23. Alternative modes of winding up

(1) The winding up of a Company may be either voluntary or by the Court.

(2) This Chapter relates to winding up generally, except so far as the contrary intention appears.

24. Rules about obligations to contribute in winding up

The Rules may make provision for or in relation to the obligations of members, former members, directors, and former directors, of a Company that is being wound up, and other Persons, to contribute to the assets of the Company.

25. Powers etc. of Liquidators

(1) A Liquidator appointed in the winding up of a Company has the powers set out in Schedule 2 (Powers of Liquidator in winding up).

(2) The Rules may make provision with respect to the Exercise of a Liquidator’s Functions in relation to the winding up of a Company, including, for example, by:

• (a) prescribing the forms and procedures to be adopted by the Liquidator in the winding up of a Company; or
• (b) imposing requirements on officers of a Company and others to cooperate with the Liquidator in relation to the winding up of the Company.

(3) Without limiting subsection (2), the Rules may authorise a Liquidator appointed in the winding up of a Company to do any or all of the following:

• (a) summon a Person to be examined before the Court about the affairs of the Company;
• (b) inspect books and records of the Company;
• (c) direct an officer of the Company to deliver to the Liquidator all books and records in the officer’s possession that relate to the Company;
• (d) inform the Liquidator of the whereabouts of books or records that relate to the Company;
• (e) direct an officer of the Company to give the Liquidator the information about the Company’s business, property, affairs and financial circumstances that the Liquidator requires;
• (f) direct an officer of the Company to attend on the Liquidator to provide the books or records, information, or other assistance, that the Liquidator may reasonably require.

(4) If a Liquidator has been appointed in the winding up of a Company, an officer of the Company must not:

• (a) Fail to do whatever the Liquidator reasonably requires the officer to do to assist in the winding up; or
• (b) Fail to comply with any reasonable direction given to the officer by the Liquidator under these Regulations or the Rules; or
• (c) hinder or obstruct the Liquidator in the Exercise of the Liquidator’s Functions.

(5) Contravention of subsection (4) is punishable by a fine.

(6) A Liquidator may Exercise the Liquidator’s Functions in relation to a Person whether the Person is inside or outside of the AIFC.

(7) However, in Exercising Functions in relation to a Person outside of the AIFC, the Liquidator must comply with local requirements applying to the Exercise of the Functions, including, if appropriate, informing, or acting in collaboration with, a local regulator or authority.

(8) In this section: officer, in relation to a Company, means a Person who is, or has been:

• (a) a director or secretary of the Company; or
• (b) an employee of the Company involved in its management; or
• (c) a Receiver or Administrative Receiver of the Company; or
• (d) a Nominee or Supervisor in relation to a proposed Voluntary Arrangement or Voluntary Arrangement for the Company.

26. Circumstances in which Company may be wound up voluntarily

A Company may be wound up voluntarily:

• (a) in the circumstances (if any) provided for in the Company’s articles of association; or
• (b) if the Company passes a resolution that it should be wound up voluntarily; or
• (c) if the Company passes a resolution that it cannot continue to conduct its business because of its liabilities and that it is advisable that it be wound up.

27. Notice of Resolution for Voluntary Winding Up

If a Company passes a Resolution for Voluntary Winding Up, it must, within 14 days after the day it passes the resolution, give notice of the resolution by advertisement published in accordance with the Rules.

28. Commencement of Voluntary Winding Up

The Voluntary Winding Up of a Company is taken to commence at the time of the passing of the Resolution for Voluntary Winding Up.

29. Effect on business and status of Company in Voluntary Winding Up

(1) In the Voluntary Winding Up of a Company, the Company must cease conducting its business from the commencement of the winding up, except so far as conducting the business may be required for its beneficial winding up.

(2) However, the corporate personality and corporate powers of the Company continue until the Company is dissolved, despite anything to the contrary in its articles of association.

30. Avoidance of share transfers after commencement of Voluntary Winding Up

Any transfer of shares in a Company (other than a transfer made to or with the approval of the Company’s Liquidator), and any alteration in the status of the Company’s members, is void if it is made after the commencement of a Voluntary Winding Up of the Company.

31. Declaration of solvency

(1) If it is proposed to wind up a Company voluntarily, the directors of the Company (or, if the Company has more than 2 directors, the majority of them) may at a meeting of the directors make a declaration to the effect that they have made a full inquiry into the Company’s affairs and that, having done so, they have formed the opinion that the Company will be able to pay its debts in full, together with interest at the official rate, within the period, not exceeding 12 months from the commencement of the winding up, specified in the declaration.

