Glossary.
The Official Receiver is a public officer the could be appointed as liquidator by the High Court for companies in compulsory winding up in Singapore.
The Official Receiver could also act as a regulator in voluntary winding up and compulsory winding up where private liquidators have been appointed. The Official Receiver is to:
a) take note of the private liquidator appointed to ensure that the private liquidator appointed performs the duties and duly observes all requirements under the law;
b) take note of the concerns of the creditors and contributories, if any, regarding the conduct of the private liquidator appointed to the Official Receiver;
c) receive the security from and issue a certificate of receipt of the same to the private liquidator appointed; and
d) receive copy of the Statement of Affairs and the accounts of receipts and payments, and statement of position in the winding up from the private liquidator appointed as prescribed by the Companies Act.
Official Receiver could also act as a representative of defunct companies after they are either dissolved or struck off from the Registry of Companies. Pursuant to Sections 345 to 347 of the Companies Act, the Official Receiver will administer the outstanding assets belong to the defunct companies prior to dissolution will vest in the Official Receiver under Section 346.
Section 272 of Companies Act (Cap. 50) states the liquidator is to:
a) investigate into the affairs and assets of the company, the conduct of its officers, and the claims of the creditors and third parties;
b) recover and realise the assets in the most advantageous manner to the company; and
c) adjudicate the claims of the creditors and ensure an equitable asset distribution in accordance to the order stated under Section 328 of the Companies Act:
a. cost and expenses of winding up, including the taxed cost of applicant and the remuneration of the liquidator;
b. wages or salary including allowance or reimbursement that does not exceed an amount that is equivalent to five (5) months’ salary or S$12,500, whichever is lesser;
c. retrenchment benefits or ex gratia payments under employment contract that does not exceed an amount that is equivalent to five (5) months’ salary or S$12,500, whichever is lesser;
d. all amounts due in respect of workmen’s compensation under Work Injury Compensation Act (Cap 354) accrued before, on or after the commencement of winding up;
e. contributions payable by the company as employer;
f. all remuneration payable to any employee pertaining to vocation leave, accrued in respect of any period before, on or after the commencement of winding up; and
g. all tax assessed under any written law before the commencement of the winding up or assessed at any time before the time fixed for the proving of debts has expired.
After payment of these preferential claims in full, the balance is then paid pari passu to all ordinary creditors. Thereafter, to make a capital repayment to shareholders with the leave of the Court. The shareholders are paid in proportion to their respective interests in the share capital of the company.
The Company’s assets are:-
a) Cash in hand and in the banks, and all other financial institutions;
b) Book debts disclosed in the Statement of Affairs;
c) Sale of office fittings and properties owned by the company;
d) Call in unpaid capital;
e) Recovery of assets from dispositions made by the company, including:
i. things in action and transfer of shares after the commencement of the winding up not sanctioned by the Court; and
ii. overdue preference given to certain creditors and transactions made to creditors at below valuation prior to winding up.
In the Schedule under the Fee (Winding Up and Dissolution of Companies and Other Bodies) Order 2005 states that the Official Receiver could charge
a) Administrative Fee;
b) Realisation Fee; and
c) Distribution Fee.
Pursuant to Section 9 of Companies Act (Amended) 2017, the Minister may, by order published in the Gazette, declare a person within a specified class of persons be an approved liquidator. Persons who are outside this specified class of person may apply to the Minister to be approved as liquidator for the purposes of the Companies Act. The applicant can be a public accountant registered under the Accountants Act or a non-public accountant under the Accountants Act. Once the approval is granted, the approved liquidator is charged with the responsibility for the registration or control of Paragraph 2(a) and (b) of the Second Schedule to the Accountants (Public Accountants) Rules 2004 and Section 9 of the Companies Act (Cap. 50).
From the commencement of the voluntary winding up, the company shall cease to carry on its business. Nevertheless, the corporate powers of the company shall continue until it is dissolved. The company’s shareholders cannot transfer the company shares without liquidator’s sanction. Filing needs to be submitted to Accounting and Corporate Regulatory Authority and the liquidation commences at the time of passing of the resolution.
CREDITORS’ VOLUNTARY WINDING-UP
The creditors’ voluntary winding-up is initiated by the directors and approved by shareholders and creditors of the company. An Extraordinary General Meeting (“EGM”) of shareholders and a creditors’ meeting be convened to resolve that the company be wound up within five (5) weeks from the lodgement of Declaration of Inability to Continue Business. The provisional liquidator is appointed at the board of directors’ meeting for the purpose of overseeing the affairs of the company thereafter until the holding of the EGM and the creditors’ meeting.
Where there is a difference between the company’s and the creditors’ nominee(s), the creditors’ choice of liquidator(s) will prevail over that of the Board of Directors’ and members’ nomination.
MEMBERS’ VOLUNTARY WINDING-UP
Members’ voluntary winding-up is initiated by the company’s directors and approved by the shareholders due to business environment, dormant status of the company and/or corporate restructuring involving a group of companies. Pursuant to Section 293(1) of the Companies Act, the directors are required to file a declaration of solvency to state that the company is able to pay its debt in full within twelve (12) months after the commencement of the winding up. A committee of inspection comprising of shareholders and directors of the company to provide oversight of the liquidation proceedings and serve as joint bank signatories to settle all outstanding debt owed by the company.
The Singapore Companies (Amendment) Act 2017, which came into force on 23 May 2017, has made significant changes to Singapore’s law relating to schemes of arrangement, judicial management and cross-border insolvency. The changes is to transform Singapore into a debt restructuring hub to act as an international centre for debt restructuring. The Companies Act (Amendment) Act 2017 (Cap 50) consist of:
a. Jurisdictional requirements that increased access by foreign companies to the debt restructuring regime in Singapore;
b. Enhanced moratorium for both scheme of arrangement and judicial management which broaden the scope of protection afforded to a distressed company;
c. New features to schemes of arrangement regime like more extensive cram-down provisions, moratorium to extend to related companies and enhanced creditor protection;
d. Introduction of “super-priority” status granted by court over secured and unsecured debts, provided that such pre-existing interest are adequately protected; and
e. Adoption of UNCITRAL Model Law to provide a framework of recognition to facilitate cross-border insolvencies and to accords foreign main proceedings greater deference and great immediate automatic relief than foreign non-main proceedings.
The professional fees is guided by the Singapore High Court and Section 142 of the Companies (Winding Up) Rule (Revised Edition) 2006 and apply where the estimated fees exceed S$200,000, and are irrespective of whether the subject company is solvent or insolvent. The scheme managers and private appointments are exempted. The guidelines are applicable to court appointed:-
a. provisional liquidation;
b. liquidator;
c. judicial managers; and
d. receivers and managers.
The court would assess the remuneration based on the following factors:
A. Based on the provisional figure, which is usually based on time-cost, the court will determine the reasonableness of the hourly rates, the industry standards and whether the hours claimed were spent and were spent reasonably;
B. Thereafter, the court will adjust the provisional figures to deduct the quantifiable heads of claims before apply a further percentage reduction to reflect the Court’s assessment of what a fair and just sum should be.
The following charges would be disallowed when assessing the remuneration:-
a. Remuneration for administrative tasks done by fee earners;
b. Work done by the receivers and managers in relation to legal proceedings unless it can be shown that work done was distinct from that undertaken by the lawyers appointed; and
c. Hourly charges for administrative staff.
