Winding up of a company with outstanding former directors' loans
Mayank Arora
(Querist) 20 November 2014
This query is : Resolved
Hello all,
If a loss-making private limited company has to be wound up and there are no other creditors apart from the loans given by current and former directors, can the company be wound up without the permission of the former directors?
The company does not have any remaining assets.
ajay sethi
(Expert) 21 November 2014
academic query .
Mayank Arora
(Querist) 21 November 2014
Sir please let me know
ABDUL RAZIQUE
(Expert) 21 November 2014
Is your company is registered? If yes.
Winding-up a solvent company
The members of a solvent company may decide to wind-up the company under s491 of the Corporations Act 2001 (the Corporations Act).
Directors’ declaration of solvency
To commence a members’ voluntary winding-up, the majority of the directors must make a written declaration that they have made an inquiry into the affairs of the company and that at a meeting of directors they have formed the opinion that the company will be able to pay its debts in full within 12 months after the commencement of the winding-up. This is often referred to as a solvency declaration.
If a director makes a declaration of solvency, and it is later found that he or she did not have reasonable grounds for making the declaration, then they may face a penalty of a $8,500 or one year in jail, or both under s494 of the Corporations Act.
Special resolution of members
After the solvency declaration the members of the company must make a special resolution to wind up the company. All members must be given at least 21 days notice in writing of the special resolution and at the meeting at least 75% of the votes cast by members entitled to vote on a special resolution must be in favour of the resolution for it to be passed.
Notice of the resolution must be published on the Insolvency notices website within 21 days after the date of the resolution being passed. To lodge a notice of resolution to be published on the Insolvency Notices website, a lodging party must register to be a user of the website and enter the required information online and pay the relevant fee.
Where the company has been under no other form of external administration, the winding-up commences from the time the special resolution is passed.
Liquidating the company
The advantage of a members’ voluntary winding-up is that the members can choose the liquidator to take control of the affairs of the company, fix the remuneration of the liquidator, and in general terms, supervise their conduct.
In the case of a proprietary company, a person who is not a registered company liquidator can carry out the liquidation.
T. Kalaiselvan, Advocate
(Expert) 22 November 2014
Expert Mr. Razique has given a proper explanation, you may follow his advise.
