In one of my previous articles, i already spoke about winding up petitions as a means of recovering debt as well as bringing to a close a company on several grounds.
Winding up a company can also be deemed necessary as a means of restructuring a company by carrying out a phoenix-like regeneration of a company which might have been performing badly or seeking rebranding.
In this article, we will be taking a deeper look into winding-up of companies in Nigeria, with a deeper focus on :-
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– The Regulatory Framework governing winding-up of companies in Nigeria.
– The types of winding-up processes available under Nigerian law.
– Who can have a company wound up.
What makes up the Regulatory Framework governing Winding-up of companies in Nigeria?
Winding-up of companies in Nigeria is governed by :-
– The Companies and Allied Matters Act (CAMA) 2020.
– The Corporate Affairs Commission CAC
– The Federal High Court of Nigeria through the Federal High Court Act 2005
– The Federal High Court Civil Procedure Rules 2019
-Company Regulations 2021
– The Companies Winding-up Rules
– The Companies Proceedings Rules
– The Investment and Securities Act (ISA)
Who is eligible to apply for a company to be wound-up?
The following persons can apply to have a company wound up :-
– A director of the company sought to be wound-up
– A creditor of a company sought to be wound-up
– A contributory of a company sought to be wound-up
– A Receiver of a company sought to be wound-up
– An official receiver of a company sought to be wound-up
– The Corporate Affairs Commission (CAC)
What are the grounds for winding-up a company?
The valid grounds for winding-up a company are :-
– as a debt recovery measure;
– where members of a company fall below the required number of 2(Two);
– where there’s a failure on the part of a company to hold its statutory meeting or file statutory reports as required under CAMA;
– where the court deems it just and equitable to have the company wound-up.
What are the types of winding-up processes in Nigeria?
Winding-up a company in Nigeria can be either as a :-
– Court-ordered winding-up :- This is where anyone eligible to have a company wound up makes an application to the Federal High Court via a petition followed by an affidavit of verification followed by the publication of the petition note in a national daily newspaper inviting all interested parties to enter an appearance within a period (usually 15 days ).
– A Court-supervised winding-up :- This involves a company through its board of directors/members passing a voluntary winding-up petition and then asking the court (also through a petition) to supervise the winding-up process, although the court in this case will have the option of appointing an additional liquidator.
–A Voluntary Winding-up which can be either :-
a). a members voluntary winding-up :- Where members of a company commence the winding-up process through a special winding-up resolution and the appointment of a liquidator to complete the winding up process.
The appointment of a liquidator would typically render defunct the powers of the board of directors except where the contrary is decided upon by the company.
b). Or a Creditors winding-up process :- Which is where the company along with its creditors decide via separate meetings to have the company wound up, followed by the notice of the creditor’s meeting being published in at least 2 daily newspapers.
This process will also be followed by the appointment of a liquidator to complete the process.