BCL - Nov 2018 - L1 - Q7a - Legal Implications Relating to Companies in Difficulty or in Crisis

BCL – Nov 2018 – L1 – Q7a – Legal Implications Relating to Companies in Difficulty or in Crisis

Question

State THREE (3) procedures to adopt in converting private liquidation to official liquidation. (6 marks)

Answer

On notice being given by the liquidator under private liquidation to the Registrar (of Companies) that the company may not be able to pay its debts and liabilities in full within the period stated in the declaration of insolvency, the Registrar may make a winding-up order converting the private liquidation into an official winding-up.
The allegation that the Company is unable to pay its debts in full within the stated period shall be accompanied by a statement in the prescribed form of the company’s assets and liabilities.
On the commencement of winding-up proceedings against a company, civil proceedings against the company shall be stayed, and a transfer of shares of the company is void.
(Section 5 of the Bodies Corporate (Official Liquidations) Act, 1963 ACT 180)
(3 points @ 2 marks each = 6 marks)