Members Voluntary Winding Up I
A company may be wound up voluntarily by way of a members’ voluntary winding up. The procedure is commenced in accordance with the Summary Approval Procedure.
The Summary Approval Procedure may also be used in relation to a company whose duration is for a fixed period or until a fixed event occurs. In this case, a members’ voluntarily winding may be initiated, under an alternative procedure. This also requires a director’s declaration of solvency to be made not earlier than 30 days prior to the members’ resolution and to be accompanied by an independent expert’s report, to the effect that declaration is not unreasonable.
Where the Summary Approval Procedure is used, the declaration shall state—
- the total amount of the company’s assets and liabilities as at the latest practicable date before the date of the making of the declaration and in any event at a date not more than 3 months before the date of that making; and
- that the declarants have made a full inquiry into the affairs of the company and that, having done so, they have formed the opinion that the company will be able to pay or discharge its debts and other liabilities in full within such period not exceeding 12 months after the commencement of the winding up as may be specified in the declaration;
Members Voluntary Winding Up II
A copy of the Summary Approval Procedure declaration shall be delivered to the CRO not later than 21 days after the date on which the winding up is commenced. If a failure to comply occurs, the court may order nonetheless that the procedure is deemed valid for all purposes.
The declaration has no effect unless it is accompanied by a report—
- drawn up in the prescribed form, by a person who is qualified at the time of the report to be appointed, or to continue to be, the statutory auditor of the company; and
- which shall state whether, in the opinion of that person, that the declaration is not unreasonable.
The required declaration must be in writing made at a meeting of the directors held not earlier than 30 days before the date of the shareholders’ meeting or if the written means for passing the resolution is used, not earlier than 30 days before the date of the signing of the resolution by the last member to sign. It must be made by the directors or, in the case of a company having more than 2 directors, by a majority of the directors.
Members Voluntary Liquidation III
The Summary Approval Procedure requires a special resolution of the members of the company. The written resolution procedure may be used. The company must forward with each notice of the meeting at which the special or other resolution is to be considered, or if the written means for passing the resolution is used, the company must append to the proposed text of the resolution, a copy of the declaration with the required expert’s report attached to it.
Where a company has passed a resolution for voluntarily winding up, whether following the Summary Approval Procedure or the above alternative procedure where it applies, it shall within 14 days give notice of the resolution by advertisement in Iris Oifigiúil. Default, including by the liquidator or by the company or an officer in default, is a category 3 offence.
In a voluntary liquidation, the liquidator shall, within 14 days, deliver a notice of his appointment to the CRO. The Registrar shall forward a copy of the notice of appointment to the ODCE. Failure to do so is an offence on the part of the liquidator.
Conversion by Court
Where the liquidation has been commenced as a member’s voluntary liquidation, it may proceed as creditor’s voluntary liquidation
- if the company is insolvent or proves to be insolvent;
- where a court order is made following an application by one-fifth of the members in value, and the court is of the opinion that it is unlikely that the company will be unable to pay its debts or
- where the summary approval procedure has been unsuccessfully attempted.
On the application by a creditor of the company, if the court is satisfied that the creditor or other creditors supporting the application represent at least one-fifth in value or number of the creditors, and it is of the opinion that it is unlikely that the company will be able to pay or discharge its debts and other liabilities within the period specified in the declaration (12 months), the court may order that the liquidation proceed as a creditors’ voluntary winding up.
The application must be made within 30 days of the date on which the resolution for the voluntary winding up has been advertised. If an application by one or more members of the company to cancel the special resolution is made and there is also an application to cancel on the dissenting minority basis applicable to the Summary Approval Procedure, the court may direct that the applications be heard together.
Where an order is made that the liquidation proceed as a creditor’s voluntary winding up, the order shall be filed in the CRO within 21 days. Failure to do so is a category 4 offence by the company and any officer in default.
Conversion by Liquidator I
If the liquidator in a members’ voluntary winding up forms the opinion at any time that the company will not be able to pay its debts in full within 12 months as above, he must convert the process into a creditors’ voluntary winding up. He must advertise and hold a meeting of creditors and provide them with a statement of the company’s affairs. To that end, he mhe must
- summon a meeting of creditors within 14 days of that date;
- send notices to the creditors not less than 10 days before the date of the meeting,
- cause notice of the meeting to be advertised in Iris Oifigiúil and at least two daily newspapers circulating in the locality in which the company’s principal place of business was situated; and
- during the period before the day on which the creditors’ meeting is to be held, furnish the creditors, free of charge, with such information concerning the affairs of the company as they may reasonably require.
