MASENO UNIVERSITY
ABA 302:- COMPANY LAW
WINDING UP
DAVE LUNG’AHO SIGANGA
This is the legal process by which a company’s legal existence is brought to an end.
It is carried through by a person known as a liquidator who wraps up the company operations by taking control of the Company, collecting the company’s assets, pays the Company’s debts, and then distributes the surplus among the members of the company.
The liquidation process involves inter alia;
A] Settling the list of contributories
B] Collecting the company’s assets;
C] Paying the company’s debts and other liabilities
D] Distributing the surplus assets among other contributories
Priority of Payment
1. Liquidators/ official receivers fees
2. Expenses incurred by the liquidator/ official receiver
3. Petitioner’s expenses
4. Preferential debts
5. Unsecured Creditors
6. Repayment of share capital as per the Company’s Articles of Association
7. The residue will be distributed to the members of the Company
Relevant Law
The process of winding up is governed by the Company Act Chapter 486
Section 212 [1] provides that the winding up may be either;
A] A compulsory winding up by the court or

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B] A voluntary winding up, which may be either a member’s voluntary winding up, or a creditors voluntary winding up; or
C] A winding up subject to the supervision of the High Court.
Who may petition?
a) The Company Itself: - The Company may by special resolution commence winding up proceedings. It is a Company decision to wind up, not a decision of some of its directors.
b) A company creditor: - a secured creditor, debenture holder, or a debenture holder’s trustee may file a winding up petition. However, a petition by a creditor to force the
Company to pay a debt shall be deemed to be an abuse of the Court Process, and such petition shall be struck out1.
c) A contributory: - once a winding up process has commenced, the