Rules for liquidating a company
Our webmaster always appreciates helpful feedback from our web visitors.Annual returns or Form 1a statutory document that every registered company in Kenya has to file with the registrar of companies to show the “current” status of the company.In such cases, investors in preferred stock have priority over holders of common stock.Liquidation can also refer to the process of selling off inventory, usually at steep discounts.In the simplest terms, this means selling the position for cash; another approach is to take an equal but opposite position in the same security—for example, by shorting the same number of shares that make up a long position in a stock.A broker may forcibly liquidate a trader’s positions if the trader’s portfolio has fallen below the margin requirement, or she has demonstrated a reckless approach to risk-taking.The debt will remain until the statute of limitation has expired, and as there is no longer a debtor to pay what is owed, the debt must be written off by the creditor. The most senior claims belong to secured creditors who have collateral on loans to the business.
Liquidation can also refer to the act of exiting a securities position.
This often happens when the companies are unable to pay its creditors and hence need to sell off its assets to pay of them.
Though in another version this could be a voluntary act as well where law ensures that all the debts of a company into existence is paid before it is closed or shut down.
Hence the law attempts to maintain the equality amongst the creditors and follow a transparent process to liquidate the assets of the company to be distributed equally amongst the creditors as per the size of their claim.
Below is the priority list as per which the assets after liquidation are distributed.