Insolvency and Corporate Solutions
Insolvency and Corporate Solutions
A company being a legal entity created by the legal process of incorporation, can only be dissolved by legal process. Thus, a company’s existence can be terminated if it is:
1. Receivership
A company is said to be in receivership when it comes under the control and administration of a “receiver”. The receiver is appointed primarily to safeguard the interests of a particular party or parties. Receivers are usually appointed pursuant to and derive their powers under the terms of a debenture deed.
2. Struck off the register of companies as a defunct company by the SSM
Section 308 of the Act empowered the SSM to deregister a company by striking the name of the company off the Register if he is and has reasonable cause to believe that the company is no longer carrying on business or in operation. The effect of the deregistration is that the company would be dissolved once gazette as such
3. Dissolved as a result of liquidation or winding-up proceedings
There are three (3) modes of winding up in which a liquidator shall be appointed:
(i) Compulsory winding up by court The process by which a company is wound up by the courts begins with the presentation of a winding up petition in court.
(ii) Members’ voluntary winding-up A members’ voluntary winding-up is available only to solvent companies and conduct of the liquidation is substantially dominated by the members. A declaration of solvency must be made by the directors of the company.
(iii) Creditors’ voluntary winding-up
A creditors’ voluntary winding-up is a winding up where no declaration of solvency has been made or lodged.
This happens when a company is insolvent and the directors which to avoid the legal complicated of wrongful trading under the Act.