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Companies Act 1993

Liquidations - The process of liquidation

241: Commencement of liquidation

You could also call this:

“When and how a liquidator is appointed to manage a company's closure”

When a company is put into liquidation, someone called a liquidator is appointed to manage the process. This can be a specific person or an Official Assignee for a certain area.

There are different ways a liquidator can be appointed. The shareholders who are allowed to vote can decide to appoint one. The company’s board can also appoint a liquidator if something specific happens that’s mentioned in the company’s rules. Sometimes, a court can appoint a liquidator if certain people or organisations ask for it. These could be the company itself, a director, a shareholder, someone the company owes money to, or other specific people or groups.

If a company has been taken off the New Zealand register, a court can only appoint a liquidator if the company is put back on the register first.

An Official Assignee can only become a liquidator in special cases, like when they’re voting for shares of someone who’s bankrupt, or if a court appoints them.

A court can appoint a liquidator for several reasons. These include if the company can’t pay its debts, if it’s not following the rules properly, if it’s given wrong information to the Registrar, or if it’s fair and right to do so.

The liquidation starts as soon as the liquidator is appointed.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM321678.

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Part 16 Liquidations
The process of liquidation

241Commencement of liquidation

  1. A company may be put into liquidation by the appointment as liquidator of a named person or of an Official Assignee for a named district.

  2. A liquidator may be appointed by—

  3. special resolution of those shareholders entitled to vote and voting on the question; or
    1. the board of the company on the occurrence of an event specified in the constitution; or
      1. the court, on the application of—
        1. the company; or
          1. a director; or
            1. a shareholder or other entitled person; or
              1. a creditor (including any contingent or prospective creditor); or
                1. if the company is in administration, the administrator; or
                  1. if the company is a financial markets participant, the FMA; or
                    1. the Registrar; or
                      1. if the company is a licensed insurer, the Reserve Bank of New Zealand; or
                        1. in the case of a company that has been removed from the New Zealand register, the Registrar or a person who, immediately before the company was removed from the New Zealand register, was a person described in subparagraph (ii), (iii), (iv), or (vii); or
                        2. a resolution of the creditors passed at the watershed meeting held under section 239AT.

                          1. However, the court must not appoint a liquidator under subsection (2)(c)(viii) unless the company is restored to the New Zealand register under section 328 or 329.

                          2. An Official Assignee may be appointed liquidator of a company only—

                          3. if the special resolution passed in accordance with paragraph (a) of subsection (2) is passed by reason of the Official Assignee exercising voting rights attaching to shares in the company of—
                            1. a person who has been adjudged bankrupt; or
                              1. another company of which the Official Assignee is liquidator; or
                              2. by the court.

                                1. The court may appoint a liquidator if it is satisfied that—

                                2. the company is unable to pay its debts; or
                                  1. the company or the board has persistently or seriously failed to comply with this Act; or
                                    1. the company, or 1 or more of its directors or shareholders, has intentionally provided the Registrar with inaccurate information; or
                                      1. the company, or 1 or more of its directors or shareholders, has in a persistent or serious way failed to comply with duties relating to the company—
                                        1. under this Act; or
                                          1. under the Financial Reporting Act 1993 while in force, except that this subparagraph does not apply after 5 years have elapsed after this subparagraph came into force; or
                                          2. the company does not comply with section 10; or
                                            1. it is just and equitable that the company be put into liquidation.

                                              1. The liquidation of a company commences on the date on which, and at the time at which, the liquidator is appointed.

                                              Notes
                                              • Section 241(2): replaced, on , by section 7 of the Companies Amendment Act 2006 (2006 No 56).
                                              • Section 241(2)(c)(va): inserted, on , by section 82 of the Financial Markets Authority Act 2011 (2011 No 5).
                                              • Section 241(2)(c)(vii): inserted, on , by section 241(2) of the Insurance (Prudential Supervision) Act 2010 (2010 No 111).
                                              • Section 241(2)(c)(vii): amended, on , by section 82 of the Financial Markets Authority Act 2011 (2011 No 5).
                                              • Section 241(2)(c)(viii): inserted, on , by regulation 4(1) of the Companies Amendment Act 2012 (2012 No 7).
                                              • Section 241(2A): inserted, on , by regulation 4(2) of the Companies Amendment Act 2012 (2012 No 7).
                                              • Section 241(4)(ba): inserted, on , by section 58 of the Companies Amendment Act 2014 (2014 No 46).
                                              • Section 241(4)(bb): inserted, on , by section 58 of the Companies Amendment Act 2014 (2014 No 46).
                                              • Section 241(5): replaced, on , by section 3 of the Companies Amendment Act 1999 (1999 No 19).