Consequences of Winding Up
The liquidator has no power to carry on business with a view to resuscitating the company or making profits. The liquidator shall carry on the business of the company principally to enable the business to be sold off as a going concern. 2. A transfer of shares may be carried out only with the sanction of the liquidator. In effect, the membership of the company is frozen once winding up commences. 3. The directors and certain other officers of the company are under a duty to assist and cooperate with the liquidator. 4 4.
Where the company has either bought property from or sold property to a person who was at the time of the transaction a director of the company for cash consideration and the transaction occurred within 2 years before the commencement of the winding up, the company may recover any amount by which the property was overvalued or undervalued. 5. Where the company has gone into liquidation within 6 months of the creation of a floating charge, that charge is void except to cover the amount of cash advanced to the company at the time of creation or subsequently, together with interest at 5% per annum.
The liquidator(s) appointed upon the winding up of the company to manage the affairs of the company for the purpose of the liquidation shall: 1. investigate the affairs and assets of the company as well as the conduct of its directors and other related persons; 2. recover and realise the company’s assets at the best possible price and in a manner that is to the best advantage to the company; and 3. adjudicate the claims of all creditors and to ensure an equitable distribution of the company’s assets. Distribution of Assets
The company’s property is to be applied in satisfaction of its liabilities upon winding up, and the surplus distributed among the members according to their rights and interests in the company. Secured creditors need not prove for their debts but can realise their security and obtain full satisfaction. Once the secured creditors have been paid out of the assets that comprise their securities, the remainder of the assets, if any, will be distributed among the preferred creditors. The order of priority is as follows : . Costs and expenses of the winding up. 2. Wages and salaries of the employees of the company. 3. Retrenchment benefit or ex-gratia payment (if any) due to the employees of the company. 4. Compensation for injuries suffered in the course of employment under the Workmen’s Compensation Act (Cap 354). 5. Provident fund contributions payable in the “12 months next before, on or after the commencement of the winding up” under any written law or under any approved scheme of superannuation or retirement benefits. . Remuneration payable in respect of vacation leave accrued before or after the commencement of the winding up. 7. All taxes assessed before the commencement of the winding up or before the time fixed for the proving of debts has expired. Any residue remaining after payment of the creditors is divisible among the members in accordance with the company’s Memorandum and Articles of Association.