Liquidators are basically people appointed to carry out the winding-up of a company upon the passing of a winding-up resolution or court order. This article will be looking at the position of liquidators under the Companies & Allied Matters Act (CAMA) with a focus on their appointment, powers and removal.
What is the provision of CAMA 2020 on Liquidator appointments?
The relevant provisions of CAMA 2020 state that a court may appoint a liquidator or liquidators for the purpose of conducting the proceedings in winding-up a company and performing such duties in reference to it as the court may impose and where there is a vacancy, an official receiver shall by virtue of his office, act as liquidator until such time as the vacancy is filled.
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The act also provides that at any time after the presentation of a petition and before the making of a winding-up order, the appointment shall be provisional and the court making the appointment may limit and restrict the powers of the liquidator by the order appointing him.
-Hence, if a provisional liquidator is to be appointed before the making of a winding-up order, the official receiver, or any other fit person, may be so appointed.
-On the making of a winding-up order, if no liquidator is appointed, the official receiver shall by virtue of his office become the liquidator.
-The official receiver in his capacity as provisional liquidator shall, and in any other case may, summon meetings of creditors and contributories of the company to be held separately for the purpose of determining whether or not an application is to be made to the court for appointing a liquidator in place of the official receiver ,or if a person other than the official receiver is appointed liquidator, he is not capable of acting in that capacity until he has notified his appointment to the Corporate Affairs Commission (CAC) and given security in the prescribed manner to the satisfaction of the Court.
What happens where more than 1 liquidator is appointed?
The act provides that if more than one liquidator of a company is appointed by the Court, the Court shall declare whether anything by this Act required or authorised to be done by a liquidator is to be done by all or any one or more of them.
What does the act say about a vacant position of a liquidator?
A liquidator appointed by the Court may resign, or, on cause shown, be removed by the Court and any vacancy in the office of a liquidator so appointed shall be filled by the Court.
What does the act say about remuneration of liquidators?
The act provides that where a person other than the official receiver is appointed a liquidator, he shall receive salary in an amount, or remuneration by way of percentage or otherwise, as the court may direct and, if more than one person is appointed as a liquidator, their remuneration shall be distributed among them in such proportions as directed by the court.
What is the official title of a liquidator under the CAMA 2020?
An appointed liquidator of a company shall, after his individual name—
(a) if he is the official receiver, be described as “official receiver and liquidator of (add here name of the company)” ; and
(b) in any other case be described as “liquidator of (add here name of the company)”.
It should be noted that the acts of a liquidator shall be valid notwithstanding any defects that may afterwards be discovered in his appointment or qualification.
Where a liquidator is appointed under the relevant section of the act, all the powers of the directors shall cease, except so far as the Court may by order sanction the continuance thereof.
What are the powers of a liquidator under CAMA 2020?
A liquidator in a winding-up by the court, with the sanction either of the court or of the committee of inspection has the powers to:
(a) bring or defend any action or other legal proceeding in the name and on behalf of the company ;
(b) carry on the business of the company so far as may be necessary for its beneficial winding-up ;
(c) appoint a legal practitioner or any other relevant professional to assist him in the performance of his duties;
(d) pay any classes of creditors in full ;
(e) make any compromise or arrangement with creditors or persons claiming to be creditors, or having or alleging themselves to have any claim, present or future, certain or contingent, ascertained or sounding only in damages against the company, or whereby the company may be rendered liable ; and
(f ) compromise all calls and liabilities to calls, debts and liabilities capable of resulting in debts, and all claims, present or future, certain or contingent, ascertained or sounding only in damages, subsisting or supposed to subsist between the company and a contributory or alleged contributory or other debtor or person apprehending liability to the company, and all questions in any way relating to or affecting the assets or the winding-up of the company, on such terms as may be agreed, and take any security for the discharge of any such call, debt, liability or claim and give a complete discharge in respect of it.
A liquidator in a winding-up by the court under the act also has the power to:
(a) sell the property of the company of whatever nature by public auction or private contract, with power to transfer the whole thereof to any person or company or to sell the same in parcels ;
(b) do all acts and to execute, in the name and on behalf of the company,all deeds, receipts and other documents, and for that purpose to use, when necessary, the company’s seal (where the company has a seal) ;
(c) prove, rank and claim in the bankruptcy, insolvency or sequestration of any contributory for any balance against his estate, and to receive dividends in the bankruptcy, insolvency or sequestration in respect of that balance as a separate debt due from the bankrupt or insolvent, and ratably with the other separate creditors ;
(d) draw, accept, make and indorse any bill of exchange or promissory note in the name and on behalf of the company with the same effect with respect to the liability of the company as if the bill or note had been drawn, accepted, made or indorsed by or on behalf of the company in the course of its business ;
(e) raise on the security of the assets of the company any money requisite ;
(f ) take out in his official name, letters of administration to any deceased contributory, and to do in his official name any other act necessary for obtaining payment of any money due from a contributory or his estate which cannot be conveniently done in the name of the company, and in all such cases the money due shall, for the purpose of enabling the liquidator to take out the letters of administration or recover the money, be deemed to be due to the liquidator himself ;
(g) appoint an agent to do any business which the liquidator is unable to do himself ; and
(h) do all other things as may be necessary for winding-up the affairs of the company and distributing its assets.
