Chapter 2. Previous Work
3.2 Control System Design
3.2.2 High Level Tasks
3.2.2.8 Place Sensor Task
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The liquidator has specific functions or duties, namely:
i. Collection of Debts
The liquidator, being an officer of the court, has the duty to secure the payment to him or other discharge of all debts of the company and apply them to the discharge of its liabilities.566
ii. Custody of Company‟s Property
The liquidator owes the duty to take into custody or under his control all the property and things or choses in action to which the company is, or appears to be entitled.567 In the course of carrying out this duty, the liquidator is given the power to disclaim onerous property568 and to have the property of the company vested in him.569
iii. Settlement of List of Contributories
The liquidator exercises the duty to settle a list of contributories as in Form 31 in the Appendix to the Rules.570 In the course of the settlement of list of contributories, the liquidator may rectify the register of members in all cases where rectification is required. It should be noted that it is only after the settlement of contributories, unless where dispensed by the court, that the collected assets of the company can be applied in discharge of its liabilities.571 Worthy of note is the fact that the duty for settlement of list of contributories is a delegated duty.572 However,
566 Insolvency Act, op cit, s. 143 (1) (UK); Bodies Corporate (Official Liquidations), op cit, s. 36 (Ghana); CWR, op cit, r. 61 (1).
567 CAMA, op cit, s. 423; Insolvency Act, ibid, s. 144 (1).
568 CAMA, ibid, s. 499 (1).
569 Ibid, s. 423.
570 CWR, op cit, r. 63 (2).
571 CAMA, op cit, s. 439; CWR, ibid,, rr. 63 – 68.
572 CAMA, ibid, s. 453 (1) (b); CWR, ibid, r. 63 (1).
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the court can dispense with the settlement of the list of contributories where the circumstance does not warrant the making of a call.573
The procedure for the settlement of list of contributories require the liquidator to give notice in writing as in Form 32 in the Appendix to the Rules, of the time and place appointed for the settlement of the list of contributories, to every person whom he proposes to include in the list.574 On the day appointed for the settlement of the list of contributories, the liquidator shall hear any person who objects to being settled as a contributory and after such hearing, shall finally settle the list and issue a certificate as in Form 33 in the Appendix to the Rules.575 It is the list so settled after hearing that constitutes the list of contributories of the company. Subsequently, the liquidator shall give notice as in Form 34 in the Appendix to the Rules to every person whom he has finally placed on the list of contributories.576 It should be noted that the liquidator or the court may vary or set aside the list.577
iv. Making of Calls
The liquidator has the duty to make calls on all or any of the contributories in the list of contributories to the extent of their liability; and for payment of any money which the court considers necessary to satisfy the debts and liabilities of the company; and the cost, charges, and expenses of winding up.578 Instructively, this duty is exercised by the liquidator as a delegated duty and subject to either the special leave of the court or the sanction of the Committee of Inspection.579
It is important to state that in other to obtain the sanction of the committee of inspection to make calls on all or any of the contributories, the liquidator has to
573 CAMA, op cit, s. 439 (1) proviso; CWR, op cit, r. 63 (1).
574 CWR, ibid, r. 64.
575 Ibid, r. 65.
576 Ibid, r. 66.
577 Ibid, rr. 67 and 68.
578 CAMA, op cit, s. 442 (1).
579 Ibid, s. 453 (1) (d) (2); CWR, op cit, r. 69 (a).
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summon a meeting of the committee by giving notice of the meeting as in Form 36 in the Appendix to the Rules. Such notice shall be sent to each member of the committee in sufficient time, not less than fourteen days to the day appointed for the meeting, which notice shall contain a statement of the proposed amount of the call and the purpose for the call.580 It is further required that the notice of the intended call and the meeting of the Committee of Inspection shall be advertised as in Form 37 in the Appendix to the Rules, in a national newspaper where the proceedings is in the head office of the court581 and in any other case, in a newspaper circulating in the division of the court in which the proceeding is pending.582
Where there is no Committee of Inspection, the liquidator can only make a call on the contributories with the leave of court,583 which leave is by summons as in Forms 39 and 40 in the Appendix to the Rules. The summons shall state the proposed amount of the call and be served seven clear days before the day appointed for making the call on every contributory. However, the court may direct that notice of such proposed call be given by advertisement as in Form 41 in the Appendix to the Rules, without a separate notice to each contributory.584
v. Keeping of Proper Books
It is a duty of the liquidator to keep proper books in which he shall cause to be made entries or minutes of proceedings at meetings.585 The book to be kept by the liquidator is the book called the “Record Book” in which he shall record all minutes of proceedings and resolutions passed at any meeting of the creditors or contributories or of the committee of inspection and all such matters that may be necessary to give a
580 CWR, op cit, r. 69 (b).
581 Ibid, r. 184 (2) – it means where the Chief Judge is stationed.
582Ibid, r. 69 (c).