(2) The declaration must be made:

• (a) within 5 weeks immediately before the day the resolution for winding up is passed; or;
• (b) on that day, but before the passing of the resolution.

(3) A director must not make a declaration under subsection (1) unless the director has reasonable grounds for the opinion stated in the declaration.

(4) Contravention of subsection (3) is punishable by a fine.

(5) If the Company is wound up because of a resolution passed within 5 weeks after the declaration under subsection (1) is made, and its debts are not paid or provided for in full within the period specified in the declaration, it must be presumed (unless the contrary is shown) that each of the directors making the declaration did not have reasonable grounds for the director’s opinion stated in the declaration.

32. Appointment of Liquidator by Company

(1) In a Members Voluntary Winding Up, the Company in general meeting must appoint 1 or more liquidators for the purpose of winding up the Company’s affairs and distributing its assets.

(2) On the appointment of a Liquidator for the Company, all the powers of the directors cease, except so far as the Company in general meeting, or the Liquidator, approves their continuance.

33. General Company meeting at end of each year

(1) If the winding up of a Company continues for more than 1 year, the Liquidator must call a general meeting of the Company at the end of the first year of the winding up, and of each succeeding year, or at the first convenient date within 3 months after the end of the relevant year (or, if the Court allows a longer period, the longer period allowed by the Court).

(2) The Liquidator must give the meeting an account of the Liquidator’s acts and dealings, and of the conduct of the winding up, during the preceding year.

34. Final meeting before dissolution

(1) As soon as the Company’s affairs are fully wound up, the Liquidator must prepare an account of the winding up, explaining how it has been conducted and how the Company’s property has been disposed of.

(2) When the account has been prepared, the Liquidator must call a general meeting of the Company for the purpose of giving the account to the meeting and explaining it to the meeting.

(3) The meeting must be called by an advertisement that specifies the time, place and purpose of the meeting, that is published at least 1 month before the meeting, and that otherwise complies with the Rules.

35. Effect of Company’s insolvency

(1) This section applies if the Liquidator of a Company is of the opinion that the Company will be Unable to Pay its Debts in full within the period stated in the declaration made for the Company under section 31 (Declaration of solvency).

(2) The Liquidator must call a meeting of creditors for a day not later than 28 days after the day the Liquidator forms the opinion, and must send notice of the meeting to the creditors by post not less than 7 days before the day the meeting is to be held.

(3) The Liquidator must give the creditors, free of charge, the information about the Company’s affairs that they reasonably require. The notice of the meeting must tell creditors about this duty.

(4) The Liquidator must also make out a statement of the Company’s affairs and give the statement to the meeting of creditors.

36. Conversion to Creditors Voluntary Winding Up

As from the day the meeting of creditors of a Company is held under section 35 (Effect of Company’s insolvency), these Regulations have effect as if:

• (a) the declaration made for the Company under section 31 (Declaration of solvency) had not been made; and
• (b) the creditors meeting and the Company meeting at which it was resolved that the Company be wound up voluntarily were the meetings mentioned in section 38 (Meeting of Creditors); and accordingly the winding up becomes a Creditors Voluntary Winding Up.

37. Application of Chapter 3

(1) This Chapter applies in relation to a Creditors Voluntary Winding Up of a Company.

(2) However, sections 38 (Meeting of creditors) and 39 (Appointment of liquidation committee) do not apply if, under section 36 (Conversion to Creditors Voluntary Winding Up), a Members Voluntary Winding Up has become a Creditors Voluntary Winding Up.

38. Meeting of creditors

(1) The Company must:

• (a) call a meeting of its creditors for a day not later than 14 days after the day the meeting of the Company is to be held to consider the proposed Resolution for Voluntary Winding Up of the Company; and
• (b) give notice of the creditors meeting to all creditors (so far as it is aware of their claims and addresses), and publish notice of the meeting in an appropriate publication, at least 7 days before the day that meeting is to be held; and
• (c) nominate a Person to be appointed as liquidator of the Company.

(2) The creditors may, at the creditors meeting, nominate a Person to be appointed as liquidator of the Company.

(3) If the same Person is nominated by the Company and the creditors or the creditors do not nominate a Person, the Person nominated by the Company is taken to be appointed as the Liquidator of the Company.

(4) If different Persons are nominated by the Company and the creditors, the Person nominated by the creditors is taken to be appointed as the Liquidator of the Company.

(5) The Person nominated by the Company must not exercise any of the Liquidator’s powers during the period before the holding of the creditors meeting without the Court’s approval.

