Voluntary wind up
Where a business is incorporated and is run through a company, liquidation is the process of winding up the company so that it no longer exists. Through the liquidation process, the company's assets are used to pay its debts.
A liquidator is appointed to wind up the company and has responsibility for disposing of the company's assets, pay or settle its debts and distribute any surplus to the shareholders (or members). When a company is in liquidation, the liquidator usually takes over the power of the directors.
There are two types of voluntary liquidation as follows:
Members' voluntary liquidation
The members of a company that can pay its debts decide to wind it up. As part of this process, a majority of business directors must make a declaration of solvency meaning that they have enquired into the affairs of the company and believe that it would be able to pay its debts within a certain period.
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Web page updated on 17 Mar 2025 13:17