A frequently asked question relating to Insolvency Law is how does a company get wound up? A company, like an individual, trust or partnership, can be wound up voluntarily or compulsorily.
- Voluntary winding up: A company or close corporation can wind itself up voluntarily by way of a special (75%) resolution of its shareholders or members, or by way of an application to court. A company can only be wound up by special resolution if no debt exists. An affidavit will be signed by the directors and a certificate to this effect is issued by the company’s auditor. A liquidator is then appointed to wind up the company.
- Compulsory winding-up: Section 344 of the 1973 Companies Act provides that a company may be compulsorily wound up by court at the application of a creditor, on various grounds, not necessarily related to the company’s insolvency. Most commonly, however, creditors will seek to wind up a company involuntarily on the basis that the company cannot pay its debts.
Our experienced Insolvency Law team can assist with all matters related to your business including liquidation, sequestration, rehabilitation and business rescue. Cognisant of the challenges faced by clients, we ensure that the right approach is adopted for your matter.
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