Winding Up and Dissolution

Some Relevant Laws

1. Companies and Allied Matters Act, 2020 (CAMA);
2. Winding Up Rules, 2001;
3. Federal High Court Act and Civil Procedure Rules, 2019;
4. Investments and Securities Act, 2007 (ISA);
5. Securities and Exchange Commission Consolidated Rules, 2013;
6. Banks and Other Financial Institutions Act (BOFIA);
7. Nigerian Communication Commission Act;
8. Companies Proceedings Rules, 1992.

Persons Who Play Major Roles

1. Liquidator;
2. Official receiver;
3. Provisional liquidator;
4. Receiver / Receiver Manager;
5. Special Manager.

Meaning and Significance

Winding up is the process by which a company is liquidated and dissolved, and its assets distributed in accordance with the rules of priority for the benefit of its creditors, members and employees.

Modes of Winding Up – S564

1. Compulsory winding up by the Court;
2. Voluntary winding up:
   • Members’ voluntary winding up;
   • Creditors’ voluntary winding up;
3. Winding up subject to the supervision of the Court.

Liability of Present and Past Members – S565

In the event of a company being wound up, every present and past member is liable to contribute to the assets of the company as provided in S117.

S117 provides that every member is liable as a contributory but not where:

1. He has ceased to be a member for a period of one year or more before the commencement of the winding up;
2. Unless it appears to the Court that the existing members are unable to satisfy the contributions required;
3. For a company limited by shares, no contribution is required exceeding the amount unpaid on the shares;
4. For a company limited by guarantee, no contribution exceeding the amount undertaken to be contributed in the event of winding up;
5. Any sum due from the company to a member by way of dividends or otherwise shall not be set off against his contribution liability, but shall be taken into account for final adjustment of rights between members.

Definition of Contributory – S566

A “contributory” means every person liable to contribute to the assets of a company in the event of its being wound up. For the purposes of all proceedings prior to final determination, the expression includes any person alleged to be a contributory.