39. Appointment of liquidation committee

(1) At the meeting of the creditors of a Company held under section 38 (Meeting of creditors) or at any subsequent creditors meeting, the creditors may appoint a committee (a liquidation committee) of not more than 5 individuals to Exercise the Functions given to the committee under these Regulations and the Rules.

(2) If a liquidation committee is appointed under subsection (1), the Company may, either at the meeting at which the Resolution for Voluntary Winding Up is passed or at any time subsequently in general meeting, appoint not more than 5 individuals as members of the committee.

(3) However, the creditors may resolve that all or any of the individuals appointed by the Company as members of the liquidation committee ought not to be members of the committee.

(4) If the creditors so resolve:

• (a) the individuals mentioned in the resolution cease to be eligible to be members of the liquidation committee, unless the Court otherwise directs; and
• (b) on an application to the Court under this subsection, the Court may appoint other individuals to be members of the liquidation committee instead of individuals mentioned in the resolution.

40. Directors’ powers on appointment of Liquidator

On the appointment of a Liquidator for a Company, all the powers of the directors cease, except so far as the liquidation committee appointed under section 39 (Appointment of liquidation committee) (or, if there is no liquidation committee, the creditors) approve their continuance.

41. Vacancy in office of Liquidator

If a vacancy occurs, by death, resignation or otherwise, in the office of a Liquidator of a Company (other than a Liquidator appointed by, or by the direction of, the Court), the creditors may fill the vacancy.

42. Meetings of Company and creditors at end of each year

(1) If the winding up of a Company continues for more than 1 year, the Liquidator must call a general meeting of the Company, and a meeting of the creditors, at the end of the first year of the winding up, and of each succeeding year, or at the first convenient date within 3 months after the end of the relevant year (or, if the Court allows a longer period, the longer period allowed by the Court).

(2) The Liquidator must give the meetings an account of the Liquidator’s acts and dealings, and of the conduct of the winding up, during the preceding year.

43. Final meetings before dissolution

(1) As soon as the Company’s affairs are fully wound up, the Liquidator must prepare an account of the winding up, explaining how it has been conducted and how the Company’s property has been disposed of.

(2) When the account has been prepared, the Liquidator must call a general meeting of the Company, and a meeting of the creditors, for the purpose of giving the account to the meetings and explaining it to the meetings.

(3) The meeting must be called by an advertisement that specifies the time, place and purpose of the meeting, that is published at least 1 month before the meeting, and that otherwise complies with the Rules.

44. Distribution of Company’s property

Subject to section 97 (Preferences) and section 66 (Preferential debts and ranking of claims), to any Rules mentioned in section 92 (Rules made in relation to these Regulations) and to the application of any other AIFC Regulations or AIFC Rules as described in section 100 (Application of other laws to receivership and winding up), a Company’s property in a Voluntary Winding Up must be applied in satisfaction of the Company’s liabilities other than to its members (as members) and, subject to that application, must (unless the Company’s articles of association otherwise provide) be distributed among the members according to their rights and interests in the Company.

45. Appointment or removal of Liquidator by Court

(1) If, for whatever reason, there is no Liquidator appointed for a Company that is being wound up voluntarily, the Court may appoint a liquidator.

(2) The Court may remove a Liquidator of a Company that is being wound up voluntarily and appoint another.

46. Reference of questions to Court

(1) The Liquidator of a Company, or any creditor, shareholder or other Person liable to contribute to the assets of a Company that is being wound up voluntarily, may apply to the Court to decide any question arising in the winding up, or to exercise, in relation to the enforcing of calls or anything else, all or any of the powers that the Court might exercise if the Company were being wound up by the Court.

(2) The Court may make the orders on the application that it considers just.

47. Expenses of Voluntary Winding Up

All expenses properly incurred in the Voluntary Winding Up of a Company, including the remuneration of the Liquidator, are payable out of the Company’s assets in priority to all other claims.

48. Winding up by Court

The Voluntary Winding Up of a Company does not bar the right of any creditor or other Person to apply to have it wound up by the Court.

49. Circumstances in which Company may be wound up by Court

A Company may be wound up by the Court if:

• (a) the Company has resolved that it be wound up by the Court; or
• (b) the Company is Unable to Pay its Debts; or
• (c) a moratorium for the Company under section 9 (Moratorium) comes to an end and there is no Voluntary Arrangement approved under Part 2 (Company Voluntary Arrangements) in relation to the Company; or
• (d) the Court is authorised to make the order under any other AIFC Regulations or any AIFC Rules; or
• (e) the Court is of the opinion that it is just and equitable that the Company should be wound up.