Notice of the creditors’ meeting shall state this duty.
Conversion by Liquidator II
The liquidator shall make out a statement in the prescribed form as to the affairs of the company, including a statement of the company’s assets and liabilities, a list of outstanding creditors and the estimated amount of their claims. He shall lay that statement before the creditors’ meeting, and attend and preside.
Where the creditors’ meeting is held, the matter is to proceed as if it was a creditors’ voluntary winding up. This does not affect the validity of earlier acts of the members’ liquidator.
Where the creditors appoint a liquidator, and there is a dispute as to the costs, charges, and expenses incurred by the liquidator appointed by the members, the liquidator appointed by the creditors, may apply to the court to determine the dispute, which may make such order as it sees fit.
Creditors Voluntary Winding Up I
A company may be wound up voluntarily in a creditors’ voluntary winding up. This may be initiated by the company in general meeting resolving that it cannot by reason of its liabilities continue its business and that it be wound in a creditors’ voluntary winding up.
A company shall be wound up in a creditors’ voluntary winding up in the case of a members voluntary winding up which is converted into a creditors’ voluntary winding up or where the summary approval procedure in respect of a members’ voluntary winding up is not completed.
Within 14 days of the date of passing of the creditors’ resolution to wind up, notice shall be given in Iris Oifigiúil. Default in so doing is a category 3 offence on the part of the company and any officer in default, including the liquidator.
Creditors Voluntary Winding Up II
The company is to cause a meeting of the creditors of the company to be summoned for the day or the day following that on which the members’ meeting at which a resolution for a creditors’ voluntary winding up is proposed. For that purpose, the company shall send to each creditor, at least 10 days before the meeting, notice in writing of the meeting.
The notice in writing must state
- the date, time and location of the creditors’ meeting;
- the name and address of the person proposed for appointment as liquidator if any and
- either attach a list of the creditors of the company or notify the recipient of his rights below, together with details of the location of where the list of creditors may be inspected.
Creditors Voluntary Winding Up III
A creditor who has not been given a list of the creditors of the company may, prior to the holding of the meeting, by giving 24 hours’ notice in writing, inspect during business hours a list of creditors. Alternatively, he may request the company in writing to deliver a copy of the list to him. The company must comply. The copy may be delivered by the company by post or, with consent, in any other manner.
The company shall cause notice of the creditors’ meeting to be advertised, at least 10 days before the meeting, once in at least 2 daily newspapers circulating in the district where the registered office or principal place of business of the company is situated. It need not include the list of creditors.
The directors of the company shall cause a full statement of the company’s affairs, together with a list of contributories and the estimated amount of those claims, to be laid before the creditors’ meeting.They shall appoint one of their members to preside at the meeting. It is the duty of the director so appointed to attend the creditors’ meeting and preside at it.
Default on the part of the company in respect of the above obligations constitutes category 3 offence on the part of the company and any officer in default.
The creditors and the members at the respective meetings may nominate persons to be liquidators. If they nominate different persons, the persons nominated by the creditors shall be the liquidator. If no person is nominated by the creditors, the person, nominated by the members is the liquidator.
Where a person nominated by the company to be liquidator takes office before the creditors make their nomination and a different person is nominated, the members’ nominee shall vacate office.
Where different persons are nominated as liquidator, any director, secretary or creditor may, within 14 days, apply to court for an order directing that the person nominated as liquidator by the company shall be liquidator instead of or jointly with the person nominated by creditors, or appointing some other person to be liquidator instead of the persons nominated by the creditors. The court may make such order accordingly.
If at a meeting of the creditors, a resolution as to the creditors’ nominee as liquidator is proposed, it is deemed to pass when a majority in value only, of the creditors, present personally or by proxy and voting, have voted in favour of the resolution.
Where at a meeting of creditors, a resolution is proposed for the appointment of a liquidator, any creditor who has a connection with the proposed liquidator shall make such connection known to the chairperson, who shall disclose the fact to the meeting together with particulars thereof. This provision also applies to a person at the meeting being a representative of a creditor entitled to vote on his behalf. The chairperson shall disclose any connection to the liquidator.
