Winding-up of a Company

This article is a simple guide to sources of information and services of winding up a company.

What Kind of Companies can be Wound-up

A limited company, which is formed and registered under the Companies Ordinance, can be wound up. The term “winding-up” (or “wound-up”) bears a similar meaning of “liquidation”. It generally means that all the assets of the company would be realised (sold off and converted to cash) through a legal process in order to repay its debts. Winding-up would bring a company to an end.

Modes of Winding-up

A company may be wound up by the court or voluntarily.

• Voluntary winding-up consists of:
  1. members’ (shareholders’) voluntary winding-up; and
  2. creditors’ voluntary winding-up.
• Compulsory winding-up by the High Court of the Hong Kong Special Administrative Region (“the Court”)

Compulsory Winding-up Petition

A limited company may be wound up by the Court in the circumstances set out in the Companies (Winding Up and Miscellaneous Provisions) Ordinance.  The more common ones are :

• the company is unable to pay a debt of $10,000 or above;
• the Court is of the opinion that it is just and equitable that the company should be wound up; or
• the company has by special resolution resolved that the company be wound up by the Court.

A creditor, a shareholder or the company itself can file a winding-up petition against the company. A solicitor is normally instructed by the petitioner to prepare and file the winding-up petition.

Any person (e.g. employee) who is qualified for receiving legal aid under the Legal Aid Ordinance and Rules may apply to the Legal Aid Department for assistance in filing a winding-up petition.

Director’s Duties in Compulsory Winding-up

On the appointment of a provisional liquidator or the making of the winding-up order, the powers of the directors of the company will cease but still they have certain duties to perform. If the directors fail to perform such duties, such as failure to keep proper books and records and failure to prepare a statement of affairs, the Official Receiver’s Office may take prosecution actions and disqualification actions against the directors.

More information

See the links below for more information about winding-up of a company.

Notes: This article serves as a general guide only. In case of doubt, please refer to the relevant regulations or seek advice from the legal profession.