
Commencement Date: 01 January 2018
CONTENTS
PART 1: GENERAL
1. Name
2. Date of enactment
3. Commencement
4. Legislative authority
5. Application of these Regulations
6. Interpretation
7. Administration of these Regulations
PART 2: COMPANY VOLUNTARY ARRANGEMENTS
8. Company arrangements
9. Moratorium
10. Calling meetings for Voluntary Arrangement proposal
11. Decisions of meetings for Voluntary Arrangement proposal
12. Effect of approval of Voluntary Arrangement proposal
13. Implementation of approved Voluntary Arrangement
PART 3: RECEIVERSHIP
14. Appointment and Functions of Receivers and Administrative Receivers
15. Notification of appointment of Receiver or Administrative Receiver
16. Interaction of Administrative Receivers and Receivers
17. No duty to inquire about Administrative Receiver’s powers
18. Power of Administrative Receiver to dispose of charged property
19. Administrative Receiver: as Company’s agent
20. Administrative Receiver: vacation of office
21. Report by Administrative Receiver
22. Creditors committee
PART 4: WINDING UP
CHAPTER 1-GENERAL
23. Alternative modes of winding up
24. Rules about obligations to contribute in winding up
25. Powers etc. of Liquidators
CHAPTER 2-VOLUNTARY WINDING UP
26. Circumstances in which Company may be wound up voluntarily
27. Notice of Resolution for Voluntary Winding Up
28. Commencement of Voluntary Winding Up
29. Effect on business and status of Company in Voluntary Winding Up
30. Avoidance of share transfers after commencement of Voluntary Winding Up
31. Declaration of solvency
32. Appointment of Liquidator by Company
33. General Company meeting at end of each year
34. Final meeting before dissolution
35. Effect of Company’s insolvency
36. Conversion to Creditors Voluntary Winding Up
CHAPTER 3-CREDITORS VOLUNTARY WINDING UP
37. Application of Chapter 3
38. Meeting of creditors
39. Appointment of liquidation committee
40. Directors’ powers on appointment of Liquidator
41. Vacancy in office of Liquidator
42. Meetings of Company and creditors at end of each year
43. Final meetings before dissolution
CHAPTER 4-PROVISIONS APPLYING TO BOTH KINDS OF VOLUNTARY WINDING UP
44. Distribution of Company’s property
45. Appointment or removal of Liquidator by Court
46. Reference of questions to Court
47. Expenses of Voluntary Winding Up
48. Winding up by Court
CHAPTER 5-COMPULSORY WINDING UP
49. Circumstances in which Company may be wound up by Court
50. Definition of Unable to Pay its Debts
51. Application for winding up
52. Petition for winding up on grounds of interests of AIFC
53. Voiding of property dispositions
54. Voiding of attachments
55. Consequences of winding up order
56. Procedures and Functions of Liquidator appointed by Court
57. Choice of Liquidator by Court or meetings of creditors and contributories
58. Appointment of Provisional Liquidator
59. Appointment of liquidation committee
60. General Functions of Liquidator in winding up by Court
61. Vesting of Company property in Liquidator
62. Power to stay winding up
63. Power to exclude creditors not proving in time
64. Payment of expenses of winding up
CHAPTER 6-OTHER WINDING UP PROVISIONS
65. Removal of Liquidator
66. Preferential debts and ranking of claims
67. Power to disclaim onerous property
68. Notification that Company is in liquidation etc.
69. Reports by Liquidator to Registrar
70. Reference of questions to Court
71. Dissolution and early dissolution
PART 5: PROTECTION OF ASSETS IN LIQUIDATION
72. Fraud in anticipation of winding up
73. Transactions in fraud of creditors
74. Falsification of Company’s books etc.
75. Material omissions from statement relating to Company’s affairs
76. False representations to creditors
77. Fraudulent trading
78. Wrongful trading
79. Remedies by Court to protect assets
80. Restriction on reuse of Company names
PART 6: RECOGNISED AND FOREIGN COMPANIES
81. Proceedings in relation to Foreign Companies
82. Application of Part 6 to Recognised Companies
83. Winding up of Recognised Companies
84. Outstanding property of dissolved etc. Recognised Company
PART 7: OTHER TYPES OF COMPANY
85. Application of these Regulations to other types of Company
PART 8: APPLICATION OF THESE REGULATIONS TO LIMITED LIABILITY PARTNERSHIPS
86. Application to limited liability partnerships
PART 9: INSOLVENCY PRACTITIONERS
87. Restrictions on appointment as liquidator, receiver etc.
