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Hello Sir
I have three (3) questions I’m not clear about for LW – Global Variant
1. Is a Insolvency Practitioner and Liquidator the same and who appoints them?
2. Is Reduction of Share Capital a form of Non-Distributable Reserves?
3. What is the difference between Implied Authority and Apparent Authority? Is possible you can give me examples.
Thank you
1. No, they are not the same. An insolvency practitioner is a professional that may be called in to assist / advise a company in distress. They could give financial advice, strategic advice, advice on liquidations and steps necessary to be followed. A liquidator is a specific type of insolvency practitioner. The liquidator’s task is to kill the company (the insolvency practitioner will try to save it if it’s possible to be saved). The liquidator must be a qualified insolvency practitioner but an insolvency practitioner isn’t necessarily a liquidator. (All elephants are animals but not all animals are elephants!)
If it’s not a liquidation scenario, the directors of the company will appoint an insolvency practitioner to receive the practitioner’s advice.
If it’s a liquidation that we’re looking at, we need to consider three types – members’ voluntary liquidation (MVL), creditors’ voluntary liquidation (CVL) and compulsory liquidation (CL)
In MVL, the directors will appoint a liquidator
In CVL, the members may NOMINATE a liquidator but the creditors will have the final say as to the identity of the liquidator to be APPOINTED
In CL, the Court will appoint the Official Receiver to the position of liquidator.
2 Is Reduction of Share Capital a form of Non-Distributable Reserves?
I’m not 100% sure what you are asking here! A reduction of share capital literally reduces the share capital of a company.
Imagine a company that has been accumulating losses so that now there is a substantial debit balance in the Revenue Reserves. We are in the position where share capital is no longer represented by available assets.
The double entry to reduce the capital would be Dr Share Capital Account and Cr Revenue Reserves.
3 What is the difference between Implied Authority and Apparent Authority? Is possible you can give me examples.
There’s a 12 post thread, the latest post by me was on November 24rth this year. Here it is:- https://opentuition.com/topic/implied-vs-apparent-authority/
OK?
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