In that regard, before a company can be placed into Creditors Voluntary Liquidation ("CVL") a meeting of shareholders must be called so that appropriate resolutions can be passed.
The proposed resolutions must be set out in full in the notice document calling the general meeting of shareholders.
The resolutions put to the shareholders meeting are:-
1. To wind-up the company
2. To appoint a named liquidator.
The procedure for calling a shareholders meeting is as follows:-
1. Directors call an extraordinary general meeting giving 14 days notice.
2. The meeting must pass the extraordinary resolution to wind up the company. For that resolution to be passed 75% in value of those attending and voting must vote in favour of the resolution.
3. The extraordinary resolution must be filed with the Registrar of Companies within 15 days.
4. Notice of the extraordinary resolutions must be advertised in the London Gazette within 14 days.
The creditors meeting must be held within 14 days of the shareholders meeting, but the powers of the shareholders' liquidator appointed at the shareholders meeting are strictly limited, until the creditors meeting is held.
The Insolvency Rules 1986 state that the liquidator appointed by the shareholders can only exercise powers conferred under The Insolvency Act 1986 in the following circumstances:
1. To take control and custody of the company's property
2. To dispose of goods of a wasting or pershable nature
3. To do all that is necessary to protect the company's assets.
If the liquidator wishes to do anything further, he/she will have to apply to the court until the creditors have had their meeting.
The shareholders' liquidator must then attend the creditors meeting and report to it on the exercise by him of any of his powers under the Act or granted by the court.
At the later creditors meeting it is the creditors nominated liquidator (who, quite often, is the same person as the shareholders' nominee) who takes up office. Most often the creditors meeting takes place immediately following the end of the shareholders meeting.
This therefore clarifies for the lay person that it is the shareholders who put the Company into liquidation and not the creditors. The creditors' meeting merely ratifies the shareholders' appointment of liquidator or appoints their own.
As always, should you wish to discuss Creditors Voluntary Liquidations or shareholders or creditors meetings or any other insolvency matter in more detail, please do not hesitate to get in contact. Telephone: 01326 340 579, Email: firstname.lastname@example.org