A person has a connection if he is a relation, is employed by or is a partner of, the proposed liquidator. Failure to disclose is a category 3 offence. The court may have regard to whether this disclosure was made in exercising its functions in relation to appointment and removal of liquidators.
The liquidator shall, within 14 days, deliver a notice of his appointment to the CRO. The Registrar shall forward a copy of the notice of appointment to the ODCE. Failure to do so is an offence on the part of the liquidator.
Pre-2014 Act Members’ Winding Up I
Formerly, there were a number of mechanisms by which a solvent members voluntary winding up might be initiated. The most commonly employed procedure was initiated by a special resolution of the shareholders, 75% majority. There must have been at least 21 days’ notice of the meeting. More than 90% could agree to a shorter notice period.
The meeting was generally convened by the directors. The members could apply to the court for an order requiring the holding of a meeting. Within 14 days of the winding up resolution being passed, particulars were required to be filed in the CRO and published in the official gazette, Iris Oifiguil.
A solvent winding up formerly required a declaration of solvency. The Summary Approval Procedure applies under the 2014 Companies Act to members voluntary winding up, which itself requires a declaration of solvency by the directors.
Pre-2014 Act Members’ Winding Up II
The declaration was required to be made by a majority of the directors. It was required to confirm that having made full enquiries, they were of the opinion that the company would be able to pay its debts in full within twelve months of winding up. The resolution was required to be no more than 28 days old, at the date of the meeting.
The declaration was required to set out the company’s assets and liabilities. Latterly, it was required to include a report from an independent person to the effect that the directors’ opinion regarding solvency is reasonable. The independent person for this purpose was a person qualified to be the company’s auditor.
If a declaration of solvency was later shown to be incorrect, the directors could be made liable personally for the company’s debts, unless they could show there was a reasonable basis for the declaration and the views on which it was based.
Pre-2014 Act Creditors Winding Up I
At least 14 days’ notice was required for the extraordinary general meeting to appoint a liquidator. As it required a special resolution, the notice was required to set out clearly the resolutions proposed and specify where and when the meeting would be held. Particulars of the resolution were required to be filed with the Companies Registration Office within 14 days and details were to be published in the Official Gazette within 14 days.
A creditors’ meeting was required to be convened, either on the same day as the shareholders’ meeting or on the following day. This was convened by the directors and notice was required to be given by post to each creditor, at least 10 days before the members’ meeting, was convened.
The notice was required to be advertised in two daily newspapers, circulating in the district where the principal place of business or the company’s registered office was situated. It was an offence for officers to fail to give the requisite notice of the meetings.
Pre-2014 Act Creditors Winding Up II
One of the directors was required to chair the creditors’ meeting. The meeting must be provided with a statement of the company’s affairs together with a list of creditors and the estimated amount of their claims. The provisions in respect of entitlement of vote at the meeting was equivalent to that in a court liquidation.
The purpose of the meeting was to appoint a liquidator and if applicable, a committee of inspection. Where the members selected one person as liquidator, the creditors might accept that choice or substitute their own nominee. Resolutions to appoint required a majority in value. Irrespective of the nomination, shareholders, officers or creditors could apply to court within 14 days to substitute the appointment of the liquidator with an alternative liquidator.
At this meeting or at a later meeting, the creditors could appoint a committee of inspection. This consisted of not more than five creditors. The company could appoint three nominees, subject to creditors’ objection, which may, in turn, be overruled by the court.
Pre-2014 Act Creditors Winding Up III
Where a members’ voluntary winding up was on-going, and creditors believed that the company is not solvent, creditors representing 20% in number or value, could apply within 28 days to court on the basis that the company is unable to pay its debts. The court could order that the liquidation should take effect as the creditors ‘ winding up.
The liquidator might form the view during the course of liquidation, that the liquidation should be converted into a creditors’ voluntary liquidation. In such event, the liquidator was required to convene the appropriate meetings, and the creditors could exercise the relevant powers. The creditors could then assume control of liquidation, subject to what a court may direct on foot of an application by a qualified shareholder.
The liquidator was required to summon meetings of the shareholders and creditors, yearly and present an account of his winding up. The company was dissolved a period after the filing of the final account.
References and Sources
Companies Act 2014 S.578-S.588 (Irish Statute Book)
Companies Act 2014: An Annotation (2015) Conroy
Law of Companies 4th Ed. (2016) Ch.25 Courtney
Keane on Company Law 5th Ed. (2016) Ch. 38 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