Procedure For Private Company Liquidation In Ghana

INTRODUCTION

An incorporated Company has a perpetual succession and can remain alive forever or potentially so. But just as it is birthed through the instrumentality of its incorporations, its death or demise may be guided through the instrumentality of its liquidations.

Liquidation in relation to a Company means the winding up of the Company¹. Liquidation may be private or official liquidation. Private Liquidation, otherwise called Voluntary Liquidation, culminates in the dissolution of the Company. Dissolution may be achieved "before full winding" or "after full winding up".

Official Liquidation, also called Compulsory Liquidation, often involves, but does not necessarily or always involve, an insolvent Company. Where an insolvent Company must be liquidated, it will always be by way of Official Liquidation, but fractions and irreconcilable shareholder disputes or other grave or serious matters may result in a solvent Company being compulsorily liquidated, and then dissolved accordingly.

PRIVATE LIQUIDATION

Private Liquidations are governed by the provisions of the Companies Act, 2019 (Act 992) whiles Official Liquidations are governed by the provisions of the Corporate Insolvency and Restructuring Act, 2020, (Act 1015) as amended.

Once a Company is wound up and dissolved, it is dead and buried – and like a human obituary that is announced in the daily graphics and other sources, the announcements of the demise of the Company is also made by publication in the "Company Bulletin" by the Registrar of Companies.

The death and burial are the norm, but death and resurrection is a rare possibility. In some instances, under strict timelines and conditions, a dissolved Company may be "restored" by the Registrar of Companies. In those rare instances, the Company would be resurrected. Otherwise, a dissolved company gives up the ghost and remains lifeless, as a fallen being, only to be faded away and be forgotten with time.

PROCEDURE OF PRIVATE/VOLUNTARY LIQUIDATIONS

Voluntary liquidation/Dissolution after full winding-up is regulated by Act 992. It is done by a solvent company and it commences with the following steps:

1. The directors of the company must depose to an affidavit that the company is solvent, at least, for the next 12 months from the commencement of liquidation and must propose that the company be privately liquidated.
2. Within five (5) days of the preparation of the affidavit of solvency, the shareholders should resolve by special resolution that the company be privately liquidated and appoint a liquidator.
3. The Company must also ensure that, there has been a renewal of its registration for all the years from the date the Company has been in existence with the RGD by filing all the Company Annual Audited Accounts and other statutory returns with the RGD is up to date (file Annual returns and Audited Accounts to date).
4. The Company must prepare in writing a notice/letter to the Registrar of Companies explaining the reasoning behind the decision to liquidate the company.
5. Attach original copies of all the registration documents (depending on the type of business registered).
6. The Registrar will review the documents before any further action is taken.
7. The Registrar of Companies may communicate to the Company in writing in response to the special resolution. The special resolution shall then be gazetted in the Companies Bulletin.
8. After the gazette of the special resolution in the Bulletin, the Registrar of Companies will cause the name of the company to be struck out from the Company register.
9. There shall then be the publication of first creditors meeting and a publication of second creditors meeting.
10. Finally, the assets of the Company shall be sold to pay off its creditors in accordance with priority interests.

DISSOLUTION WITHOUT FULL WINDING UP

Where the Registrar, by reference to personal knowledge, or on information supplied by any officer, member or creditor of a Company, has reasonable cause to believe that the Company is not carrying on business or is not in operation, the Registrar may by written communication to the Company enquire whether the Company is carrying on business or is in operation and will go ahead to strike out the name of the Company from the Register without the Company fully going through a winding up process.

1. Dissolution without full winding-up is regulated by the Act 992 and it is done by Solvent Companies and commences with the following steps:
2. 1. Renewal/ File of all Company Annual Returns Up to Date.
   2. The Shareholders shall write a notification letter to Registrar of Companies and attach Form A and copy of the original Company Registration Certificate about the intention to wind up operations even though it has not operated over the years.
   3. Where the Registrar makes the enquiry about the operational or non- operational activities of the Company and the Registrar does not receive an answer to the written communication, within two months of the communication, the Registrar may send to the Company a second written communication referring to the first written communication, stating that an answer has not been received by the Registrar, and that if an answer is not received to the second written communication within two months from the date of the second written communication, a notice will be published in the Companies Bulletin with the view to striking the name of the Company off the register.
   4. Where the Registrar receives an answer from the Company to the effect that it is not carrying on business or in operation, or does not within the specified time after sending the second written communication receive an answer to the second written communication, the Registrar may publish in the Companies Bulletin and send to the Company by written communication a notice that at the expiration of three months from the date of that notice the name of the Company shall, unless cause is shown to the contrary, be struck off the register and the Company shall stand dissolved.
   5. At or after the expiration of the time specified in the notice, the Registrar shall, unless cause is shown, strike the name of the Company off the register and shall publish the notice of that fact in the Companies Bulletin and upon that publication. the Company shall stand dissolved.

RESTORATION

1. In both cases of dissolution there is an opportunity for the Company to be revived or restored by a court order.
2. When the name of a Company is struck off the register, at any time within twelve years (12) after the publication in the Companies Bulletin, the Court may, on application made for this purpose by a liquidator or by a former officer, member or creditor of the Company, or by a person claiming through or under any of them, make an order on the terms that the Court considers fit, declaring the dissolution void and ordering the name of the Company to be restored to the register on the orders of the court.

CONCLUSION

Even though the terms "winding up, liquidation and dissolution" are used interchangeably, they do not have the same meaning. The winding up process involves liquidation along the way with dissolution being the final stage of the whole process. Companies who intend to wind up voluntarily must do so by following the appropriate procedures as discussed above and ensure that the final stage is reached and concluded by the Registrar of Companies.

Footnote

1. See s 169 of Corporate Insolvency and Restructuring Act, 2020 (Act 1015)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.