It should be noted that the exercise by the liquidator in a winding-up by the court of the powers conferred by this section shall be subject to the control of the Court,and any creditor or contributory may apply to the Court with respect to any exercise or proposed exercise of any of those powers.
What does the CAMA 2020 say about the vesting of company property in a liquidator?
The act provides that where a company is being wound up by the court, the court may,on the application of the liquidator, by order direct that all or any part of the property of whatsoever description belonging to the company or held by trustees on its behalf shall vest in the liquidator by his official name, and subject to the requirements of registration under any particular enactment, the property to which the order relates shall vest accordingly and the liquidator may, after giving such indemnity as may be required,or as the court may direct,bring or defend in his official name any action or other legal proceeding which relates to that property or which it is necessary to bring or defend for the purpose of effectively winding-up the company and recovering its property.
What are the provisions of CAMA on the exercise and control of a liquidator’s powers?
-Subject to the provisions of this Act, the liquidator of a company being wound up by the Court shall, in the administration and distribution of the assets of the company among its creditors, have regard to directions given by resolution of the creditors or contributories at any general meeting, or by the Committee of Inspection and directions given by the creditors or contributories at any general meeting shall, in case of conflict, override directions given by the Committee of Inspection.
-A liquidator may under the act also summon general meetings of the creditors or contributories for the purpose of ascertaining their wishes, and it shall be his duty to summon meetings at such times as the creditors or contributories by
resolution either at the meeting appointing the liquidator or otherwise, may direct, or whenever requested in writing to do so by one tenth in value of the creditors or contributories, as the case maybe.
-The liquidator may apply to the Court in the manner prescribed for directions in relation to any particular matter arising under the winding-up.
– Subject to the provisions of this Act, the liquidator shall use his own discretion in the management of the estate and its distribution among the creditors.
-Any person aggrieved by an act or decision of the liquidator, may apply to the Court for such order as it deems just and the Court may confirm, reverse, or modify the act or decision.
What does the act say on the issue of custody of property belonging to the company in liquidation?
In a winding-up by the Court the liquidator shall take into his custody, or under his control, all the property and choses in action to which the company is or appears to be entitled.
What are the books to be kept by a liquidator?
The act requires that a liquidator of a company which is being wound up by the court shall, in the manner prescribed, keep proper books in which he shall cause to be made entries or minutes of proceedings at meetings and of other matters as may be prescribed, and a creditor or contributory may, subject to the control of the Court, personally or by his agent inspect the books.
What does the CAMA 2020 say on the release of a liquidator?
Under the act, where the liquidator of a company being wound up by the court has :
– realised all the property of the company, or so much of it as may, in his opinion, be realised without needlessly protracting the liquidation;
-and has distributed a final dividend, if any, to the creditors;
-adjusted the rights of the contributories among themselves, and made a final return, if any, to the contributories;
-has resigned; or
-has been removed from his office;
the Corporate Affairs Commission shall, on the application of the liquidator, cause a report on the accounts of the liquidator to be prepared.
The CAC will then consider the report referred to above together with any objection that may be raised by a creditor, contributory, or person interested against the release of the liquidator, and may grant or withhold the release of the liquidator as it deems fit subject to an appeal to the Court.
If the release of a liquidator is withheld, the Court may, on the application of any creditor, contributory, or person interested, make such order as it deems just, charging the liquidator with the consequences of any act or default which he may have done or made contrary to his duty.
An order of the Commission releasing the liquidator shall discharge him from all liability in respect of any act done or default made by him in the administration of the affairs of the company, or otherwise in relation to his conduct as liquidator, and the order may be revoked on proof that it was obtained by fraud, suppression or concealment of any material fact.
Where the liquidator has not previously resigned or been removed, his release shall operate as a removal from his office.
What does the act say about the exercise of control over liquidators?
-The act provides that the CAC shall take cognisance of the conduct of liquidators of companies which are being wound up by the Court and if a liquidator does not faithfully perform his duties and duly observe all the requirements imposed on him by any enactment, or other- wise with respect to the performance of his duties, or if any complaint is made to the CAC by a creditor or contributory in that regard, the Commission shall inquire into the matter, and may take such action thereon as it deems fit, including the direction of a local investigation of the books and vouchers of the liquidator.
-The Commission may, at any time, require the liquidator of a company being wound up by the Court to answer any inquiry in relation to any winding-up in which he is engaged and if the Commission deems fit, it may apply to the court to examine the liquidator or any other person on oath concerning the winding-up.