The provisions of the Company Law concerning liquidation are to be applied unless the company's Memorandum or Articles of Association provide a specific procedure for its liquidation, upon resolving the company's dissolution an agreement is reached between the partners as to its liquidation-n procedure.
Upon the dissolution of a company, it is considered to be in the liquidation stage. While the liquidation procedures are being implemented the company will retain its legal capacity for the implementation of its liquidation. It is imperative to affix the term 'In Liquidation' to the company name. As a consequence of the dissolution of the company the authority of its managers or board of directors will also come to an end, they should continue to manage the company but as far as third parties are concerned, they will be considered as liquidators until a liquidator is appointed. During the liquidation, the company's administrative structure will continue to exist, but it will only perform functions that are not within the jurisdiction of the liquidators.
The partners or the company's general assembly through majority resolution should appoint one or more liquidators. If the liquidation is decreed in accordance with a Court Order, the Court will appoint the liquidator.
The death, bankruptcy, insolvency or interdiction of a partner, even though such partner had appointed the liquidator, will not affect the liquidator's functions. Moreover, the liquidator must register his appointment and the method of liquidation with the Commercial Register.
In coordination with the manager or chairman of the company the liquidator should make an inventory of assets and liabilities of the company. The managers and chairman have a statutory duty to hand over the company's accounts, books, documents and assets to the liquidator.
The liquidator must:
1. Prepare a detailed statement of company assets and liabilities as well as a balance sheet to be signed by him and manager or chairman of the company.
2. Keep a book of accounts for the liquidation of transactions.
3. Preserve the assets of the company and its rights as well as the company debts.
4. Open a bank account in the name of the company 'in liquidation' and deposit company funds.
The liquidator shall be the representative of the company in any litigation regarding the company. He should satisfy the creditors of the company by selling its moveable assets or real estate in an auction or any other method specified in the liquidation procedure. The liquidator should not embark on new business unless it is necessary for the completion of previous works, otherwise he will be personally liable for the consequences.
The liquidator must notify all the creditors by registered letters of the commencement of the liquidation. Such notice is published in the local newspapers and gives a period of not less than 45 days during which the creditors should present their claims.
Certain debts of the company have to be prioritized and settled before others such as; employees' salaries or wages, or debts accrued while the company is in liquidation. Any amounts remaining after the settlement of the company debts will be proportionately disbursed amongst the partners. If the net proceeds of liquidation were insufficient to cover the repayment of all partners' shares, the losses will also be divided proportionately amongst the partners.
At the end of the liquidation a final account has to be prepared and presented to the partners or the general assembly. The liquidators will then have to record the end of the liquidation in the Commercial Register and request that the company is struck off the register.