A limited company can be wound up
An “unlimited company” is not strictly a company
This type of business operates as a sole proprietorship or partnership.
As a sole proprietorship: An unlimited company can be run by one person in his or her own name. In this case, the person will be solely responsible for the operation of the business and the assumption of debts. There is no difference between their personal finances and business finances.
Partnership: An unlimited company can also be run jointly by two or more partners. In this case, the partners are jointly and severally liable for the debts of the business. This means that each partner is responsible for paying a portion of the debts of the business and may use their own personal assets to pay the debts.
A limited company can be wound up by voluntary winding-up or compulsory winding-up by the court.
Voluntary winding-up includes:
– Voluntary winding-up of the members (shareholders) of the company
– Creditors’ voluntary winding-up
The court may make a compulsory winding-up of a limited company under the circumstances set out in the Companies (Winding Up and Miscellaneous Provisions) Ordinance. Some common scenarios include:
– The company is unable to repay its debts of HK$10,000 or more
– The Court held that it was fair and reasonable to wind up the Company
– The company is wound up by the court by a special resolution
Any creditor, shareholder or the company itself can make an application for winding-up. Usually, the applicant will engage a solicitor to handle the winding-up application process.
Applicants (e.g. employees) who meet the qualifications under the Legal Aid Ordinance and Rules may apply to the Legal Aid Department for assistance in preparing and filing a winding-up application.
When a company is compulsorily wound up, when the court appoints an interim liquidator or makes a winding-up order, the powers of the directors of the company cease and there are a number of duties that need to be performed. Directors who fail to perform their duties, such as failing to keep and maintain books and records, failing to prepare and file statements of affairs, etc., may be subject to prosecution and disqualification as directors.
Winding up of a company https://www.gov.hk/tc/business/supportenterprises/businesstopics/windingup.htm
