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ACCA Applied Skills · Corporate and Business Law (Global) · Insolvency and administration

Zentro Ltd is solvent, and its members wish to bring the company to an end because its business purpose has been completed. The directors have made a declaration that the company can pay its debts in full within a stated period. Which type of winding up is being used?

This is a members' voluntary winding up. It applies to a solvent company where the directors declare that all debts can be paid in full within a stated period, and the members choose to wind up. Without that declaration the winding up would be a creditors' voluntary one.

  1. ACompulsory winding up by the court
  2. BMembers' voluntary winding upCorrect
  3. CCreditors' voluntary winding up
  4. DAdministration

Explanation

A members' voluntary winding up is used for a solvent company where the directors declare it can pay its debts in full within a stated period. A compulsory winding up is ordered by the court, usually on a creditor's petition. A creditors' voluntary winding up applies where no such declaration of solvency is made. Administration is a rescue procedure, not a winding up.

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