88. Qualification and registration of Insolvency Practitioners and Official Liquidators
89. Register of insolvency practitioners and official liquidators
90. Obligation of disclosure to Registrar
91. Supervision of Insolvency Practitioners
PART 10: MISCELLANEOUS
92. Rules made in relation to these Regulations
93. Getting in Company’s property
94. Duty to cooperate with Administrator
95. Producing account of dealings with Company etc.
96. Transactions at undervalue
97. Preferences
98. Relevant time under sections 96 and 97
99. Invalid security interests
100. Application of other laws to receivership and winding up
101. Power of Court to declare dissolution of Company void
SCHEDULE 1: ADDITIONAL POWERS OF ADMINISTRATIVE RECEIVERS
SCHEDULE 2: POWERS OF LIQUIDATOR IN WINDING UP
SCHEDULE 3: INTERPRETATION
PART 1: GENERAL
1. Name
These Regulations are the AIFC Insolvency Regulations 2017.
2. Date of enactment
These Regulations are enacted on the day they are adopted by the Governor.
3. Commencement
These Regulations commence on 1 January 2018.
4. Legislative authority
These Regulations are adopted by the Governor under article 4 of the Constitutional Statute and subparagraph 3) of paragraph 9 of the Management Council Resolution on AIFC Bodies.
5. Application of these Regulations
These Regulations apply within the jurisdiction of the AIFC.
6. Interpretation
Schedule 3 contains definitions and other interpretative provisions used in these Regulations.
7. Administration of these Regulations
These Regulations are administered by the Registrar of Companies.
PART 2: COMPANY VOLUNTARY ARRANGEMENTS
8. Company arrangements
(1) The directors of a Company may make a proposal under this Part to the Company and to its creditors for a scheme of arrangement of its affairs (a Voluntary Arrangement).
(2) The directors must appoint a Person (the Nominee) to act in relation to the proposed Voluntary Arrangement for the purpose of supervising its implementation.
(3) The Nominee must be an Insolvency Practitioner.
9. Moratorium
(1) If the directors of a Company eligible for a moratorium under this section intend to make a proposal for a Voluntary Arrangement, they may take steps to obtain a moratorium for the Company.
(2) The Rules may make provision for or in relation to the obtaining of a moratorium, including, for example, for or in relation to the following:
(a) the Companies eligible for a moratorium under this section;
(b) the procedure for obtaining a moratorium;
(c) the effects of a moratorium;
(d) the procedure applying (instead of sections 10 to 13) in relation to the approval and implementation of a Voluntary Arrangement for a Company if a moratorium is or has been in force for the Company.
10. Calling meetings for Voluntary Arrangement proposal
(1) The Nominee must call meetings of the Company and of its creditors to consider the Voluntary Arrangement proposal.
(2) The Nominee must give notice, in accordance with the Rules, of the meeting of creditors to every creditor of the Company of whose claim and address the Nominee is aware.
(3) The Company meeting must be held in accordance with the AIFC Companies Regulations.
11. Decisions of meetings for Voluntary Arrangement proposal
(1) The meetings called under section 10 (Calling meetings for Voluntary Arrangement proposal) must decide whether to approve the proposed Voluntary Arrangement (with or without modifications).
(2) However, a meeting must not approve any proposal or modification that affects the right of a preferential creditor or secured creditor of the Company to enforce the creditor’s rights or security, unless the creditor agrees.
12. Effect of approval of Voluntary Arrangement proposal
(1) This section applies if each of the meetings called under section 10 (Calling of meetings for Voluntary Arrangement proposal) approves the proposed Voluntary Arrangement (with or without modifications).
(2) If each of the meetings approves the Voluntary Arrangement with the same modifications or without modifications, the Voluntary Arrangement as approved by the meetings is the approved Voluntary Arrangement.
(3) If the proposed arrangements approved by the meetings differ from each other, the Court may, on the application of a Person who appears to the Court to be interested, decide which of the proposed arrangements is to be taken to be the approved Voluntary Arrangement.
