Voluntary liquidation - shares of the minority , Business Law and Ethics

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Voluntary liquidation - shares of the minority:

A company in (or about to go into) members' voluntary liquidation may by special resolution authorize the liquidator to sell the business or property for shares (of some other company) to be distributed to members.  But any member who did not vote in favour of the special resolution may in the ensuing seven days deliver to the registered office a notice addressed to the liquidator requiring him either to pay that member the value of his interest in cash or to abandon the proposed sale: CA s.280.

If the company is in a creditors voluntary liquidation a special resolution to approve the sale must be passed and it is also necessary for the sale to be approved by the court or by the committee of inspection: CA s.292.  Moreover a creditor can at any time within a year of the passing of the special resolution (in a members voluntary winding up) render it invalid by obtaining a court order for compulsory liquidation: s.280(5).  It is therefore prudent to dispose of possible objections by creditors before the company enters into the transaction.


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