583 Ibid, r 69 (g).
584 Ibid, r. 70.
585 CAMA, op cit, s. 430.
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correct view of his administration of the company‟s affairs. However, the liquidator is not bound to enter in the Record Book, any document of a confidential nature.586 Another book to be kept by the liquidator is that known as the “Cash Book” in which he shall enter from day to day the receipts and payments made by him and in trading account where carrying on the business of the company.587
It is pertinent to state that the liquidator owes consequential duty to submit the books to the Committee of Inspection when required which is not less than once every three months.588 Furthermore, the Committee of Inspection shall not, less than once every three months, audit the liquidator‟s Cash Book and certify the audit as in Form 70 in the Appendix to the Rules.589 In addition, the liquidator is mandated to transmit to the Registrar-General of Corporate Affairs Commission (CAC) for audit, a copy of the Cash Book in duplicate; vouchers and copies of the certificates or audit by the Committee of Inspection, at the expiration of six months from the date of the winding up order and at the expiration of every succeeding six months thereafter until his release.590 It is instructive that the Attorney-General of the Federation may order that the books and papers of a company wound up should not be destroyed for such period not exceeding five years from dissolution.591
vi. Payments into Company‟s Liquidation Account
It is a duty of every liquidator of a company to pay money received by him, including unclaimed dividends, into the public fund of the Federation kept by the Corporate Affairs Commission and known as “the Companies Liquidation
586 CWR, op cit, r. 154.
587Ibid, rr. 155 (1), 159 (1).
588 Ibid, r 155 (2).
589 Ibid, r 157.
590 CAMA, op cit, s. 429; CWR, ibid, r. 158 (1).
591 CAMA, ibid, s. 515 (2) (3) – powers of the Corporate Affairs Commission to prevent disposal of books, etc of the company; CWR, op cit, r. 178.
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Account”.592 However, the liquidator can pay moneys received by him into another bank selected by the Committee of Inspection and an account other than the Companies Liquidation Account, where the Committee of Inspection were able to obtain exemption from the Corporate Affairs Commission on the ground of business expediency and beneficial advantage to the creditors and contributories, which account is known as the “Special Bank Account”.593 It still remains the position of the law that a liquidator of a company cannot pay any sum received by him into his private bank account.594
vii. Statement and Information
The liquidator of a company is under a duty to give to the official receiver such information and access to and facilities for inspecting the books and documents of the company.595 Furthermore, the liquidator owes the duty to send a statement in the prescribed form concerning the liquidation, to the Corporate Affairs Commission596 and to make available the statement for inspection by a creditor or contributory of the company, on the payment of the prescribed fees.597
viii. Distribution of the Company‟s Assets
Once the liquidator has gathered the company‟s assets, he is under a duty to distribute surplus among the members according to their rights.598
ix. Liquidator‟s Meetings
The liquidator, subject to the provisions of the CAMA and the control of the court, has the duty to summon, hold and conduct meetings of the creditors or
592 CAMA, op cit, ss. 428 (1), 527 – definition of “Companies Liquidation Account”; CWR, op cit, rr 152, 171.
593 CAMA, ibid, s. 428 (1) proviso.
594 Ibid, s. 428 (3).
595 Ibid, s. 426.
596 Ibid, s. 516 (1).
597Ibid, s. 516 (2).
598 Orojo, op cit, p. 484.
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contributories from time to time as may be directed or requested599 for the purpose of ascertaining their wishes in all matters relating to the winding up. The procedure for meetings including the Liquidator‟s meetings of creditors and contributories are set out in the Rules,600 including the right to attend by proxies.601 Suffice to state that a minor cannot be appointed a general or special proxy.602 While a general proxy is as in Form 64 in the Appendix to the Rules,603 a special proxy is as in Form 65 in the Appendix to the Rules.604
x. Proof of Debt and Priority of Debt
One of the significant duties of a liquidator is that of proof of debt. It is entrusted on the liquidator the duty to ascertain, examine, admit or reject the proof of debt lodged with him and to ascertain priority of debt.605 As a corollary, the liquidator is to verify debts ranking for dividends in a winding up by the court.606 In order to carry out this duty, a liquidator is guided by certain rules such as the “rule against double proof”, which seeks to prevent more than one creditor suing the insolvent company for the same debt607 and the “mandatory set-off rules” which requires the sum due from the creditor to be set off against the sum due from the company where those sums arise from mutual credits, mutual debts or other mutual dealings between the company and the creditor arising in the liquidation.608
xi. Returns
The liquidator is under a duty to make various returns, including:
599 CAMA, op cit, ss. 427 (2), 453 (1) (a); CWR, op cit, rr. 110 (1), 112.
600 CWR, ibid, rr. 111- 124.
601Ibid, rr. 129 to 139.