(4) If there is an approved Voluntary Arrangement under subsection (2) or (3), the approved Voluntary Arrangement:
(a) takes effect as if made by the Company at the meeting of creditors; and
(b) binds every Person who in accordance with the Rules had notice of, and was entitled to vote at, that meeting (whether or not the Person was present or represented at the meeting) as if the Person were a party to the Voluntary Arrangement.
(5) If the Company is being wound up or under receivership, the Court may do either or both of the following:
(a) by order, stay all proceedings in the winding up or discharge the receivership;
(b) give the directions in relation to the conduct of the winding up or the receivership as it considers appropriate for facilitating the Voluntary Arrangement.
13. Implementation of approved Voluntary Arrangement
(1) This section applies if there is an approved Voluntary Arrangement for a Company.
(2) On the Voluntary Arrangement taking effect, the Nominee for the proposed Voluntary Arrangement becomes the Supervisor of the approved Voluntary Arrangement.
(3) If a creditor or other Person is dissatisfied by any act, omission or decision of the Supervisor, the Person may apply to the Court. On the application, the Court may do any or all of the following:
(a) confirm, reverse or modify any act or decision of the Supervisor;
(b) give the Supervisor directions;
(c) make any other order it considers appropriate.
(4) The Supervisor:
(a) may apply to the Court for directions in relation to any particular matter arising under the Voluntary Arrangement; and
(b) is included among the Persons who may apply to the Court for the winding up of the Company or for a receivership order to be made in relation to it.
(5) The Court may make an order appointing an Insolvency Practitioner as Supervisor for the Company, either in substitution for an existing Supervisor or to fill a vacancy.
PART 3: RECEIVERSHIP
14. Appointment and Functions of Receivers and Administrative Receivers
(1) A Company may, by instrument (the appointing instrument), give a Person (the appointer) power to appoint a Person for the purpose of getting in and selling any part of the Company’s property and applying the proceeds in reduction of a debt owing by the Company to the appointer.
(2) If the appointer appoints a Person under the power given to the appointer by the appointing instrument, the Person appointed (the appointee) is:
(a) if the property of the Company over which the Person is appointed consists of all or substantially all of the undertaking of the Company—an Administrative Receiver of the Company; or
(b) in any other case—a Receiver of the Company.
(3) The appointee must be an Insolvency Practitioner.
(4) The appointee has the Functions given to the appointee by the appointing instrument except so far as otherwise provided under these Regulations or the Rules, and is subject to the appointing instrument, these Regulations and the Rules in the Exercise of those Functions.
(5) If the appointee is an Administrative Receiver of the Company, the appointee has, in addition to the powers given by the appointing instrument, the powers set out in Schedule 1 (Additional powers of Administrative Receivers).
(6) In the application of Schedule 1 to the appointee, a reference to relevant property of the Company is a reference to property of the Company for which the appointee is, or apart from the appointment of another Person as Receiver would be, the Administrative Receiver.
(7) The appointee or the appointor may apply to the Court for directions in relation to any particular matter arising in relation to the Exercise of the appointee’s Functions as Administrative Receiver or Receiver of the Company.
(8) On an application under subsection (7), the Court may give the directions, or may make the order declaring the rights of Persons before the Court or otherwise, as it considers just.
15. Notification of appointment of Receiver or Administrative Receiver
If a Receiver or Administrative Receiver has been appointed for a Company, every invoice, order for goods or services, or business letter, issued by or on behalf of the Company or the Receiver or Administrative Receiver, and on or in which the Company’s name appears, must contain a statement that a Receiver has been appointed.
16. Interaction of Administrative Receivers and Receivers
If an Administrative Receiver is appointed for a Company, any Receiver appointed before the appointment of the Administrative Receiver immediately vacates office, and a Receiver may not be subsequently appointed for any part of the Company’s property.
17. No duty to inquire about Administrative Receiver’s powers
A Person dealing with the Administrative Receiver of a Company in good faith and for value is not required to inquire whether the Administrative Receiver is acting within the Administrative Receiver’s powers.
18. Power of Administrative Receiver to dispose of charged property
(1) If, on application by the Administrative Receiver of a Company, the Court is satisfied that the disposal (with or without other assets) of any relevant property that is subject to a security interest would be likely to promote a more advantageous realisation of the Company’s assets than would otherwise be achieved, the Court may, by order, authorise the Administrative Receiver to dispose of the property as if it were not subject to the security interest.
(2) Subsection (1) does not apply to a security interest held by the Person by whom or on whose behalf the Administrative Receiver was appointed or to any security interest to which a security interest held by the Person has priority.
