Directors and Liquidators both have rights and duties following a formal liquidation appointment. We address the rights and duties of directors in this article.
Rights of Directors following a Liquidation:
1. Right to Information: Directors have the right to access information and records about the liquidation process and the company's financial affairs. This includes access to the liquidator's reports, financial statements, and other relevant documents.
2. Right to Participate: Directors may participate in meetings of creditors and have the right to raise questions or concerns about the liquidation process.
3. Legal Advice: Directors have the right to seek legal advice and representation to protect their interests and understand their obligations during the liquidation process.
Duties of Directors to the Liquidator:
Directors have certain duties to cooperate with the liquidator during the company's liquidation. These duties are designed to ensure transparency, accuracy, and efficiency in the winding-up process:
1. Duty to Deliver Company Records: Directors are required to provide the liquidator with access to all company records, books, and documents. This duty aims to ensure that the liquidator has accurate information about the company's financial position and affairs.
2. Duty to Assist Liquidator: Directors are obligated to assist the liquidator in their investigations and inquiries. This duty includes providing information about the company's transactions, assets, liabilities, and financial history.
3. Duty to Attend Examinations: Directors may be required to attend public examinations if ordered by the court. Public examinations are sessions during which directors and officers of the company are questioned under oath about the company's affairs.
4. Duty to Disclose Information: Directors must disclose any property or assets that were transferred or disposed of with the intention of defrauding creditors within a certain period before the liquidation commenced.
5. Duty Not to Impede Liquidation: Directors are prohibited from taking actions that would hinder or obstruct the liquidation process, such as transferring assets out of the company or dissipating company funds.
6. Duty to Provide a Statement of Affairs: Directors may be required to provide a statement of affairs to the liquidator. This statement includes details about the company's assets, liabilities, creditors, and debtors.
It's important for directors to be aware of these duties and to cooperate fully with the liquidator to ensure compliance with the law. Failure to fulfill these duties can have legal consequences. Directors who have concerns or questions about their rights and responsibilities in a liquidation or who require advice on appointing liquidators contact our team.