, the power to pay all classes of creditors in full; the power
to make any compromise or arrangement with creditors or persons claiming to be
creditors; and the power to compromise all calls, debts and liabilities capable
of resulting in debts respectively, except with the sanction of the court – proviso to section 490(1) of CAMA.
3.
A winding-up subject to the
supervision of the court does not amount to winding-up by the court for the
purpose of the provisions of CAMA as specified in Schedule 12 – section 490(2) of CAMA.
Subject to the provisions contained in Schedule 12, an
order for a winding-up subject to supervision of the court shall for all
purposes be an order for winding-up by the court.
PROVISIONS APPLICABLE TO EVERY WINDING-UP
1. Section
491 of CAMA – notice of appointment
of liquidator.
2. Section
492 of CAMA – proof of
debts and ranking of claims.
3. Section
493 of CAMA – application
of the bankruptcy rules to insolvent companies.
4. Section
494 of CAMA – preferential
payments.
5. Section
495 of CAMA – fraudulent
preference.
6. Section
496 of CAMA – liabilities
and rights of certain fraudulent preferred persons.
7. Section
498 of CAMA – effect of
floating charge.
8. Section
499 of CAMA – disclaimer
of onerous property.
9. Section
500 of CAMA – restrictions
of rights of creditors as to execution.
10. Section
501 of CAMA – duty of
sheriff as to goods taken in execution.
11. Section
502 of CAMA – offences
by officers.
12. Section
503 of CAMA – falsification
of books.
13. Section
504 of CAMA – frauds by
officer.
14. Section
505 of CAMA – no proper
accounts.
15. Section
506 of CAMA – fraudulent
trading.
16. Section
507 of CAMA – misfeasance
summons.
17. Sections
508 of CAMA – prosecution
of delinquent officers and members.
18. Sections
509 – 518 of CAMA – supplementary provisions.
19. Sections
519 – 523 of CAMA – supplementary power of court.
20. Sections
524 – 526 of CAMA – dissolution provisions.
21. Sections
527 – 529 of CAMA – central
accounts.
22. Section
530 of CAMA – returns by
officers of court.
23. Section
531 of CAMA – annual
accounts of company winding-up and disposal.
MAJOR OFFICERS IN LIQUIDATION AND INSOLVENCY
OFFICIAL RECEIVER
The
Deputy Chief Registrar of the Federal High Court or any other Officer
designated for the purpose by the Chief Judge of that Court is the Official
Receiver – section 419 of CAMA. His
duty is to receive the Statement of Affairs of the company and to collate
information about the company e.g. the capital, assets and whether there is
need for further enquiry concerning the promotion, formation or failure of the
company – section 421 of CAMA. He
becomes the liquidator when the winding order is made in a compulsory winding
up until the appointment of a liquidator – section
422(3)(b) of CAMA, and acts as such whenever there is a vacancy – section 422(1) of CAMA.
PROVISIONAL LIQUIDATOR
A
liquidator is a person who is appointed by the company or the Court to wind-up
the affairs of a company and to distribute its assets, if any, among creditors
and contributories in accordance with the articles. He represents the interests
of all creditors, especially the unsecured creditors. Upon his appointment, all
the powers of the directors cease – section
422(9) of CAMA.
RECEIVER
A
receiver is appointed by secured creditors under power contained in agreement
between the company and the creditors. Accordingly he represents the interest
of the creditors and his main concern is to release the assets of the company
and payoff the debt due to the creditors. When satisfactory discharge of his
duty requires that he manages the affairs of the company, he is called a
"Receiver and Manager."
A
receiver is just to take over the business of the company whilst a manager is
to take up the company and try to turn it around to manage it with the aim of
generating profits for running the company. A manager has the duty of running
the company as a going concern while a receiver does not.
SPECIAL MANAGER
Where the Official Receiver
becomes the liquidator of a company, he may apply to the court for an order
appointing a Special Manager with such power, including those of Receiver or
Manager as the court may invest on him – section
436 of CAMA. The Official Receiver himself may be appointed Special
Manager.
ETHICAL
ISSUES
1.
Rule 14(1) of Rules of Professional Conduct (RPC), 2004 – A lawyer shall dedicate and devote his time to his client, to act in
a manner consistent with the best interests of the client.
2.
Rule 16 of RPC – A lawyer shall
represent his client competently.
3.
Rule 31(5) of RPC – except as provided
by a rule or order of court, a lawyer shall not deliver to the judge any
letter, memorandum, brief or other written communication without concurrently
delivering a copy to the opposing lawyer.
(sample
of winding-up resolution)
WINDING-UP RESOLUTION
THAT it has been proved to the satisfaction of this meeting that
the company cannot by reason of its liabilities continue its business, and that
it is advisable to wind-up the same, and accordingly that the company be
wound-up voluntarily and that ............................. (name of proposed
liquidator) of .................................. (address) be nominated as
liquidator for the purpose of such winding-up.
(sample
of declaration of solvency)
IN THE FEDERAL HIGH COURT
HOLDING AT ABUJA
SUIT
No.......................
IN THE MATTER OF
......................................................... LIMITED
PRESENTED BY
.........................................................
DECLARATION OF SOLVENCY
BROUGHT PURSUANT TO SECTION
462 OF THE COMPANIES AND ALLIED MATTERS ACT 2004; FORM 82 OF THE COMPANIES
WINDING-UP RULES 2001; AND THE INHERENT JURISDICTION OF THE COURT
We .................................. of
................................... being all the directors/majority of the
directors of ....................................... Limited, do solemnly and
sincerely declare that we have made a full enquiry into the affairs of this
company, and that, having so done, we have formed the opinion that this company
will be able to pay its debts in full within a period of
............................... months from the commencement of the winding-up,
and we append a statement of the company’s asset and liabilities as at
...................... 20......... being the latest practicable date before the
making of this declaration. And we make this solemn declaration,
conscientiously believing the same to be true, and by virtue of the Oaths Act,
2004.
Dated at .................................. the
........................ day of .............. 20.....
BEFORE ME
______________________
COMMISSIONER OF OATHS or
NOTARY PUBLIC
(sample
of petition for winding-up)
IN THE FEDERAL HIGH COURT
HOLDING AT ABUJA
SUIT
No.......................
IN THE MATTER OF
......................................................... LIMITED
PRESENTED BY
......................................................... (NAME OF PETITIONER)
PETITION FOR WINDING-UP
BROUGHT PURSUANT TO SECTION
410 OF THE COMPANIES AND ALLIED MATTERS ACT, CAP C20, LFN 2004; RULE 15 OF THE
COMPANIES WINDING-UP RULES 2001; AND THE INHERENT JURISDICTION OF THE COURT
1. The ..............................................
Limited (hereinafter called the company) was in the month of
..................................... incorporated under the Companies and
Allied Matters Act;
2. The registered office of the company is at
....................................................
3. The nominal share capital of the company is N.................... divided into
........................ shares of N....................
each. The amount of the capital paid up or credited as paid is N........................................................
4. The objects for which the company was
established are as follows –
a)
....................................................
b)
....................................................
c)
....................................................
And other objects set forth in the memorandum of
association thereof.
5. (state the facts on which the petitioner relies
under this paragraph).
6. The petitioner therefore humbly pray as follows
–
a)
That the
company may be wound-up by the Court under the provisions of the Companies and
Allied Matters Act.
b)
Or that
such order be made in the premises as shall be just.