50. Definition of Unable to Pay its Debts

(1) A Company is taken to be Unable to Pay its Debts if:

• (a) a creditor to whom the Company is indebted in a sum exceeding U.S. $2,000 then due has served on the Company a Written demand requiring the Company to pay the sum so due and the Company has for 3 weeks afterwards neglected to pay the sum or to agree terms in relation to its payment to the reasonable satisfaction of the creditor; or
• (b) execution or other process issued on a judgement, decree or order of any court in favour of a creditor of the Company is returned unsatisfied in whole or part; or
• (c) it is proved to the satisfaction of the Court that the Company is unable to pay its debts as they fall due.

(2) A Company is also taken to be Unable to Pay its Debts if it is proved to the satisfaction of the Court that the value of the Company’s current assets is less than the amount of its current liabilities, taking into account its contingent and prospective liabilities.

(3) In this section: Company includes a Recognised Company.

51. Application for winding up

Subject to any other AIFC Regulations or any AIFC Rules to the contrary, an application to the Court for the winding up of a Company may only be presented by the Company, the directors or any creditor or creditors (including any contingent or prospective creditor or creditors).

52. Petition for winding up on grounds of interests of AIFC

If it appears to the AIFCA that it is in the interests of the AIFC that a Company should be wound up, the AIFCA may present a petition for the Company to be wound up if the Court considers it just and equitable for it to be wound up.

53. Voiding of property dispositions

In a winding up by the Court, any disposition of the Company’s property, and any transfer of shares or alteration in the status of the Company’s members, made after the commencement of the winding up is void unless the Court otherwise orders.

54. Voiding of attachments

If a Company is being wound up by the Court, a Person must not attach, sequester or otherwise appropriate the assets of the Company after the commencement of the winding up, and any such activity is void unless the Court otherwise orders.

55. Consequences of winding up order

If a winding up order is made for a Company, no legal proceeding may be continued or commenced against the Company or its property without the leave of the Court and subject to the terms that the Court may impose.

56. Procedures and Functions of Liquidator appointed by Court

Without limiting section 25 (Powers etc. of Liquidators), the Rules may make provision for or in relation to the procedures and Functions of a Liquidator of a Company appointed by the Court.

57. Choice of Liquidator by Court or meetings of creditors and contributories

(1) If the Court orders that a Company be wound up, the Court must, in the order, appoint a Person as liquidator of the Company. The Person appointed as liquidator becomes the Company’s Liquidator on the making of the order. The Person may either continue the liquidation or call meetings of the Company’s creditors and contributories to nominate a Person to be liquidator of the Company.

(2) The creditors and the contributories at their respective meetings may nominate a Person to be liquidator.

(3) The Person nominated by the creditors is taken to have been appointed as the Company’s Liquidator or, if a Person is not nominated by the creditors, the Person (if any) nominated by the contributories is taken to have been appointed as the Company’s Liquidator.

(4) However, if the creditors and contributories nominate different Persons, any creditor, shareholder or other Person liable to contribute to the assets of the Company may, within 7 days after the day the nomination is made by the creditors, apply to the Court for an order either:

• (a) appointing as the Company’s Liquidator the Person nominated by the contributories instead of, or jointly with, the Person nominated by the creditors;or
• (b) appointing another Person as the Company’s Liquidator instead of the Person nominated by the creditors.

58. Appointment of Provisional Liquidator

The Court may, at any time after the presentation of a winding up petition for a Company, appoint a liquidator provisionally for the Company. The powers of the Provisional Liquidator may be limited by the order appointing the Provisional Liquidator.

59. Appointment of liquidation committee

(1) At the meeting of the creditors of a Company held under section 57 (Choice of Liquidator by Court or meetings of creditors and contributories) or at any subsequent creditors meeting, the creditors may appoint a committee (a liquidation committee) of not more than 5 individuals to Exercise the Functions given to the committee under these Regulations and the Rules.

(2) If a liquidation committee is appointed under subsection (1), the Company may, at any time in general meeting, appoint not more than 5 individuals as members of the committee.

(3) However, the creditors may resolve that all or any of individuals appointed by the Company as members of the liquidation committee ought not to be members of the committee.

(4) If the creditors so resolve:

• (a) the individuals mentioned in the resolution cease to be eligible to be members of the liquidation committee, unless the Court otherwise directs; and
• (b) on an application to the Court under this subsection, the Court may appoint other individuals to be members of the liquidation committee instead of individuals mentioned in the resolution.

60. General Functions of Liquidator in winding up by Court

The Functions of the Liquidator of a Company that is being wound up by the Court are to ensure that the assets of the Company are got in or otherwise secured, realised and distributed to the Company’s creditors and, if there is a surplus, to the Persons entitled to it.

