Meaning
Shareholders of a solvent company can choose to initiate a voluntary winding-up process to distribute assets and dissolve the entity. Under the mechanism of section 92, the members of a company may pass a resolution to appoint a voluntary liquidator. This procedure bypasses the court system entirely, allowing for a faster and less expensive closure of the business.
It requires that the company be solvent and able to pay its debts in full.
Member Resolution
The process begins with a formal vote of the shareholders. To trigger a liquidation under section 92, the members must pass a qualifying resolution by the requisite majority specified in the company’s articles. This vote is the legal trigger that strips the directors of their executive powers.
Statutory Limitation
The voluntary process cannot be used if the company is insolvent. An appointment under section 92 is void if the directors cannot make a declaration of solvency within the statutory timeframe. This restriction prevents directors from avoiding court scrutiny when a company fails.
Notification Obligation
The appointment must be publicized to protect creditors and other stakeholders. Once a liquidator is appointed under section 92, they must file notice with the corporate registry and publish a public notice. This ensures that any claims against the company are brought forward promptly.
