Please find below a summary of the procedure and the requirements. Please note that we have assumed that the Company is a private limited company, that it is solvent, and that all the directors and shareholders will agree to wind up the Company.
Summary Winding Up - Procedure
Firstly, each of the directors of the Company must make a signed statement of solvency (the "Statement of Solvency") which states that, having made full enquiry into the Company's affairs, each director is satisfied that:
- the Company has no assets and no liabilities;
- the Company has assets and no liabilities;
- the Company will be able to discharge its liabilities in full within the six months after the commencement of the winding up ("Condition A");
- the Company has liabilities that will fall due more than six months after the commencement of the winding up that it will be able to discharge in full as they fall due ("Condition B"); or
- both Condition A and Condition B apply to the Company.
Secondly:
- the Company must pass, within 28 days after the Statement of Solvency has been signed by the directors, a special resolution that the Company be wound up summarily (the "Special Resolution"); and
- a copy of the Special Resolution must be delivered to the Jersey registrar of companies (the "Registrar") within 21 days of being passed, together with the Statement of Solvency.
We would recommend that the board of directors of the Company resolves to approve the summary winding up of the Company and the contents and circulation of the Statement of Solvency.
Note: A summary winding up under which assets of a Company are to be distributed only commences when the Special Resolution is passed.
Effect on status of Company
The corporate status and capacity of the Company continues after the commencement of the summary winding up until the Company is dissolved. However, the Company's powers must not be exercised except so far as may be required:
- to discharge its liabilities; and
- to distribute its assets.
Appointment of liquidator
The Law does not require a liquidator to be appointed to carry out a summary winding up. However, a Company may, on or after the commencement of its summary winding up, by special resolution appoint a person to be liquidator for the purposes of the winding up.
On the appointment of a liquidator the directors cease to be authorised to exercise their powers in respect of the Company and those powers may be exercised by the liquidator (subject to the resolution appointing the liquidator or any subsequent special resolution of the Company providing otherwise).
Application of assets
Where the Statement of Solvency states that the Company has assets and no liabilities the Company must, on the registration of the Statement of Solvency by the Registrar, distribute its assets among its members according to their rights or otherwise as provided by its memorandum or articles.
Where the Statement of Solvency states that the Company has liabilities the Company, after the registration of the Statement of Solvency by the Registrar:
- must satisfy those liabilities as they become due or within six months of that commencement, as the case may be; and
- if the directors / liquidator of the Company reasonably believe that it is able to pay any remaining liabilities as they fall due, may then distribute its remaining assets among its members according to their rights or otherwise as provided by its memorandum or articles.
As soon as a Company has completed the distribution of its assets in accordance with the above, it must deliver to the Registrar a statement signed by each of the directors or the liquidator, if the distribution has been completed by the liquidator, stating that each director / liquidator, having made full enquiry into the Company's affairs is satisfied that the Company has no assets and no liabilities (the "Final Statement").
Dissolution
On the registration by the Registrar of the Final Statement the Company is dissolved.
Effect of insolvency
If, after the commencement of a summary winding up of the Company, the directors / liquidator forms the opinion that the Company has liabilities that it will be unable to discharge within six months of the commencement of the winding up or, if they fall due after that date, as they fall due, then this will switch to a different procedure called a creditors' winding up. In addition to the creditors' winding up process, the Law was amended in 2022 so as to introduce a separate creditor-driven winding up process. Where a creditor has a liquidated claim against a Company for not less than the prescribed amount of £3,000, that
creditor may apply to the Jersey Royal Court for an order that the Company be wound up and a liquidator appointed over it.
We would be pleased to provide our more detailed Client Memo on winding up Jersey companies, which provides more information about the creditors' winding up process, or our more detailed Client Advisory on the creditor-driven winding up regime.
Termination of summary winding up
Where the summary winding up of a Company has commenced and:
- the termination of the winding up has been approved by a special resolution of the Company; and
- a certificate signed by all the directors of the Company confirming certain matters under Article 154(2)(a) of the Law (the "Certificate") has been delivered to the Registrar, along with the special resolution referred to above,
the summary winding up process terminates.
Upon the termination of a winding up, any liquidator appointed for the purpose of the winding up ceases to hold office and the Company and all other persons are reinstated in the same position, as if the winding up had not commenced.
The termination of a winding up does not affect the validity of anything duly done by any liquidator, director or other person, or by operation of law, before its termination.
Offences
It is an offence for a director to sign and deliver to the Registrar a Statement of Solvency, Final Statement or Certificate without having reasonable grounds for the statements made in it.
A person who commits this offence is liable, upon conviction, to imprisonment for up to two years, a fine or both.
Timing
Where a Company has no assets and no liabilities, it can be subject to a summary winding up that can take place in a matter of days (even a day in certain circumstances).
Where a Company has assets and liabilities, the timing of distributing those assets and discharging the liabilities will dictate the length of the summary winding up.
The information contained in this memorandum is necessarily brief and general in nature and does not constitute legal or taxation advice. Appropriate legal or other professional advice should be sought for any specific matter.
