Closure

The Companies Act, Cap. 308 envisages the winding up and liquidation of a company in two broad scenarios:

• Liquidation and dissolution pursuant to a receiving order where the company is adjudged bankrupt or insolvent (Part IV – Division A of the Companies Act and the Bankruptcy and Insolvency Act, 2001-34)
• Liquidation and dissolution for reasons other than insolvency (Part IV – Division B of the Companies Act)

The detailed rules governing the dissolution of a company which is bankrupt or insolvent are not contained in the Companies Act, Cap. 308 but are to be found instead in the Bankruptcy and Insolvency Act, 2001-34.

Part IV – Division B of the Companies Act contemplates that a company may be dissolved in the following situations:

• The company has issued no shares (section 363)
• The company has no property and no liabilities (section 364)
• A special resolution of shareholders has been passed for voluntary liquidation and dissolution (section 366)
• Registrar’s dissolution (section 371)
• Court-ordered dissolution (sections 372–373)

A company that has not issued any shares may be dissolved at any time by resolution of all the directors. The following documents must be sent to the Registrar together with the prescribed filing fee:

1. Certified copy of the Resolution signed by ALL the directors on record
2. Articles of Dissolution (Form 23) with Box 1 duly ticked
3. Letter from the Inland Revenue Department
4. Letter from the National Insurance Scheme

A company that has no property and no liabilities may be dissolved by special resolution of the shareholders. The following documents must be sent to the Registrar:

1. Certified copy of the Special Resolution duly certified by a director or secretary on record
2. Statutory Declaration by a director confirming that the company has no property and no liabilities
3. Articles of Dissolution (Form 23) with Box 2 duly ticked
4. Letter from the Inland Revenue Department
5. Letter from the National Insurance Scheme

A company may liquidate and dissolve by special resolution of the shareholders. The process involves two stages:

Stage 1 – Statement of Intent:

• File Statement of Intent to Dissolve (Form 25) with certified copy of the Special Resolution

Stage 2 – After issuance of Certificate of Intent to Dissolve:

• Notify each known creditor of the company’s intent to dissolve
• Publish notice in the Gazette and in a newspaper
• Collect property, dispose of properties, discharge obligations, and distribute remaining property to shareholders

Final filing:

1. Articles of Dissolution (Form 23) with Box 3 duly ticked
2. Copy of Gazette and newspaper publication
3. Statutory Declaration of a director giving details of compliance
4. Letter from the Inland Revenue Department
5. Letter from the National Insurance Scheme

Sections 365(3) and 370(4) of the Companies Act provide that a company ceases to exist on the date shown in its certificate of dissolution.

The Registrar may dissolve a company or apply to the court for a dissolution order where a company:

• Has not commenced business within three years after the date shown in its certificate of incorporation
• Has not carried on its business for three consecutive years
• Has not had its name restored to the register within two years after being struck off under section 412

Section 372: The Registrar or any interested person may apply to the court for a dissolution order if the company:

• Has failed for two or more consecutive years to hold annual meetings of shareholders
• Has contravened certain sections of the Act (sections 18, 149, 151, 175 or 176)
• Has procured any certificate under the Act by misrepresentation

Section 373: The court may order liquidation and dissolution upon application of a shareholder if:

• The business or affairs have been conducted in a manner that is oppressive or unfairly prejudicial to any shareholder, debenture holder, creditor, director or officer
• A unanimous shareholder agreement entitles the complaining shareholder to demand dissolution after a specified event that has occurred
• It is just and equitable that the company be liquidated and dissolved