Jersey company law provides a flexible and user-friendly regime for solvent winding up, whether or not the company has assets.
This short guide runs through the relevant procedure and relevant solvency statements, as well as the requirements for directors.
A summary winding up, also known as a solvent winding up, is a statutory procedure used to dissolve a solvent Jersey company (meaning that the company is able to pay its debts as they fall due) under the Companies (Jersey) Law 1991.
A company may be wound up summarily if it has:
- no assets and no liabilities;
- assets and no liabilities;
- liabilities that can be discharged within six months from the commencement of the winding up (the “Commencement”); or (iv) liabilities that will arise following the end of the six months from the Commencement.
Please note that it is not necessary for a company to appoint a liquidator to assist with the summary winding up, however the shareholders may appoint one via special resolution if they would prefer to do so.
The procedure for the summary winding up of a Jersey company will be as follows:
- The directors of the company will
sign a solvency statement (the “First Solvency
Statement”) which will state that, having made a full enquiry
into the affairs of the company, each director is satisfied that
- the company has no assets and no liabilities;
- the company has assets and no liabilities;
- the company has liabilities that can be discharged within six months of the Commencement; or
- the company has liabilities that will arise following the end of the six months from the Commencement.
- The shareholders of the company must then pass a special resolution to commence the winding up the company on a summary basis within 28 days of the First Solvency Statement being signed (the “Special Resolution”).
- Within 21 days of the Special Resolution, the Special Resolution and the First Solvency Statement must be filed with the Registrar of Companies (the “Registrar”). If the company has no assets and no liabilities, then the company will be dissolved upon the Registrar's registration of the First Solvency Statement. If the company has assets and liabilities, then following the Registrar's registration of the First Solvency Statement the directors must discharge any liabilities of the company in full within six months of the Commencement and distribute any assets to the company's shareholders.
- The directors must then sign another solvency statement (the “Second Solvency Statement”) stating that, having made full enquiry into the affairs of the company, each director is satisfied that the company no longer has any assets or liabilities. The Second Solvency Statement is then delivered to the Registrar and upon registration, the company is then deemed to be dissolved.
Things to Note
Once Commencement has taken place, the company's status and capacity continue as normal until it is dissolved by the Registrar. However, during the period between Commencement and the completion of the winding up, the company may only exercise its powers in order to realise its assets, discharge its liabilities and distribute the assets to the company's shareholders.
Please note that where a director has signed either the First Solvency Statement or the Second Solvency Statement (together, the “Statements”) without having reasonable grounds for making such a statement, they will have committed an offence which will be liable on conviction to imprisonment for up to two years, a fine or both. It is therefore imperative for the directors to have undertaken a sufficient review of the affairs of the company prior to signing the Statements to ensure that they do not fall foul.
Originally published 04 July, 2020
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.