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CS Professional · Corporate Restructuring, Valuation and Insolvency · Voluntary Liquidation

Lotus Engineering Ltd has no debt. Its articles fix a duration that has now expired. Which approval route applies for voluntary liquidation by members?

A resolution of the members in general meeting suffices, appointing an insolvency professional as liquidator. The Code allows this where the period fixed by the articles has expired. Creditor approval is required only if the company owes debt, and this company owes none.

  1. AAn ordinary resolution in general meeting appointing an insolvency professional as liquidator, with no creditor approval since there is no debtCorrect
  2. BA special resolution, plus approval by two-thirds of creditors
  3. CA resolution of the board alone, without a general meeting
  4. DAn order of the Adjudicating Authority before any resolution

Explanation

Section 59(3)(c)(ii) allows a resolution (not a special resolution) of the members in general meeting where the company is liquidated on expiry of the period fixed by its articles, appointing an insolvency professional as liquidator. The creditor-approval proviso applies only if the company owes debt, and this company has none.

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