Dissolutions
Dissolution of a Company: Voluntary Winding Up
Members' Voluntary Winding Up
A Members' Voluntary Winding Up begins with an extraordinary resolution by members to dissolve the company. The liquidation process is overseen by a liquidator appointed by the shareholders. The company must file a Declaration of Solvency (Form B2), signed by the majority of directors, confirming the company's ability to pay its debts within 12 months. If the declaration is made in bad faith, directors can face criminal charges.
Procedure for Solvent Winding Up
Appointment of Liquidator: A liquidator is appointed to manage the dissolution process, including settling debts and distributing assets.
Powers of the Liquidator: The liquidator has the authority to pay creditors, make compromises, and sell company assets.
Required Forms:
Notice of resolution for dissolution (Form B1)
Declaration of Solvency (Form B2)
Notice of liquidator’s appointment (Form L)
Winding Up Process
After the company’s affairs are settled, the liquidator drafts a distribution scheme, which is presented to the shareholders and creditors for approval. Once registered, the company is struck off the register after a 3-month period, unless creditors bring an action to delay the process.
Creditors’ Voluntary Winding Up
If the company is insolvent, the winding-up process becomes a Creditors' Voluntary Winding Up. The creditors nominate the liquidator, and the process is similar to a Members' Voluntary Winding Up, but creditors rank according to their legal preferences. If the liquidation is not concluded within 12 months, the liquidator must file an update on the progress.
Key Forms for Creditors' Voluntary Winding Up:
Notice of resolution for dissolution (Form B1)
Notice of liquidator’s appointment (Form L)
Liquidator’s progress statement (Form L4)
After the winding-up process is complete, the company may be struck off the register unless creditors intervene within three months.
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