Question Tag: Liquidator Powers

i) Conditions That Prohibit a Person from Being Appointed as a Liquidator:
The Companies Act, 2019 (Act 992) specifies the following conditions that disqualify a person from being appointed as a liquidator:

1. Infancy:
   An individual who is an infant (under the age of 18) is not eligible to be appointed as a liquidator.
2. Unsound Mind:
   A person found by a court of competent jurisdiction to be of unsound mind is disqualified from being a liquidator.
3. Corporate Body:
   A body corporate (e.g., a company) cannot be appointed as a liquidator; only natural persons are eligible.
4. Conviction for Fraud or Dishonesty:
   An individual convicted of an offense involving fraud or dishonesty, or an offense in connection with the promotion, formation, or management of a body corporate, is disqualified from serving as a liquidator. This disqualification applies unless ten years have passed since the end of the sentence.
   (4 marks)

ii) Powers That Can Be Exercised by a Liquidator:
The Companies Act, 2019 (Act 992) grants liquidators several powers, including:

1. Power to Bring or Defend Legal Proceedings:
   The liquidator has the authority to bring or defend any legal proceedings on behalf of the company, whether civil or criminal, to preserve and recover the assets of the company.
2. Power to Carry on Business:
   The liquidator may carry on the business of the company so far as necessary for the beneficial winding up of the company. This includes actions such as completing contracts already in place.
3. Power to Sell Property:
   The liquidator is empowered to sell the property of the company, whether real or personal, by public auction or private contract, to realize the company’s assets.
4. Power to Compromise Debts:
   The liquidator can make compromises or arrangements with creditors and persons claiming to be creditors or having claims against the company. This may involve settling claims or arranging for payment of the company’s debts on terms that are favorable to the winding-up process.
   (6 marks)