Part 4 Part 4 – Creditors’ Voluntary Liquidation (CVL)
When a CVL is applicable4.1 When a Company cannot pay all of its debts within 12 months or at all (i.e. it is insolvent), it may choose to proceed in a number of ways, include going into a CVL.
Statement of Company’s Affairs4.2 Where it is proposed to wind up a Company via an MVL, the Directors of the Company must prepare a Statement of Affairs of the Company and provide the Statement to the Company’s creditors.4.3 The Statement of Affairs must:a) give the particulars of the Company’s property, debts and liabilities;b) give the names and addresses of the Company’s creditors;c) specify the security held by each creditor;d) give the date on which each security was granted; ande) contain such other information as may be prescribed.
Notice of voluntary liquidation4.4 When the members have passed a resolution for voluntary winding up, the Company must publish a notice of the resolution in the ADGM within seven days.
Publishing a notice of voluntary winding up in the ADGMTo satisfy the requirement to publish a notice in the ADGM, the Registrar expects Company’s to publish an advertisement in both an English and an Arabic language newspaper, each with a wide circulation that includes the ADGM and the Emirate of Abu Dhabi, UAE.The advertisement should be published for three consecutive days.
Status of Company once liquidation commences4.5 From the commencement of the liquidation, a Company must cease to carry on business, except where required for its beneficial winding up.
Role of Directors once liquidation commences4.6 Once a liquidator is appointed the Company’s director(s) no longer have control of the company or anything that it owns and cannot act on behalf of the Company.
Disqualification of unfit Directors4.7 Pursuant to the CR 2020, the Registrar has a duty to disqualify unfit directors of insolvent companies. If you were the director of a Company in a CVL and the Registrar is satisfied that your conduct, as a director of the Company, makes you unfit to be concerned in the management of a company, you will be served a disqualification order. The minimum period of disqualification is two years, and the maximum period is 15 years.
Summary of the steps to commence a CVL
4.8 The following is a summary of the steps to commence a CVL.
Prepare a Statement of Affairs The Directors must prepare a Statement of Affairs Call a general meeting Members must pass a resolution for voluntary winding up Call a meeting of creditors Directors to lay the Statement of Affairs before the creditors Appoint a liquidatorThe liquidator shall be nominated by the creditors (if they do not do so, then the Company may).The liquidator must be an ADGM licensed insolvency practitioner. Advertise the resolution in ADGM The Company must publish an advertisement in an English and Arabic language newspaper with a wide circulation, including ADGM and Abu Dhabi, UAE