61. Vesting of Company property in Liquidator

(1) If a Company is being wound up by the Court, the Court may direct that all or any part of the property of any description belonging to the Company, or held by trustees on its behalf, vest in the Liquidator.

(2) The Liquidator may bring or defend any legal proceeding that relates to property vested in the Liquidator or that it is necessary to bring or defend to wind up the Company and recover its property.

62. Power to stay winding up

The Court may at any time after an order is made for the winding up of a Company, on the application of the Liquidator, or any creditor, shareholder or other Person liable to contribute to the assets of the Company, and on proof to the satisfaction of the Court that all proceedings in the winding up ought to be stayed, make an order staying the proceedings, either altogether or for a limited time, on the terms and conditions the Court considers appropriate.

63. Power to exclude creditors not proving in time

If the Court is satisfied that all necessary steps have been taken to draw the liquidation of a Company to the attention of creditors, the Court may fix a time or times within which creditors must prove their debts or claims or be excluded from the benefit of any distribution made before the debts or claims are proved.

64. Payment of expenses of winding up

If the assets of a Company that is being wound up by the Court are insufficient to satisfy its liabilities, the Court may make an order about the payment out of the assets of the expenses incurred in the winding up in the order of priority that the Court considers just.

65. Removal of Liquidator

(1) This section applies in relation to the removal from office and vacation of office of the Liquidator of a Company that is being wound up voluntarily.

(2) The Liquidator may be removed from office only by:

• (a) an order of the Court; or
• (b) for a Members Voluntary Winding Up—a general meeting of the Company called specially for that purpose; or
• (c) for a Creditors Voluntary Winding Up—a general meeting of the Company’s creditors called specially for that purpose in accordance with the Rules.

66. Preferential debts and ranking of claims

(1) Subject to the application of any other AIFC Regulations and any AIFC Rules as described in section 100 (Application of other laws to receivership and winding up), in the winding up of a Company the Company’s preferential debts must be paid in priority to all other debts.

(2) The Rules may make provision for or in relation to designating certain types of claim on a Company as preferential debts and to prescribing any priorities for their payment and as to the ranking of other claims.

67. Power to disclaim onerous property

(1) The Liquidator of a Company may, by giving the notice prescribed by the Rules, disclaim any onerous property and may do so even though the Liquidator has taken possession of it, endeavoured to sell it or otherwise exercised rights of ownership in relation to it.

(2) However, a Liquidator in a Members Voluntary Winding Up may not disclaim property.

(3) In this section: onerous property means:

• (a) any unprofitable contract; or
• (b) any other property of the Company that is unsaleable or not readily saleable or may give rise to a liability to pay money or perform any other onerous act.

68. Notification that Company is in liquidation etc.

If a Company is being wound up (whether by the Court or voluntarily), every invoice, order for goods or services, or business letter, issued by or on behalf of the Company or a Liquidator of the Company, and on or in which the Company’s name appears, must contain a statement that the Company is being wound up.

69. Reports by Liquidator to Registrar

If the winding up of a Company is not concluded within 1 year, the Liquidator must, at the intervals prescribed by the Rules until the winding up is concluded, give the Registrar of Companies a report, in the form prescribed under the Rules, about the liquidation.

70. Reference of questions to Court

(1) The Liquidator of a Company, or any creditor, shareholder or other Person liable to contribute to the assets, of a Company, may apply to the Court for the Court to decide any question arising in the Company’s winding up.

(2) The Liquidator or any aggrieved Person may apply to the Court for an order in relation to the Exercise of the Liquidator’s Functions.

(3) On an application under this section, the Court may make the order that it considers just, including, if appropriate, an order enforcing or setting aside any direction given, or requirement made, by the Liquidator to or of a Person.

71. Dissolution and early dissolution

(1) Subsections (2) and (3) apply if the Liquidator of a Company that is being wound up has sent the Liquidator’s final account and return to creditors.

(2) At the end of 3 months after the day the final account and return is sent to creditors, the Company is taken to be dissolved.

(3) However, on the application of any Person who appears to the Court to be interested, the Court make an order deferring the dissolution of the Company for the time the Court considers appropriate.

(4) If the realisable assets of the Company are insufficient to cover the expenses of the winding up, and the affairs of the Company do not require any further investigation, the Liquidator may at any time apply to the Registrar of Companies for the early dissolution of the Company.

(5) Before making an application under subsection (4), the Liquidator must give at least 28 days notice of the Liquidator’s intention to make the application to the Company’s creditors and contributories.