The Shareholders Meeting in a Creditors Voluntary Liquidation
Procedure, resolutions & the follow on creditors meeting
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 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 with 15 days.
4. Notice of the extraordinary resolutions must be advertised in the London Gazette in 14 days.
The shareholders meeting must be held within 14 days of the creditors meeting, but the powers of the shareholders liquidator appointed at that shareholders meeting are strictly limited, until the creditors meeting is held.
The Insolvency (England & Wales) Rules 2016 state that the liquidator appointed by the shareholders only 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 perishable nature
3. To do all that is necessary to protect the company's assets.
If the liquidator wishes to do any thing further, he/she will have to apply to the court until the creditors have had heir meeting.
The members 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.
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