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hello
I came across this question in the mock exam in this site.
Which one of the following is not able to petition the court for a compulsory liquidation order on the grounds of company insolvency?
a. secretary of state
b.board of directors
c.company’s creditors
d.members of the companyand the correct answer is members of the company, question is why?
according to what i learnt, the people who can petition are:
-the company itself (does this mean the board of directors?)
-any creditor who is owed atleast 750 pounds
-any contributory or contributories (shareholders?)
-the official receiver
-the secretary of stateaccording to me, all op the options in the question can petition, please help
Hmmm, tricky, and very detailed.
Read this!
“Conditions for a contributory to present a petition
In general, a “contributory” is not entitled to present a winding-up petition unless, either the number of members has fallen below 2, or his shares were originally allotted to him or have been held by him or registered in his name for at least 6 months during the 18 months before commencement of the winding up or have devolved on him through the death of a former holder. However, if a person is a “contributory” because he has had his shares purchased or redeemed by the company out of capital within the 12 months before the commencement of the winding up and would therefore be liable to contribute to the company’s assets in the event of a winding up, he may petition on the grounds either that the company is unable to pay its debts or that it is just and equitable that the company be wound up. A contributory must have a financial interest in the winding up and if the shares are fully paid and there is no surplus after creditors’ claims, that interest usually does not exist but there may be exceptions to this rule.”
I believe that, in general, it’s safe to say that shareholders are not entitled to petition for a winding-up order on the grounds that the company is insolvent (but I accept that there are exceptions!)
OK?
35 Which of the following CANNOT petition for the compulsory winding up of a company on the grounds of
INSOLVENCY under s.122 Insolvency Act 1986?
A The board of directors
B The members of the company
C The company’s creditors
D The Secretary of Stateans is B
Members are not normally allowed to petition on the grounds of insolvency. That long paragraph above says that contributors may blah blah blah but those contributors are no longer members. They were, but their shares have been bought back by the company “out of capital” and of course that’s not allowed so these former members remain liable to contribute (hence they are contributors)
Of course, members CAN petition by passing a special resolution but that’s away from this question
As I said in my first response, it’s tricky
ok so you are saying contributories are people who WERE once shareholders, but currently not a shareholder because their shares were redeemed by the company?
and only such people can petition, not the shareholders?
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