(3) It must be a condition of an order under this section that the following amounts must be applied towards discharging the amounts secured by the security:
(a) the amount of the net proceeds of the disposal;
(b) the amount (if any) required to make good the deficiency between the net proceeds of the disposal and the net amount that would be realised on a sale of the property in the open market by a willing vendor.
(4) If the condition mentioned in subsection (3) relates to 2 or more security interests, the condition must require the amounts mentioned in that subsection to be applied towards discharging the amounts secured by those security interests in the order of their priorities.
19. Administrative Receiver: as Company’s agent
The Administrative Receiver of a Company is taken to be the Company’s agent unless and until the Company Goes into Liquidation.
20. Administrative Receiver: vacation of office
The Administrative Receiver of a Company may at any time be removed from office by order of the Court (but not otherwise) and may resign the office by giving notice of the resignation in accordance with the Rules.
21. Report by Administrative Receiver
(1) If an Administrative Receiver is appointed for a Company, the Administrative Receiver must, within 3 months after the day of the appointment (or, if the Court allows a longer period, the longer period), send to all creditors of the Company (so far as the Administrative Receiver is aware of their claims and addresses) a report about the following matters:
(a) the events leading up to the appointment, so far as the Administrative Receiver is aware of them;
(b) the disposal, or proposed disposal, by the Administrative Receiver of any property of the Company and the conduct, or proposed conduct, by the Administrative Receiver of any business of the Company;
(c) the amounts of principal and interest payable to the debt security holders of the Company and the amounts payable to preferential creditors of the Company; and
(d) the amount (if any) likely to be available for the payment of other creditors.
(2) The Administrative Receiver must, within 3 months after the day of appointment (or, if the Court allows a longer period, the longer period), publish, in accordance with the Rules, a notice stating an address to which unsecured creditors of the Company may write for copies of the report to be sent to them free of charge.
(3) The Administrative Receiver must call a meeting of the Company’s unsecured creditors for the purpose of discussing the report, and must give the unsecured creditors not less than 14 days notice of the meeting.
22. Creditors committee
(1) If a meeting of a Company’s unsecured creditors is called under section 21(3) (Report by Administrative Receiver) by the Administrative Receiver, the meeting may establish a committee (a creditors committee) to Exercise the Functions given to the committee under these Regulations and the Rules.
(2) If a creditors committee is established under subsection (1), the committee may, on giving not less than 7 days notice, require the Administrative Receiver to attend before it at any reasonable time and give it the information relating to the Exercise of the Administrative Receiver’s Functions that it may reasonably require.
PART 4: WINDING UP
CHAPTER 1-GENERAL
23. Alternative modes of winding up
(1) The winding up of a Company may be either voluntary or by the Court.
(2) This Chapter relates to winding up generally, except so far as the contrary intention appears.
24. Rules about obligations to contribute in winding up
The Rules may make provision for or in relation to the obligations of members, former members, directors, and former directors, of a Company that is being wound up, and other Persons, to contribute to the assets of the Company.
25. Powers etc. of Liquidators
(1) A Liquidator appointed in the winding up of a Company has the powers set out in Schedule 2 (Powers of Liquidator in winding up).
(2) The Rules may make provision with respect to the Exercise of a Liquidator’s Functions in relation to the winding up of a Company, including, for example, by:
(a) prescribing the forms and procedures to be adopted by the Liquidator in the winding up of a Company; or
(b) imposing requirements on officers of a Company and others to cooperate with the Liquidator in relation to the winding up of the Company.
(3) Without limiting subsection (2), the Rules may authorise a Liquidator appointed in the winding up of a Company to do any or all of the following:
(a) summon a Person to be examined before the Court about the affairs of the Company;
(b) inspect books and records of the Company;
(c) direct an officer of the Company to deliver to the Liquidator all books and records in the officer’s possession that relate to the Company;
(d) inform the Liquidator of the whereabouts of books or records that relate to the Company;
(e) direct an officer of the Company to give the Liquidator the information about the Company’s business, property, affairs and financial circumstances that the Liquidator requires;
(f) direct an officer of the Company to attend on the Liquidator to provide the books or records, information, or other assistance, that the Liquidator may reasonably require.
