Problematic of liquidation and dissolution of companies under rwandan law: case study of Rwandatel

I.3. Company dissolution and its liquidation in general

Here below the researcher is going to make look on how dissolution is done in basing on general overview. First, the key words will be defined in order to understand the topic, and second, we will see how companies are liquidated and dissolved in different countries which will enable me to make a broader comparison.

I.3.1. Company dissolution

After defining the key words and enumerating different categories and types of companies, it is considered that dissolution has procedure to be followed and it is what the researcher analyze here below.

I.3.1.1. PROCEDURE OF COMPANY DISSOLUTION

A company can be dissolved either through liquidation or through the strike-off process. And there are different means of winding up the company. Here below some are explained:

Dissolved Company Assets: Once a company has been dissolved, the assets of the dissolved company become state property

Dissolved company liabilities: pre-dissolution liabilities of a company remain as liabilities of the company following its dissolution. Since a dissolved company does not have legal existence, however, the company is required to be restored to the registrar, in order for creditors to maintain proceedings in respect of a liability incurred by that company or to enforce a judgment obtained against that company does not retrospectively remove the protection of limited liability from that company.^30(*)

When a company is struck off but the business continues to operate and to incur liabilities post-dissolution, such business is made in a personal capacity by the individual who is in charge of running the business as the company has no legal existence at the date on which the liability is incurred^31(*). In a situation where a company is wound up and dissolved and that the business continues even after dissolution, the members or shareholders of that company are in a position to apply to have the company restored to the registrar and when it happens, the profit of limited liability will be retrospectively conferred I respect of the activities of the company during the period when it was not on the register.

Dissolution is also considered as a last stage of liquidation. It is the process by which a company or part of a company is brought to an end, and its assets and property are redistributed. Winding up of a company is done according to laws of the country in which it operates or country of incorporation. Taking an example of United Kingdom, a limited company can request to be closed or dissolved under section 1003 of the companies Act 2006^32(*), providing that it meets all of the listed below requirements:

-Not operated within 3 months

-Not changed the company name within the last 3 months

-Is not subject to any legal proceedings, current or proposed

-Has not made a disposal for value of property or rights

After seeing that the company meets all above said requirements, the striking off application (DS01) can be completed^33(*). The form also has its requirements to be fulfilled which are to be signed by the majority of directors and it costs £10^34(*). Its copy must be sent to interested parties within 1 week of the application. That is to Revenue and Customs, creditors, employees, members and others not mentioned but who may have a link with the company.

When the application is accepted Companies House will no longer chase for further compliance and a notice will be placed in official gazette and giving at least 3 months notice of the intent to remove the company^35(*). If an interested party makes an objection, the action to close the company will be suspended.

* ³⁰ S.S. Gulshan et al./, BusinesslLaw including Company Law, 12^th edition, published by New Age International (IP) ltd, New Delhi, 2005, p.250.

* ³¹ S.S. Gulshan et al. /, op. cit., p.260.

* ³² a Company Law Solutions Limited, «Types of Companies», Companylawclub.co.uk/topics/types_of_companies.shtml/, last accessed 6/5/2014

* ³³ R.B Emerson et al., Business Law, 5th edition, Business review library, USA , 2009, P. 300

* ³⁴Ibid.

* ³⁵ M.B.Salgado, Droit des enterprises en difficulte, Breal editions, Rome,2007, p. 80