1. My company is in heavy debt and we will not be able to continue business or pay off the debts. What should be done to bring the company to an end?
You may consider the option of voluntary winding-up. The relevant procedures include:-
- A special resolution for voluntary winding-up to be passed by the shareholders.
- A notice of the resolution has to be advertised in the Government Gazette within 14 days of the passing of the resolution.
- The company has to call a meeting of creditors. The notice for the meeting has to be advertised in the Government Gazette and in Chinese and English newspapers.
- The directors of the company have to make a full statement of the position of the company’s affairs, together with a list of creditors and the estimated amount of their claims, to be laid before the meeting. Resolution (concerning the details of the winding-up matter or process) may be passed at the meeting.
- During the meeting, a liquidator may be nominated and appointed. Further, an inspection committee may be appointed to supervise the exercise of power by the liquidator.
- The liquidator will deal with the affairs of the company. The liquidator will call further meetings of the company or creditors each year to account for his acts concerning the winding-up.
- When the affairs of the company have been fully wound up, the liquidator will produce an account of the winding-up, and call a final meeting of the company and of the company’s creditors.
If no special resolution can be passed at a general meeting of shareholders, the board of directors may nevertheless pass a resolution that the company be wound up. The relevant resolution shall include the following contents:
- The company cannot because of its liabilities continue its business;
- The directors consider it necessary that the company be wound up;
- Why it is not reasonably practical to use other provisions of the Companies (Winding Up and Miscellaneous Provisions) Ordinance to wind up the company; and
- A meeting of the company and of its creditors will be summoned and held on a date not later than 28 days after the delivery of a declaration to the Registrar of Companies.
A declaration recording such resolution has to be signed by a director and be delivered to the Registrar of Companies within seven days of the date of the resolution. Meetings of the company and of the creditors have to be summoned within 28 days of the delivery of such resolution to the Registrar of Companies. A provisional liquidator also has to be appointed upon the delivery of the declaration.
Due to the complexity of the above procedures, you are advised to consult a lawyer or other qualified professionals before commencing such actions.