(4) If a Liquidator has been appointed in the winding up of a Company, an officer of the Company must not:
(a) Fail to do whatever the Liquidator reasonably requires the officer to do to assist in the winding up; or
(b) Fail to comply with any reasonable direction given to the officer by the Liquidator under these Regulations or the Rules; or
(c) hinder or obstruct the Liquidator in the Exercise of the Liquidator’s Functions.
(5) Contravention of subsection (4) is punishable by a fine.
(6) A Liquidator may Exercise the Liquidator’s Functions in relation to a Person whether the Person is inside or outside of the AIFC.
(7) However, in Exercising Functions in relation to a Person outside of the AIFC, the Liquidator must comply with local requirements applying to the Exercise of the Functions, including, if appropriate, informing, or acting in collaboration with, a local regulator or authority.
(8) In this section:
officer, in relation to a Company, means a Person who is, or has been:
(a) a director or secretary of the Company; or
(b) an employee of the Company involved in its management; or
(c) a Receiver or Administrative Receiver of the Company; or
(d) a Nominee or Supervisor in relation to a proposed Voluntary Arrangement or Voluntary Arrangement for the Company.
CHAPTER 2-VOLUNTARY WINDING UP
26. Circumstances in which Company may be wound up voluntarily
A Company may be wound up voluntarily:
(a) in the circumstances (if any) provided for in the Company’s articles of association; or
(b) if the Company passes a resolution that it should be wound up voluntarily; or
(c) if the Company passes a resolution that it cannot continue to conduct its business because of its liabilities and that it is advisable that it be wound up.
27. Notice of Resolution for Voluntary Winding Up
If a Company passes a Resolution for Voluntary Winding Up, it must, within 14 days after the day it passes the resolution, give notice of the resolution by advertisement published in accordance with the Rules.
28. Commencement of Voluntary Winding Up
The Voluntary Winding Up of a Company is taken to commence at the time of the passing of the Resolution for Voluntary Winding Up.
29. Effect on business and status of Company in Voluntary Winding Up
(1) In the Voluntary Winding Up of a Company, the Company must cease conducting its business from the commencement of the winding up, except so far as conducting the business may be required for its beneficial winding up.
(2) However, the corporate personality and corporate powers of the Company continue until the Company is dissolved, despite anything to the contrary in its articles of association.
30. Avoidance of share transfers after commencement of Voluntary Winding Up
Any transfer of shares in a Company (other than a transfer made to or with the approval of the Company’s Liquidator), and any alteration in the status of the Company’s members, is void if it is made after the commencement of a Voluntary Winding Up of the Company.
31. Declaration of solvency
(1) If it is proposed to wind up a Company voluntarily, the directors of the Company (or, if the Company has more than 2 directors, the majority of them) may at a meeting of the directors make a declaration to the effect that they have made a full inquiry into the Company’s affairs and that, having done so, they have formed the opinion that the Company will be able to pay its debts in full, together with interest at the official rate, within the period, not exceeding 12 months from the commencement of the winding up, specified in the declaration.
(2) The declaration must be made:
(a) within 5 weeks immediately before the day the resolution for winding up is passed; or;
(b) on that day, but before the passing of the resolution.
(3) A director must not make a declaration under subsection (1) unless the director has reasonable grounds for the opinion stated in the declaration.
(4) Contravention of subsection (3) is punishable by a fine.
(5) If the Company is wound up because of a resolution passed within 5 weeks after the declaration under subsection (1) is made, and its debts are not paid or provided for in full within the period specified in the declaration, it must be presumed (unless the contrary is shown) that each of the directors making the declaration did not have reasonable grounds for the director’s opinion stated in the declaration.
32. Appointment of Liquidator by Company
(1) In a Members Voluntary Winding Up, the Company in general meeting must appoint 1 or more liquidators for the purpose of winding up the Company’s affairs and distributing its assets.
(2) On the appointment of a Liquidator for the Company, all the powers of the directors cease, except so far as the Company in general meeting, or the Liquidator, approves their continuance.
33. General Company meeting at end of each year
(1) If the winding up of a Company continues for more than 1 year, the Liquidator must call a general meeting of the Company at the end of the first year of the winding up, and of each succeeding year, or at the first convenient date within 3 months after the end of the relevant year (or, if the Court allows a longer period, the longer period allowed by the Court).
(2) The Liquidator must give the meeting an account of the Liquidator’s acts and dealings, and of the conduct of the winding up, during the preceding year.
