Appointment of Liquidator I
In a court liquidation, the court appoints the liquidator. In practice, the petitioner’s nominee will usually be appointed. The court will not appoint a person or may replace a liquidator, who is insufficiently independent or otherwise has a conflict of interests. A liquidator appointed in a voluntary liquidation may be replaced by the court.
The court liquidator is an officer of the court and is subject to sanctions as such. A voluntary liquidator is an agent on behalf of the company subject to the duties of his office. He is obliged to act in good faith in realising and distributing the assets. The liquidator also owes a duty of good faith and a duty of care to the company
A liquidator is described as “the liquidator” or the “the provisional liquidator” of the particular company and not by his individual name. The acts of a liquidator are deemed valid notwithstanding any later defects discovered in his appointment or qualification.
Appointment of Liquidator II
In an (insolvent) creditors voluntary winding up, the creditors may appoint their own nominee in place of the members’ nominee. A creditor who proposes to nominate himself as liquidator is not permitted to vote on such resolution. Anybody connected with or representing a creditor may not be appointed as liquidator unless the connection is disclosed. The company’s officers may apply to the court to displace the creditors’ nominee by the members’ nominee or a third party.
A liquidator appointed by the court must publish a notice in the CRO Gazette and file details with the CRO. A court liquidator must enter a bond by an insurer for the due performance of his obligations. A liquidator appointed by the members or creditors must notify his appointment to the CRO within 14 days.
Procedure for Appointment I
The appointment of a liquidator, other than a provisional liquidator is of no effect unless the person nominated has, prior to his appointment, signified his written consent to the appointment.
If there is more than one liquidator, the court or meeting appointing the liquidator shall declare or resolve whether anything required or authorised to be done by them, is to be done by all of them or one or more of them.
Any person who gives, agrees or offers to give to any member or creditor of a company, any valuable consideration with a view to securing his appointment or nomination as liquidator, or securing or preventing the appointment or nomination of another person as liquidator, is guilty of a category 2 offence.
Procedure for Appointment II
The chairperson of any meeting at which a liquidator was appointed shall, immediately, deliver to the liquidator notice in writing of his appointment, unless the liquidator or his representative is present at the meeting, at which the resolution was passed. If a chairperson is not elected, the chairperson is the person who was the signatory or the first signatory, on the notice by which the meeting was called.
The liquidator, following receipt of notice of his appointment, shall forthwith deliver a notice of his or her appointment to the CRO. The CRO shall furnish a copy to the ODCE.
Where an order is made appointing a liquidator, the applicant or such officer of the court as may be prescribed, shall, following the order, deliver a copy of the notice in writing of appointment, to the liquidator unless the liquidator is present in court when the order is made. The court officer shall following the making of the order, cause the CRO to be furnished with particulars of the order, as may be prescribed.
Qualification of Liquidators
In practice, most liquidators are accountants who are experienced insolvency practitioners. Until recent legislation, any person could act as a liquidator, subject to limited exceptions, unless disqualified in the circumstances.
The Companies 2014 Act requires, for the first time, that a liquidator must be qualified. He must be a member of a prescribed accounting body, hold a current practising certificate and not be prohibited from so acting. He may be a practising solicitor who is not prohibited from so acting. He may be a member of another professional body recognised by the practising body who is authorised to undertake the relevant activities and is not prohibited. He may be a person so qualified under the laws of another EEA state.
A person is not qualified for appointment as a liquidator unless he has in place the required professional indemnity insurance prescribed by the Supervisory Authority, in respect of claims and civil liability arising on his own behalf and on behalf of his employees or agents. Alternatively, he may participate in a mutual indemnity fund, recognised by the Supervisory Authority, will suffice. It is an offence to act while not having the requisite insurance cover.
If a liquidator ceases to be qualified, he shall vacate office. He shall give notice in writing of vacating office and of the circumstances within two days, to the CRO, the ODCE and the Supervisory Authority. He shall give notice within 14 days to the committee of inspection, in the case of a court or voluntary winding up, where they have been appointed, to the creditors in other cases and in the case of a members’ voluntary winding up, to the members.
A liquidator may be qualified as a person with practical experience of winding up and knowledge of the relevant law who makes application to the Supervisory Authority within two years of commencement of the legislation and is approved for such purpose.
He must satisfy the Supervisory Authority, that he has obtained adequate experience of the winding up of companies and knowledge of the law applicable, by virtue of practical experience on behalf of another or on his own account or on the basis of having practised in the EEA state as a liquidator. He must be a fit and proper person for this purpose and must not otherwise be disqualified as such.
The Supervisory Authority may charge a levy for the purpose of exercising its regulatory functions in relation to whether the applicant is qualified by virtue of experience / grandfathered and whether he is longer sufficiently fit and proper person to act as a liquidator, charge.A person will cease to qualify on the grandfathered basis if he becomes qualified for appointment on another basis (membership of one of the requisite bodies).
Certain categories of persons are disqualified from acting as a liquidator of a company:
- any person who has, within 24 months before the commencement of winding up been, an officer or employee of the company;
- certain relations of officers of the company (without leave of court);
- a person who is a partner or in the employment of an officer or employee of the company;
- an undischarged bankrupt;
- a person who is not qualified on the above grounds to be a liquidator of a group company.
