← Lessons 02-Business and Company Law
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Law of Contract Sole Traders Partnerships Limited Liability Partnerships — LLP Limited Companies Public Limited Company — PLC Private Limited Company Company Formation & Registration Certificate of Incorporation Private Company → Public Company Company Registers Company Accounts Share Capital Directors Company Secretary Auditors Annual General Meetings — AGM Proxies Company Reports People with Significant Control — PSC Winding Up / Liquidation Liquidator's Duties Bankruptcy ⭐ Key Exam Numbers to Remember

Winding Up / Liquidation

  • A company can be dissolved and removed from the register.
  • This process is commonly called:
    • Winding up
    • Liquidation
  • Two main types:
    • Voluntary winding up.
    • Compulsory winding up.

Members' Voluntary Winding Up

  • Shareholders agree to wind up the company.
  • A resolution is passed.
  • If the company is solvent, directors make a statutory declaration that the company can pay its debts.
  • Shareholders appoint a liquidator.

Creditors' Voluntary Winding Up

  • Used when the company cannot pay all its debts.
  • The company cannot make the required declaration of solvency.
  • Creditors receive a statement of the company's financial position.
  • Creditors, rather than shareholders, appoint the liquidator.

Compulsory Winding Up

The court may order winding up where, for example:

  • Company does not start business within a year.
  • Company suspends business for a year or more.
  • Number of members falls below two.
  • PLC's Trading Certificate is withheld.
  • Company cannot pay its debts.

The notes state that failure to pay a creditor within 3 weeks after a statutory demand of £750 or more can lead to a winding-up order.