A company can only be put into voluntary liquidation by its shareholders. The liquidator appointed must be an authorised insolvency practitioner.
There are two types of voluntary liquidation:
- Members’ Voluntary Liquidation – This can take place when the company is solvent. The Shareholders of the company appoint a liquidator to realise the assets. The proceeds will then be distributed to the company shareholders.
- Creditors’ Voluntary Liquidation – This is when the shareholders of the company decide to put the company into liquidation, but there aren’t enough assets to pay the creditors in full. i.e. the company is insolvent. The liquidation begins from the time the resolution to wind up is passed. The directors ask a Licensed Insolvency Practitioner to convene a meeting of creditors so that a Liquidator can be appointed.