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

Sunrise Textiles Ltd, a debt-free company, has its directors' declaration in place. Within four weeks, its members pass a special resolution for voluntary liquidation. Which of the following must that resolution also do under section 59 of the IBC?

The special resolution must appoint an insolvency professional to act as the liquidator. Section 59(3)(c)(i) couples the decision to liquidate voluntarily with this appointment. The auditor or the Registrar cannot be the appointing authority, and the board does not continue to manage the company.

  1. AAppoint an insolvency professional to act as the liquidatorCorrect
  2. BAppoint the company's statutory auditor as liquidator
  3. CAuthorise the board of directors to continue managing the company during liquidation
  4. DLeave the choice of liquidator to the Registrar of Companies

Explanation

Section 59(3)(c)(i) requires the special resolution to require voluntary liquidation and to appoint an insolvency professional as liquidator. The auditor is not eligible by virtue of that role, and the board's powers cease on the liquidator's appointment. The Registrar is only notified, and does not choose the liquidator.

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