The Liquidator ’s task is to realise the company's assets and distribute the proceeds to the creditors and shareholders of the company in accordance with the law. Director of companies in liquidation are required to assist the Liquidator .
This paper details some of the duties and obligations of directors of companies in liquidation
Report as to Affairs
Under Section 475(2) of the Corporations Law, the director must complete and deliver to the Liquidator a Report as to Affairs ("RATA"). The RATA must be completed and returned to the Liquidator within FOURTEEN (14) DAYS from the date the notice to the director is served. The notice is considered to be served when it would have been delivered in the ordinary course of post - Section 109Y(4) of the Corporations Law.
If the director needs more time to complete the RATA, he should write to the Liquidator within 14 days. The Liquidator can only grant extensions of time liquidator where:
· there are special reasons; and
· the Liquidator receives the director’s request for extra time liquidator within the fourteen days time limit.
Under the Corporations Law the director commits an offence if the director fails to submit a RATA. The penalty for the offence is a fine of $2,500 or imprisonment for six months or both. The ASC enforces these penalties and the Liquidator must by law report all breaches to them. It is therefore in the director's best interest to submit the RATA to the Liquidator within fourteen (14) days.
The Law specifies a particular form for the Form 507. The RATA must also be verified on the Form 507A. The Liquidator normally encloses two copies of these forms as well as instructions to help the director to complete them.
As well as completing the RATA the Liquidator also requires the director to prepare answers to a general questionnaire. The Liquidator makes this request under section 475(2) of the Corporations Law.
Requirement to Deliver Property
Under the law the Liquidator must take control of all of the company's assets. Accordingly the Liquidator encloses a notice under section 483(1) of the Corporations Law. This notice requires the director to deliver to the Liquidator within fourteen days all money, property, books, papers and records of the company which are held by the director or in the director's control. Further, if the director is aware of another location of any of these items, the law requires the director to notify the Liquidator of these details within fourteen days.
Notice that a Corporation is in Liquidation
The law requires that the words "In Liquidation" appears on every document issued or signed by a Corporation once it is in liquidation (Section 541 of the Corporations Law). Whilst the director's powers to issue documents on behalf of the company are now very limited the director may be required to prepare various forms, etc. with the company name stated (eg. RATA, Group Certificates). If the director do not use the words "In Liquidation" after the company name in these documents, the director may be fined $1,000 or imprisoned for 3 months, or both.
Responsibilities under the Law
In addition to the director’s obligations already described here, the Corporations Law imposes certain responsibilities on directors, secretaries and officers of the company.