A person who becomes disqualified must cease to act as liquidator. He must give notice of vacating office to the CRO, ODCE, and in certain cases, to the Supervisory Authority. Within 14 days after the date of vacating office, he shall give notice
- in the case of winding up by the court, to the court and if a committee of inspection has been appointed to the members of that committee, or if no committee of inspection has been appointed, to the creditors of the company;
- in the case of a creditors’ voluntary winding up if a committee of inspection has been appointed, to the members of that committee, or if no committee of inspection has been appointed the creditors of the company;
- in the case of a members’ voluntary winding up to the members of the company.
It is a category 2 offence to act as liquidator while disqualified.
Removal or Replacement I
The members in a member’s voluntary winding up may remove the liquidator, appoint a replacement or appoint a liquidator to fill a vacancy. A general meeting of the company for these purposes may be convened on 10 days’ notice to the members, by any member with authority of at least one-tenth in number of the members or by an existing liquidator. The power is subject to any order that the court may make with regard to the matter, on application to it by any contributory or the existing liquidator.
The creditors in a creditors’ voluntary winding up (other than where the court has directed the appointment of the liquidator) may by resolution of a majority in value, exercise the power to remove the liquidator, appoint or replace the liquidator, or appoint a liquidator to fill a casual vacancy. The meeting is convened by 10 days’ notice to the creditors given by any creditor with the authority of not less than one-tenth in value of the creditors, or by an existing liquidator. This is subject to any order the court may make with regard to the matter on application by any creditor.
Removal or Replacement II
In any winding, up, the court may, on the application of a member, creditor, liquidator or the ODCE, appoint a liquidator whenever no liquidator is appointed or on cause shown, remove a liquidator and appoint another liquidator. Any liquidator may be removed by the court for a good reason. A removal does not necessarily imply any wrongdoing. The court may give consequential directions, to give effect to this order.
An official (court appointed) liquidator may resign with court consent.
A liquidator who leaves office must complete his obligations to render an account, file a report and returns and be released from his bond obligations. He must lodge a report and account in general for receipts and distributions.
In any winding, up, the liquidator may resign from office. Where he resigns, he must, within two days give notice to the CRO and the OCDE. Within 14 days after the date of vacating office, he shall give notice
- in the case of a winding up by the court, to the court and if a committee of inspection has been appointed to the members of that committee, or if no committee of inspection has been appointed, to the creditors of the company;
- in the case of a creditors’ voluntary winding up if a committee of inspection has been appointed, to the members of that committee, or if no committee of inspection has been appointed, to the creditors of the company;
- in the case of a members’ voluntary winding up, to the members of the company.
The failure to do so is an offence.
Giving of Notices
The chairperson of any meeting at which a liquidator was removed shall, immediately, deliver to the liquidator notice in writing of his removal, unless the liquidator or his representative is present at the meeting, at which the resolution was passed. If a chairperson is not elected, the chairperson is the person who was the signatory or the first signatory, on the notice by which the meeting was called.
The chairperson of a meeting at which the liquidator is removed shall, following the meeting, deliver to the Companies Registration Office the prescribed form of notice of the removal.
Where an order is made removing a liquidator, the applicant or such officer of the court as may be prescribed, shall, following the order, deliver a copy of the notice in writing of appointment or removal, to the liquidator unless the liquidator is present in court when the order is made. The court officer shall following the making of the order, cause the CRO to be furnished with particulars of the order, as may be prescribed.
Where a liquidator vacates office by reason of cessation of qualification, removal or resignation, and no person remains appointed to act as liquidator, the former liquidator is to retain possession of the company’s books, records and property of the company under his control, until a new liquidator is appointed. He shall thereupon deliver them to the new liquidator, or if directed by the court, on the application of the former liquidator, the ODCE, a member or creditor of the company, to effect delivery or disposal as the court thinks fit. The delivery of the items does not prejudice any lien which the liquidator may have on the items.
References and Sources
Companies Act 2014 Various S.633- S.644 (Irish Statute Book)
Companies Act 2014: An Annotation (2015) Conroy
Law of Companies 4th Ed. (2016) Ch.24 Courtney
Keane on Company Law 5th Ed. (2016) Ch.36 Hutchinson
Other Irish Sources
Tables of Origins & Destinations Companies Act 2014 (2016) Bloomsbury
Introduction to Irish Company Law 4th Ed. (2015) Callanan
Bloomsbury’s Guide to the Companies Act 2015 Courtney & Ors
Company Law in Ireland 2nd Ed. (2015) Thuillier
Pre-2014 Legislation Editions
Modern Irish Company Law 2nd Ed. (2001) Ellis
Cases & Materials Company Law 2nd Ed. (1998) Forde
Company Law 4th Ed. (2008) Forde & Kennedy
Corporations & Partnerships in Ireland (2010) Lynch-Fannon & Cuddihy
Companies Acts 1963-2012 (2012) MacCann & Courtney
Constitutional Rights of Companies (2007) O’Neill
Court Applications Under the Companies Act (2013) Samad
Company Law – Nutshell 3rd Ed. (2013) McConville
Questions & Answers on Company Law (2008) McGrath, N & Murphy
Make That Grade Irish Company Law 5th Ed. (2015) Murphy
Company Law BELR Series (2015) O’Mahony
Companies Act 2006 (UK) (Legilsation.gov.uk)
Statute books Blackstone’s statutes on company law (OUP)
Gower Principles of Modern Company Law 10th Ed. (2016) P. and S. Worthington
Company Law in Context 2nd Ed. (2012) D Kershaw
Company Law (9th Ed.) OUP (2016) J Lowry and A Dignam
Cases and Materials in Company law 11th Ed (2016) Sealy and Worthington
UK Practitioners Services
Tolley’s Company Law Handbook
Gore Browne on Companies
Palmer’s Company Law