34. Final meeting before dissolution
(1) As soon as the Company’s affairs are fully wound up, the Liquidator must prepare an account of the winding up, explaining how it has been conducted and how the Company’s property has been disposed of.
(2) When the account has been prepared, the Liquidator must call a general meeting of the Company for the purpose of giving the account to the meeting and explaining it to the meeting.
(3) The meeting must be called by an advertisement that specifies the time, place and purpose of the meeting, that is published at least 1 month before the meeting, and that otherwise complies with the Rules.
35. Effect of Company’s insolvency
(1) This section applies if the Liquidator of a Company is of the opinion that the Company will be Unable to Pay its Debts in full within the period stated in the declaration made for the Company under section 31 (Declaration of solvency).
(2) The Liquidator must call a meeting of creditors for a day not later than 28 days after the day the Liquidator forms the opinion, and must send notice of the meeting to the creditors by post not less than 7 days before the day the meeting is to be held.
(3) The Liquidator must give the creditors, free of charge, the information about the Company’s affairs that they reasonably require. The notice of the meeting must tell creditors about this duty.
(4) The Liquidator must also make out a statement of the Company’s affairs and give the statement to the meeting of creditors.
36. Conversion to Creditors Voluntary Winding Up
As from the day the meeting of creditors of a Company is held under section 35 (Effect of Company’s insolvency), these Regulations have effect as if:
(a) the declaration made for the Company under section 31 (Declaration of solvency) had not been made; and
(b) the creditors meeting and the Company meeting at which it was resolved that the Company be wound up voluntarily were the meetings mentioned in section 38 (Meeting of Creditors);
and accordingly the winding up becomes a Creditors Voluntary Winding Up.
CHAPTER 3-CREDITORS VOLUNTARY WINDING UP
37. Application of Chapter 3
(1) This Chapter applies in relation to a Creditors Voluntary Winding Up of a Company.
(2) However, sections 38 (Meeting of creditors) and 39 (Appointment of liquidation committee) do not apply if, under section 36 (Conversion to Creditors Voluntary Winding Up), a Members Voluntary Winding Up has become a Creditors Voluntary Winding Up.
38. Meeting of creditors
(1) The Company must:
(a) call a meeting of its creditors for a day not later than 14 days after the day the meeting of the Company is to be held to consider the proposed Resolution for Voluntary Winding Up of the Company; and
(b) give notice of the creditors meeting to all creditors (so far as it is aware of their claims and addresses), and publish notice of the meeting in an appropriate publication, at least 7 days before the day that meeting is to be held; and
(c) nominate a Person to be appointed as liquidator of the Company.
(2) The creditors may, at the creditors meeting, nominate a Person to be appointed as liquidator of the Company.
(3) If the same Person is nominated by the Company and the creditors or the creditors do not nominate a Person, the Person nominated by the Company is taken to be appointed as the Liquidator of the Company.
(4) If different Persons are nominated by the Company and the creditors, the Person nominated by the creditors is taken to be appointed as the Liquidator of the Company.
(5) The Person nominated by the Company must not exercise any of the Liquidator’s powers during the period before the holding of the creditors meeting without the Court’s approval.
39. Appointment of liquidation committee
(1) At the meeting of the creditors of a Company held under section 38 (Meeting of creditors) or at any subsequent creditors meeting, the creditors may appoint a committee (a liquidation committee) of not more than 5 individuals to Exercise the Functions given to the committee under these Regulations and the Rules.
(2) If a liquidation committee is appointed under subsection (1), the Company may, either at the meeting at which the Resolution for Voluntary Winding Up is passed or at any time subsequently in general meeting, appoint not more than 5 individuals as members of the committee.
(3) However, the creditors may resolve that all or any of the individuals appointed by the Company as members of the liquidation committee ought not to be members of the committee.
(4) If the creditors so resolve:
(a) the individuals mentioned in the resolution cease to be eligible to be members of the liquidation committee, unless the Court otherwise directs; and
(b) on an application to the Court under this subsection, the Court may appoint other individuals to be members of the liquidation committee instead of individuals mentioned in the resolution.
40. Directors’ powers on appointment of Liquidator
On the appointment of a Liquidator for a Company, all the powers of the directors cease, except so far as the liquidation committee appointed under section 39 (Appointment of liquidation committee) (or, if there is no liquidation committee, the creditors) approve their continuance.
