The Gazette 1982

CIA/E T N

JANUARY/FEBRUARY 1982

The Calling and Conduct of a Creditors Meeting in a Voluntary Winding-Up

by

Nicholas G. Comyn, Solicitor.

When Called? The voluntary liquidation of a Company is commenced at a General Meeting, which passes the Resolution to wind up (Section 253); in the case of a Creditors' voluntary winding up, the Resolution is an ordinary Resolution, (Section 251 (c) ). Section 266 (1) of the Companies Act, 1963 provides: "the Company shall cause a meeting of the Creditors of the Company to be summoned for the day, or the day next following the day, on which there is to be held the meeting at which the Resolution for voluntary winding up is to be proposed, and shall cause the notices of the said meeting of Creditors to be sent by post to the Creditors at least ten days before the date of the said meeting of the Company". The relevant periods for the calling of the Creditors' Meeting are therefore two: (a) at least ten days notice to the Creditors, by post and (b) to be held the day of or the day after the General Meeting of the Company. In practice, both meetings are usually held on the same day, the Creditors' Meeting being held immedia- tely after the General Meeting. Form of Notice The essential characteristics of the Notice convening the Creditors' Meeting are governed by the Companies Act, 1963 i.e. the meeting is called to discuss (a) the Statement of Affairs, (b) the appointment of a Liquidator and (c) the appointment of the Committee of Inspection. In addition to setting out these facts, the Notice should state where and when the meeting is to be held and, in practice, the Notice will request the Creditor to submit a Statement of the amount due to him by the Company. Every Notice must have attached to it two forms of proxy, a general proxy and a special proxy, as provided for in Rule 77 of Statutory Instrument No. 28 of 1966. A form of general proxy provides that the proxy appointed may vote at his discretion at the meeting of the Creditors or any adjournment thereof. The form of special proxy provides that the proxy may only vote at the Creditors' Meeting as directed, for or against the specified resolution - this pre-supposes, a matter often overlooked, that the form of special proxy itself should specify the proposals to be put to the Creditors' Meeting

and the person to be appointed Liquidator. Included in both the general and special form of proxy is a condition that the proxy when signed be lodged within a time and at an address named by the person convening the meeting at which it is to be used. Execution of the Proxy Note (2) to the form of general and special proxy in Statutory Instrument No. 28, 1966 is the kernel and provides that "a firm executes by A.B. a partner in the said firm". If the appointer is a corpora- tion, then the form of proxy must be executed under its Common Seal or under the hand of some officer duly authorised in that behalf and the fact that he is so authorised must be so stated. If execution is by an authorised officer, then a copy of the Resolution authorising him should be lodged with the proxy (on a strict interpretation of Rule 75 of the Statutory Instrument No. 28 and of Section 139 (1) (b) of the Companies Act, 1963). Unfortunately, the Rules do not provide what happens if the proxy is not properly executed and it is not clear whether a managing director, in the ordinary course of the Company's business, will have power to sign such a proxy. In general, as it is a normal commercial transaction of a Company, a managing director would seem to have authority to sign a proxy form. Rule 83 (1) provides that the time for the return of the proxies is by four o'clock the day before the Creditors' Meeting. Solicitor's Role in the preparation of the Statement of Affairs: The Statement of Affairs, which must be produced at the Creditors' Meeting and which is the responsibility of the Directors (Section 266 (3) (a) of the Companies Act, 1963), is normally the preserve of the Company's accountant or financial controller. However, a Solicitor has a certain role to play, which is to advise that a realistic value is taken of the assets, that proper treat- ment is made of secured debts, that all preferential debts are provided for, that Hire Purchase Agreements are specified, that any "claim" for reservation of title is noted and finally, in particular, to ensure that a full list of Creditors and the amounts due to them is drawn up. If there is a dispute as to any debt due to any Creditor, then this should be noted, as it has consequences under Rule 69 of Statutory Instrument No. 28.

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