A liquidator refers to an officer who is specially appointed to wind up the affairs of a company when the company is closing—typically when the company is going bankrupt.
Who can be a liquidator in South Africa?
A company may be liquidated either voluntarily, by means of the board of directors passing a resolution to that effect, or an application can be made to court either by the company itself (a shareholders’ resolution is required) or by a creditor or shareholder of the company.
Who can be a liquidator?
Eligibility for appointment as liquidator. (1) An insolvency professional shall be eligible to be appointed as a liquidator if he, and every partner or director of the insolvency professional entity of which he is a partner or director, is independent of the corporate debtor.
Why is a liquidator appointed?
The liquidator is appointed to close the company in a professional manner, making sure a fair distribution of the company’s assets takes place amongst creditors. Neither the Court or the official receiver are involved in a CVL procedure. Liquidators are also appointed in Members Voluntary Liquidation (MVL).
How to Become A Liquidator In South Africa
Qualification as Liquidator
The Companies Act 2014 (“the Act”) commenced on 1st June 2015. Under the previous Companies Acts, there were no formal qualifications necessary for the appointment as liquidator or as an examiner.
The 2014 Companies Act however does require qualification for appointment as either liquidator and examiner. Please see information leaflet no.38 regarding qualifications and disqualifications and also Part 11 Companies Act 2014. It should be noted that the Companies Registration Office has no involvement regarding qualification.
Qualification Category | |
Category 1 | Member of Prescribed Accountancy Body |
Category 2 | Practising Solicitor |
Category 3 | Member of Professional Body recognised by IAASA |
Category 4 | Person qualified under the laws of other EEA state |
Category 5 | Person of practical experience |
Liquidations initiated prior to Companies
A liquidator (including a provisional liquidator) can continue to act, in a winding up where the appointment was made prior to the Companies Act 2014’s commencement. (i.e The Act does not affect the appointment of liquidator in any case which was started prior to the new Act).
If a liquidator is applying to act as a liquidator to a company under category 5 (Person of Practical experience), the liquidator can continue to act as liquidator to a company where the appointment was made prior to the introduction of the new Act, even where that application has been refused. (i.e. the new Act does not affect the appointment of a liquidator in any case which was started prior to the new Act).
Category 1 – Member of a prescribed accountancy body
The person is a member of a prescribed accountancy body, being a person who –
holds a current practising certificate issued by that body; and is not prohibited by virtue of rules of that body or a direction, ruling or decision of that body, or any disciplinary or professional practice committee of it, from acting as a liquidator.
Category 2 – Practising solicitor
The person is a solicitor, being a solicitor who –holds a current practising certificate issued by the Law Society of Ireland under the Solicitors Acts 1954 to 2002; and is not prohibited by virtue of regulations made by the Law Society of Ireland, or a decision or order made
Category 3 – Member of other professional body recognised by IAASA
The person is a member of such professional body as the IAASA may from time to time recognise for the purposes of this section, being a person who –
is authorized for the time being by that professional body to pursue the particular activities that that body aims to promote or foster or as respects the pursuit of which by its members that body has been established to represent ;
and is not prohibited by virtue of rules of that body or a direction, ruling or decision of that body, or any disciplinary or professional practice committee of it, from acting as a liquidator.
Category 4 – Person qualified under the laws of other EEA State
The person is entitled under the laws of an EEA state, (other than Ireland), to act as a liquidator in insolvency proceedings and the qualifications held by, or the circumstances otherwise relating to the person, that entitle him or her so to act are ones that by virtue of any Community act, entitle him or her to act as a liquidator in the State.
Specific disqualification from appointment as liquidator or provisional liquidator.
None of the following persons shall be qualified to be appointed or act as liquidator of a company –
(a) a person who is, or who within the period of 24 months before the date of the commencement of the winding up has been, an officer or employee of the company;
(b) except with the leave of the court, a parent, spouse, civil partner, brother, sister or child of an officer of the company;
(c) a person who is a partner or in the employment of an officer or employee of the company;
(d) a person who is an undischarged bankrupt;
(e) a person who is not qualified by virtue of a preceding provision of this subsection for appointment as liquidator of any other body corporate which is that company’s subsidiary or holding company or a subsidiary of that company’s holding company, or would be so disqualified if the body corporate were a company
Who can be a liquidator in South Africa?
A company may be liquidated either voluntarily, by means of the board of directors passing a resolution to that effect, or an application can be made to court either by the company itself (a shareholders’ resolution is required) or by a creditor or shareholder of the company.
How much does a liquidator cost in South Africa?
The cost of liquidation is R 13,500.00. Yes, there are companies that charge R 70 000 for this same service, but if you have that amount of money available, then you should rather pay some of your creditors.
Who can be a liquidator In South Africa?
Eligibility for appointment as liquidator. (1) An insolvency professional shall be eligible to be appointed as a liquidator if he, and every partner or director of the insolvency professional entity of which he is a partner or director, is independent of the corporate debtor.
Why is a liquidator appointed In South Africa?
The liquidator is appointed to close the company in a professional manner, making sure a fair distribution of the company’s assets takes place amongst creditors. Neither the Court or the official receiver are involved in a CVL procedure. Liquidators are also appointed in Members Voluntary Liquidation (MVL).
What happens if a liquidator is appointed In South Africa?
Once a liquidator is officially appointed, they are in charge of closing down the business and investigating the circumstances that led to the company’s insolvency. Their main purpose is to convert any remaining assets into cash and pay as many creditors as possible with those funds, hoping to pay dividends too.
Is a liquidator an officer of the court In South Africa?
In the guide to compulsory liquidation, it is stated that: “The liquidator is an officer of the court (Re Oasis Merchandising Ltd [1998] Ch 170). As such, he has a duty to act fairly and impartially (Condon, ex parte James [1874-80] All ER Rep 388)”.
How long does liquidation process take In South Africa?
It involves handing your company over to a registered liquidator who sells you assets, pays your creditors, and dissolves the business. The liquidation process typically takes around twelve weeks for simple companies, or up to 18 months for more complex ones.
Who does a liquidator owe duties to In South Africa?
a Liquidator has a duty to investigate the affairs of the company, including its promotion and formation and the conduct of its business in the past, including the conduct of its officers. The duty is positive and he has to undertake the investigation exercising reasonable skill and care;
Can a liquidator commence legal proceedings?
The liquidator has the statutory power to commence or continue proceedings on the company’s behalf.