41. Vacancy in office of Liquidator
If a vacancy occurs, by death, resignation or otherwise, in the office of a Liquidator of a Company (other than a Liquidator appointed by, or by the direction of, the Court), the creditors may fill the vacancy.
42. Meetings of Company and creditors at end of each year
(1) If the winding up of a Company continues for more than 1 year, the Liquidator must call a general meeting of the Company, and a meeting of the creditors, at the end of the first year of the winding up, and of each succeeding year, or at the first convenient date within 3 months after the end of the relevant year (or, if the Court allows a longer period, the longer period allowed by the Court).
(2) The Liquidator must give the meetings an account of the Liquidator’s acts and dealings, and of the conduct of the winding up, during the preceding year.
43. Final meetings before dissolution
(1) As soon as the Company’s affairs are fully wound up, the Liquidator must prepare an account of the winding up, explaining how it has been conducted and how the Company’s property has been disposed of.
(2) When the account has been prepared, the Liquidator must call a general meeting of the Company, and a meeting of the creditors, for the purpose of giving the account to the meetings and explaining it to the meetings.
(3) The meeting must be called by an advertisement that specifies the time, place and purpose of the meeting, that is published at least 1 month before the meeting, and that otherwise complies with the Rules.
CHAPTER 4-PROVISIONS APPLYING TO BOTH KINDS OF VOLUNTARY WINDING UP
44. Distribution of Company’s property
Subject to section 97 (Preferences) and section 66 (Preferential debts and ranking of claims), to any Rules mentioned in section 92 (Rules made in relation to these Regulations) and to the application of any other AIFC Regulations or AIFC Rules as described in section 100 (Application of other laws to receivership and winding up), a Company’s property in a Voluntary Winding Up must be applied in satisfaction of the Company’s liabilities other than to its members (as members) and, subject to that application, must (unless the Company’s articles of association otherwise provide) be distributed among the members according to their rights and interests in the Company.
45. Appointment or removal of Liquidator by Court
(1) If, for whatever reason, there is no Liquidator appointed for a Company that is being wound up voluntarily, the Court may appoint a liquidator.
(2) The Court may remove a Liquidator of a Company that is being wound up voluntarily and appoint another.
46. Reference of questions to Court
(1) The Liquidator of a Company, or any creditor, shareholder or other Person liable to contribute to the assets of a Company that is being wound up voluntarily, may apply to the Court to decide any question arising in the winding up, or to exercise, in relation to the enforcing of calls or anything else, all or any of the powers that the Court might exercise if the Company were being wound up by the Court.
(2) The Court may make the orders on the application that it considers just.
47. Expenses of Voluntary Winding Up
All expenses properly incurred in the Voluntary Winding Up of a Company, including the remuneration of the Liquidator, are payable out of the Company’s assets in priority to all other claims.
48. Winding up by Court
The Voluntary Winding Up of a Company does not bar the right of any creditor or other Person to apply to have it wound up by the Court.
CHAPTER 5-COMPULSORY WINDING UP
49. Circumstances in which Company may be wound up by Court
A Company may be wound up by the Court if:
(a) the Company has resolved that it be wound up by the Court; or
(b) the Company is Unable to Pay its Debts; or
(c) a moratorium for the Company under section 9 (Moratorium) comes to an end and there is no Voluntary Arrangement approved under Part 2 (Company Voluntary Arrangements) in relation to the Company; or
(d) the Court is authorised to make the order under any other AIFC Regulations or any AIFC Rules; or
(e) the Court is of the opinion that it is just and equitable that the Company should be wound up.
50. Definition of Unable to Pay its Debts
(1) A Company is taken to be Unable to Pay its Debts if:
(a) a creditor to whom the Company is indebted in a sum exceeding U.S. $2,000 then due has served on the Company a Written demand requiring the Company to pay the sum so due and the Company has for 3 weeks afterwards neglected to pay the sum or to agree terms in relation to its payment to the reasonable satisfaction of the creditor; or
(b) execution or other process issued on a judgement, decree or order of any court in favour of a creditor of the Company is returned unsatisfied in whole or part; or
(c) it is proved to the satisfaction of the Court that the Company is unable to pay its debts as they fall due.
(2) A Company is also taken to be Unable to Pay its Debts if it is proved to the satisfaction of the Court that the value of the Company’s current assets is less than the amount of its current liabilities, taking into account its contingent and prospective liabilities.