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Hey,
Okay so I have a couple of Questions regarding liquidation of limited companies.
1. In creditors voluntary liquidation, do creditors appoint liquidators or just members? Its actually very conflicting because in some places it says that creditors appoint the liquidators while in some it says that it is only the members who appoint liquidators and they later take consent of creditors on the matter.
2. Who gets paid first, liquidation expenses or fixed charge holders?
3. Can shareholders not petition for compulsory winding? If yes, why not?
4. When auditor is being removed, is 14 days period the correct notice period for notifying the registrar of the ordinary resolution because for all other resolutions the notice period is 15 days?
Please answer these queries.
Would greatly appreciate.1 Members NOMINATE their choice of liquidator. Immediately after that members’ meeting, the creditors have their meeting and may adopt the members’ nominee or reject it and appoint their own nominee
2 Difficult to answer. In practice I’m told by a liquidator that “the liquidator is paid first”. So I then asked “where do the fixed charge holders fit in?”. “Ah” said the liquidator “they are paid first”
My lectures suggest that they rank first equal and there would need to be some negotiation between the two to see how much each should receive if there isn’t enough to pay both in full
3 Shareholders may petition the Court for a compulsory winding up on the grounds that the company is unable to pay its debts or that it is just and equitable. To lodge the petition would require a special resolution of the members (not less than 75% voting in favour of the resolution)
But then you may ask “Why petition the Court when all that is needed for a voluntary winning up is a special resolution?”
Good question to which I don’t know the answer!
4 Another good question! Here’s a change of law that came into effect for companies in 2015 and will necessitate an amendment to the course notes (and maybe a revised lecture)
The change came into effect for companies with a financial year commencing after October 2015 and removes the necessity for companies to notify the registrar on the occasion of an auditor resignation or removal
OK?
The change has not been incorporated yet, right? So if we are judged in the exam on auditor removal notice to registrar, we opt for 14 days. Right?
Also i am rather confused with the open tuition notes where its states 14 days notice for both ordinary and special resolution without any explanation. So that notice is to the members in accordance with the 14 days notice that its given for general meeting, right? And there is no such mention of filing the notice with the Registrar in the notes which means that we simple have to go with the 15 days period, right?
Also could you please differentiate between 28 days notice to company and 21 days notice to the members for special notice. I mean why are there two separate notices?
And there is this MCQ which confused me.
Mark has been in continuously employed by stone ltd for 18 months, he is dismissed with notice by the employer for requesting paid holiday leaves.
A. The reason for dismissal is automatically unfair and so Mark can bring action for unfair dismissal regardless of his length of employment.
B. Mark cannot bring an action for unfair dismissal since he has not been in continuous employment for more than 2 years.Why is A the answer? Because from what I know you cannot bring an action for unfair dismissal if you haven’t been in continuous employment for 2 years except for dismissal for maternity cases.
Apologies for my haphazardness..
P.S: I cant help but feel proud that you don’t know the answers-)
Also the question in Kaplan clearly states in BLOCK letter that members CANNOT petition the compulsory winding up of the company. What is one supposed to do in such scenario?
I’m not sure I’m happy with your PS! When I say “It’s a question I cannot answer” I mean that I don’t understand why any group of members would want to pass a special resolution to involve the Court in a compulsory winding up
“Let’s have a meeting to pass a special resolution to petition the Court for a compulsory winding up”
“Why? Let’s just have a meeting to pass a special resolution to put the company into a voluntary winding up without involving the Court and it’s associated costs”
Wherever I look on the Internet, I’m finding that members can petition the Court by passing a special resolution.
28 and 21? I explain this in lectures but, briefly, two of the reasons for special notice involve removals (director and auditor) and if these people feel aggrieved about the proposed removal, they have the statutory right to defend their corner by way of written representation of reasonable length which is then circulated to the members in advance of the meeting
In order to have the time to prepare such a written statement, the director (or auditor, as appropriate) is given not less than 7 days. So the notice asking for a resolution to remove must be deposited at the company’s registered office
The company must then tell the affected director / auditor by the end of the next business day
The director / auditor then has 7 days before the notice for the meeting is then sent to the members together with the written representations
Your opening remarks in this most recent post are incorrect. The change HAS taken place – it came into effect in October 2015
OK?
Sorry, missed this part!
Some actions of dismissal by employers are automatically unfair, regardless of how long the employee has been employed
Where an employee is dismissed because the employee is seeking to assert a statutory right (for example, asking for paid holiday time) it is irrelevant that the employment period is not yet 2 years
OK?
You got it wrong, i didn’t mean it the way you think i meant it. also i am absolutely aware of the reason behind your ‘its a question I cant answer’ because like you said earlier, this is English law for us.
Regardless of the fact whether the change has been incorporated, we still opt for 14 days in the exam for auditors removal notice to registrar?
The 28 and 21 days part is clear. Thank you.
Is UCTA only for business to business contracts?
Also i think you missed the second paragraph, the 14 days thing..
I hadn’t misread your post … I was joking!
Let’s be clear – there’s no need to notify registrar about auditor’s removal
Ordinary and special resolutions need 14 days notice and, where applicable (special resolutions and SOME ordinary resolutions must go to registrar within 15 days
UCTA applies to substantially ALL contracts, not just business to business. In fact, it could be argued that it’s an Act designed to protect the consumer and the consumer in most contracts is the end user (you and me)
OK?
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