In the complex process of winding up a company, the Tribunal mandates the establishment of an Advisory Committee. This committee’s primary role is to guide the liquidator through the winding-up proceedings and report to the Tribunal on directed matters.
This committee comprises a maximum of 12 members, including creditors and contributories of the company, or other individuals as deemed appropriate by the Tribunal, considering the company’s circumstances. The formation of this committee involves a meeting where creditors and contributories recommend its members. The liquidator subsequently files a report in Form No. WIN 23 to the Tribunal detailing the meeting and the recommended members. In cases of disagreement, the liquidator can seek the Tribunal’s intervention regarding the committee’s composition. The Tribunal will schedule a hearing, and the liquidator must issue a notice to non-consenting contributories in Form WIN 24 at least seven days before the hearing. During the hearing, the Tribunal decides on the committee’s membership or issues relevant directions.
The Advisory Committee is empowered to inspect the company’s books of accounts, documents, assets, and properties at reasonable times. Meetings of the committee are presided over by the Company Liquidator.
Addressing Vacancies within the Advisory Committee
If a member becomes insolvent, arranges with creditors, or misses five consecutive meetings without permission, their position becomes vacant. Members can be removed by an ordinary resolution at a creditors’ or contributories’ meeting, with a seven-day notice specifying the meeting’s purpose. To fill a vacancy, the liquidator convenes a meeting of contributories or creditors to pass a resolution. The Advisory Committee must always have at least two members. If filling the vacancy is deemed unnecessary, the liquidator can seek the Tribunal’s directive. Should the creditors or contributories fail to fill the vacancy, the liquidator must report this to the Tribunal, which may then appoint a member.
Regulations on Advisory Committee Members (Rule 39)
Members, including the liquidator, must not purchase any part of the company’s assets during their tenure without the Tribunal’s leave. Any unauthorized purchases can be nullified by the Tribunal upon the liquidator’s, creditor’s, or contributory’s application. The Tribunal may also issue an order regarding the associated costs.
Prohibition on Profiting (Rule 40)
Members are prohibited from profiting from transactions related to the winding-up process or receiving payments for services rendered without the Tribunal’s order. Unauthorized payments or profits are subject to recovery during the liquidator’s accounts audit or otherwise.
Payment for Services
If a Tribunal orders payment to a committee member for special services related to the company’s asset administration, the order must specify the service nature. Generally, no remuneration is allowed for duties performed as a committee member without the Tribunal’s explicit order.
Committee Meetings
Meetings can be convened by the liquidator or by one-third of the committee members. A quorum requires either one-third of the total committee members or a minimum of two members, whichever is higher. Decisions are made by the majority of members present.
Resignation and Cost of Orders
A committee member may resign by submitting a written notice to the liquidator. Costs associated with obtaining Tribunal orders under rules 39 or 40 are borne by the interested party and not from the company’s assets.
Views: 0