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

Once the liquidator is appointed in the voluntary liquidation of Prakash Foods Ltd, what is the effect on the company's board of directors and key managerial personnel?

The powers of the board and key managerial personnel cease to have effect and vest in the liquidator. Because the liquidation chapter's provisions apply to voluntary liquidation, the liquidator takes over management of the company's affairs completely rather than sharing it with the directors.

  1. ATheir powers cease and vest in the liquidatorCorrect
  2. BTheir powers continue but need the liquidator's approval
  3. CTheir powers are suspended only for the creditors' meeting
  4. DTheir powers continue for routine matters

Explanation

Sections 35 to 53 apply to voluntary liquidation with necessary modifications. Under section 34(2), on appointment of the liquidator all powers of the board, key managerial personnel and partners cease to have effect and vest in the liquidator. Continuation, even for routine matters, is not provided.

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