A winding up notice
The liquidator’s consent to act
Directors’ declaration of solvency
The directors’ declaration is a declaration or affidavit in a prescribed form which confirms that a full enquiry into the company’s affairs has been made and that, to the best of the directors’ knowledge and belief, the company will be able to pay its debts in full, together with interest at the prescribed rate, within a period not exceeding 12 months from the commencement of the winding up.
The declaration must be signed by all the company’s current directors. Any person who knowingly makes a declaration of solvency without having reasonable grounds for the opinion that the company will be able to pay its debts in full, within the period specified, commits an offence and is liable, if convicted, to a substantial fine and/or to imprisonment.
If a directors’ declaration of solvency is not filed within 28 days of the commencement of the voluntary liquidation, the liquidator must apply to the Grand Court of the Cayman Islands (the Court) to have the liquidation continue under the supervision of the Court.
The liquidator must also publish a notice of the voluntary liquidation in the Cayman Islands Gazette (the Gazette) within 28 days of the commencement of the voluntary liquidation and if the company is carrying on a regulated business in the Cayman Islands it must file notice of the winding up with the Cayman Islands Monetary Authority (CIMA). The Gazette notice advises creditors of the proposed voluntary winding up of the company and calls for submissions and proofs of debt in relation to monies due to creditors. Creditors are usually provided with three weeks in which to file details of their claims to the liquidator.
The liquidator must collect in all assets of the company, apply them in satisfaction of all liabilities of the company, and verify all creditors (if any), as well as all shareholders who are entitled to a distribution. There is no set time frame for this process, and it can be very quick, for example where there are no creditors, and only a few easily realisable assets. The process may take longer where there are numerous creditors and multiple assets.
Assignments of assets in kind may be required in respect of final distributions by the liquidator. Any surplus assets may be assigned in a final distribution made by the liquidator, based on instructions from the shareholders and the provisions of the M&A.
At the FGM, the liquidator provides a general report on the liquidation process. The liquidator lays the final accounts of the company which the liquidator has prepared before the FGM showing the manner in which the winding up was conducted. At the FGM the liquidator will ask the shareholders to pass resolutions approving the liquidator’s accounts, its remuneration and authorising the destruction of the company’s books and records after a specified time, typically five years from the date of dissolution of the company.
The liquidator convenes the FGM for a date at least 21 days after the notice of the FGM appears in the Gazette.
Within seven days of the FGM, the liquidator must file its report and a return with the Registrar confirming the date of the FGM and details of the resolutions passed. The liquidator also requests a certificate of dissolution to be issued by the Registrar and pays the applicable filing fee. Please contact us for details of current fees.
The Registrar delivers the certificate of dissolution to the liquidator. Termination of the company is the date of the certificate of dissolution.