Supplemental Provisions for Windings Up

Part 11 – Winding Up

There are twelve sections in the “supplemental provisions” section in winding up. The salient points are as follows:

  1. A company being wound up must stop carrying on business, except to the extent that it must continue its business to aid a beneficial result in the winding up (Section 677).
  1. All the powers of the directors cease, unless the creditors or the inspection committee allow them to continue; or, if it’s a members’ voluntary liquidation, unless the members, in a general meeting, allow them to continue. (These rules do not apply in the case of a provisional liquidator).
  1. All actions against a company – in all windings up – are stayed when a winding up order has been made (Section 678). This Section replaces Section 222 of the 1963 Act.
  1. There is a new duty on a liquidator to call a meeting at the end of each year if the winding up goes on for more than twelve months (Section 680).
  1. In furtherance of this new duty, the Director of Corporate Enforcement has a new power to direct the liquidator to hold the above meeting if he has not done so (Section 679).
  1. If the winding up has not come to an end after the expiry of twelve months, the liquidator must send the CRO details about the progress of the liquidation, at intervals set out here (Section 681).
  1. The provision which required liquidators to report on the conduct of directors – familiar to practitioners as Section 56 of the CLEA 2001 – is re-enacted in Section 682. As before, the liquidator must apply to have the directors restricted unless relieved of that obligation by the DCE (Section 683).
  1. If the Court thinks it necessary, it may make an order for the inspection of accounting records, etc, at any time after making a winding up order, or at any time after a voluntary winding up has begun (Section 684); this last element is new.
  1. The company’s books are admissible in all civil proceedings (Section 686). This rule is slightly amended from the form found in Section 304 of the 1963 Act. The aim of the amended rule is to make it easier to prove the documents.
  1. There is a new rule that the liquidator may have regard to the wishes of creditors and contributories (Section 687). The liquidator must convene a meeting of creditors and contributories if enough of them – 10% in value of the creditors or 10% in number of the contributories – want him to. If there is a conflict between what the creditors and contributories want, the wishes of the creditors prevail. If there is a conflict between what the creditors and contributories want, and what the committee of inspection wants, the wishes of the creditors and contributories prevail.
  1. There is a new duty on professional bodies to report to the DCE any misconduct of a member in the conduct of a liquidation (Section 688).