Director Preparation for Voluntary Liquidation
Director Preparation for Voluntary Liquidation. Whether you are going into Members Voluntary Liquidation or Creditors Voluntary Liquidation you can take steps to prepare.
You can you use this guide to help you prepare for voluntary liquidation.
Going into liquidation is about preparation, extraction of and assembling information so that the mandatory statutory and regulatory procedures can be processed and properly complied with.
Type of Process
If the company is solvent you will be wanting more likely than not, to opt for a members voluntary liquidation. Whereas if the company is insolvent you will have no choice other than to deploy a creditors voluntary liquiation if you want to initiate the procedure yourself on the ‘voluntary’ basis.
Articles of Association
Firstly, you will need to see how the company is set up and what its Articles of Association say about the requirements for winding up and holding formal meetings.
Once you have determined what the Articles say, then you can set about convening the necessary meetings of the company’s board of directors and shareholders.
There will need to be a meeting of the Board of Directors because the Directors hold office and in effect control the company. Such a meeting should be minuted to confirm that the Board approves that the company should be wound up and the reasons for the process being adopted.
Once the meeting of the Board of Directors has taken place, then the meeting of the shareholders can be convened to seek to pass the special resolution for the company to be wound up and an ordinary resolution for a liquidator to be appointed. A special resolution requires at least 75% of shareholders who vote to approve it, whereas an ordinary resolution requires more than 50%.
If the company is insolvent then notice must be provided to the company’s creditors and they will have the final say as to who is appointed as the liquidator. Initially however they must be informed of their voting rights and ability to lodge a claim. The creditors will need to be provided with a report that satisifies the information requirements of Statement of Insolvency Practice Number 6. Such requirements will provide creditors with information on the company’s financial history, reasons for its insolvency and the statement of affairs.
Statement of Affairs
In order for a company to go into liquidation there is a requirement to file at Companies House, not just the resolution that it is to be wound up but also a Statement of Affairs, setting out its assets and liabilities.