602 Ibid, r. 137 (3).
603 Ibid, rr. 130, 132 and 137.
604 Ibid, rr. 130, 133 and 137.
605 Ibid, rr. 74 to 101.
606 Ibid, r. 102.
607 Davies & Worthington, op cit, p.1290.
608 Ibid, p. 1291.
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a) Return of capital to contributories.609 b) Notice of his appointment.610
c) Account of receipts and payments as liquidator.
d) Copy of the order of dissolution of the company.611
e) Statement in the prescribed forms at such intervals as may be prescribed, if the winding up is not concluded within one year after its commencement.612 It is pertinent to state that the liquidator‟s duty to make returns is enforceable by an order of the court.613
2. Powers of the Liquidator
In order to carry out the expansive duties, the liquidator is conferred with a wide range of powers, some of which can be exercised on his own volition, others need the leave of court or sanction of the committee of inspection614 and some exercised with the special leave of court.615 The liquidator has the power with either the leave of court or sanction of the Committee of Inspection616 to:
a) Bring or defend any action or other legal proceedings in the name and on behalf of the company.617 In other words, where no sanction of either the court or the Committee of Inspection is sought and obtained by the liquidator, no legal action or proceedings can be brought or defended by the liquidator,618
b) Carry on the business of the company so far as may be necessary for its
609 CWR, op cit, r. 103.
610 CAMA, op cit, ss. 422 (3) (d), 491; CWR, ibid, r. 41 (7).
611 CAMA, ibid, s. 454.
612Ibid, s. 516 (1).
613 Ibid, s. 511 (1).
614 Ibid, s. 425.
615Ibid, s. 453 (2).
616 Ibid, s. 425 (1).
617Ibid, s. 425 (1) (a); Onwuchekwa v NDIC, supra.
618 In Re: Amolegbe (2015) 25 JMLR, 213 at 232, para. E; [2014] N.W.L.R (pt 1408) 76 at 96 – 97, paras G –A.
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beneficial winding up,619
c) To appoint a Legal Practitioner or any other relevant professionals to assist him in the performance of his duties,620
d) Pay any classes of creditors in full,621
e) Make any compromise or arrangement with creditors or persons claiming to be creditors or having or alleging themselves to have any claim against the company,622
f) Compromise all calls and liabilities to calls, debt and liabilities and all claims between the company and a contributory and all questions relating to the assets of the company,623
g) Making of calls,624
h) Rectifying the register of members where required.625
The liquidator shall have the power without either the leave of court or sanction of the Committee of Inspection to:
a) Sell the property of the company of whatever nature by public auction or private contract, with power to transfer the whole thereof to any person or to sell the same in parcels,626
b) Do and execute all acts, in the name and on behalf of the company, all deeds, receipts and other documents, and for that purpose, when necessary to use the company‟s seal,627
c) Prove, rank and claim in the bankruptcy insolvency or sequestration of any
619 CAMA, op cit, s. 425 (1) (b); Gbedu v Itie & ors, supra, at 260,paras. F–H.
620 CAMA, ibid, s. 425 (1) (c).
621 Ibid, s. 425 (1) (d); CAC v Davis, supra at 78-79, paras H–F.
622 CAMA, ibid, s.425 (1) (e); CAC v Davis, supra at 78–79.
623 CAMA, ibid, s.425 (1) (f); CAC v Davis, ibid.
624 CAMA, ibid, s. 453 (1) (d) and (2).
625Ibid, s. 453 (1) (b) and (2).
626Ibid, s. 425 (2) (a).
627 Ibid, s. 425 (2) (b).
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contributory for any balance against his estate,628
d) Draw, accept, make and endorse any bill of exchange or promissory note in the name and on behalf of the company,629
e) Raise on the security of the assets of the company any money requisite;630 f) Take out in his official name, letters of administration to the estate of any
deceased contributory and to do in his official name any other act necessary for obtaining payment of any money due from a contributory or his estate which cannot be conveniently done in the name of the company,631
g) Appoint an agent to do any business which the liquidator is unable to do himself,632 and,
h) Do all such other things as may be necessary for winding up the company and distributing its assets.633