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Liquidation Process

Liquidation is the process of closing down, winding up or dissolving a company.

Types of Liquidation
  • Official Liquidation
  • Private Liquidation
  • Dissolution
Modes of Liquidation

By a special resolution of the company through:

  • Petition addressed to the Registrar
  • Petition to the court
  • By conversion from a private liquidation to official liquidation

  1. The official liquidator requires funds to execute the liquidation.
  2. The official liquidator requests the statement of affairs from all the directors of the company.
  3. Publication of the liquidation order in the gazette.
  4. Notice in a national daily newspaper calling on all creditors to file their proof of debt before a fixed date, and calling on debtors to pay up or make arrangements before a fixed date to pay their debt.
  5. Publication of the first creditors meeting by the official liquidator to brief creditors on the state of the liquidation.
  6. Gathering of the veto of the company by the official liquidator.
  7. Publication of the second creditors meeting.
  8. Selling of the assets of the company to pay creditors.

Private liquidation is a process designed to allow an insolvent company to close voluntarily. The decision is made by a board resolution but instigated by the directors; 75% of the company’s shareholders must agree to liquidate for liquidation proceedings to advance.

  1. Affidavit of solvency by the directors of the company.
  2. Special resolution for the winding up, including appointment of a liquidator. The special resolution is passed by the members.
  3. Directors of the company should file annual returns and auditors’ accounts up to date.
  4. The Registrar of Companies may issue a Section 248 notice attached to the special resolution filed by the members of the company to be gazetted in the bulletin.
  5. After the gazetting of the special resolution in the bulletin, the Registrar of Companies will issue Section 260(1) of the Companies Act to strike the company’s name off the companies register.
  6. The Registrar will proceed to cancel the company’s name from the companies register, after Section 260(1) has been gazetted and a copy has been sent to the Registrar of Companies.
  7. Publication of the second creditors meeting.
  8. Selling of the assets of the company to pay creditors.
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