Knowledge

A summary winding up is a statutory procedure used to wind up a solvent Jersey company.

It may be commenced by a Jersey company (which is not a limited life company or other company of limited duration) that:

A.    has no assets and no liabilities;
B.    has assets and no liabilities; or
C.    has assets and liabilities which will be discharged.

Details of the procedure to be followed in each instance are set out below. References in this briefing to the "Law" are to the Companies (Jersey) Law 1991.

Procedure
A - No assets and no liabilities
To summarily wind up a company that has no assets and no liabilities:

• Step 1: Each director must sign a statement of solvency (Commencement Statement) that, having made full enquiry into the company's affairs, each director is satisfied that the company has no assets and no liabilities.
• Step 2: Within 28 days after the Commencement Statement has been signed by the last of the directors, a special resolution (Special Resolution) that the company be wound up summarily must be passed. The summary winding up formally commences upon the passing of the Special Resolution.
• Step 3: Within 21 days after the date of the passing of the Special Resolution, the Special Resolution, together with the Commencement Statement, must be filed with the Registrar of Companies. The company is dissolved by operation of law on registration of the Commencement Statement by the Registrar of Companies.

B - With assets and no liabilities
To summarily wind up a company that has assets and no liabilities:

• Step 1: Each director must sign a statement of solvency (Commencement Statement) that, having made full enquiry into the company's affairs, each director is satisfied that the company has assets and no liabilities.
• Step 2: Within 28 days after the Commencement Statement has been signed by the last of the directors, a special resolution (Special Resolution) that the company be wound up summarily must be passed. The summary winding up formally commences upon the passing of the Special Resolution.
• Step 3: Within 21 days after the date of the passing of the Special Resolution, the Special Resolution, together with the Commencement Statement, must be filed with the Registrar of Companies.
• Step 4: On registration of the Commencement Statement by the Registrar of Companies, the company is required to distribute its assets among its members according to their rights or otherwise as provided by its memorandum or articles of association.
• Step 5: As soon as the company has completed the distribution of its assets, it is required to deliver to the Registrar of Companies a further statement (Completion Statement) signed by each director of the company (or by any liquidator) that each director (or the liquidator, as appropriate), having made full enquiry into the company's affairs, is satisfied that the company has no assets and no liabilities.  The company is dissolved by operation of law on registration of the Completion Statement.

C - With assets and liabilities which will be discharged
To summarily wind up a company that will be able to discharge its liabilities in full within six months of the commencement of the winding up, or has liabilities that will fall due more than 6 months after the commencement of the winding up that it will be able to discharge in full as they fall due, or where both of the foregoing apply to the company:

• Step 1: Each director must sign a statement of solvency (the Commencement Statement) that, having made full enquiry into the company's affairs, each director is satisfied that:
  • the company will be able to discharge its liabilities in full within six months of the commencement of the winding up; or
  • the company has liabilities that will fall due more than 6 months after the commencement of the winding up that it will be able to discharge in full as they fall due; or
  • both of the above apply to the company.
• Step 2: Within 28 days after the Commencement Statement has been signed by the last of the directors, a special resolution (Special Resolution) that the company be wound up summarily must be passed. The summary winding up formally commences upon the passing of the Special Resolution.
• Step 3: Within 21 days after the date of the passing of the Special Resolution, the Special Resolution, together with the Commencement Statement, must be filed with the Registrar of Companies.
• Step 4: After registration of the Commencement Statement by the Registrar of Companies, the company is required to satisfy its liabilities as they become due or within six months of the commencement of the winding up, as the case may be. If the directors of the company reasonably believe that the company is able to pay any remaining liabilities as they fall due, the company may then distribute its remaining assets among its members according to their rights or otherwise as provided by its memorandum or articles of association.
• Step 5: As soon as the company has completed the distribution of its assets, it is required to deliver to the Registrar of Companies a further statement (Completion Statement) signed by each director of the company (or by any liquidator) that each director (or the liquidator, as appropriate), having made full enquiry into the company's affairs, is satisfied that the company has no assets and no liabilities.  The company is dissolved by operation of law on registration of the Completion Statement.

Miscellaneous
Liquidators
On or after the commencement of its winding up, a company may, by special resolution, appoint a liquidator for the purposes of the winding up. This is not a compulsory provision of the Law and where a company's affairs are straight forward the winding up will usually be carried out by its directors and it would be rare for a liquidator to be appointed.

Effect of winding-up
Powers: Whilst the corporate state and capacity of the company continue from the commencement of the winding up until the company is dissolved, from the commencement of the winding up its powers must be exercised (with very limited exceptions) only so far as may be required for the realisation of the assets of the company, the discharge of any liabilities of the company and the distribution of its assets in accordance with Article 150 of the Law.

Correspondence: Following the commencement of the summary winding up, every invoice, order or business letter issued by or on behalf of the company (or by any liquidator), being a document on or in which the name of the company appears, must contain a statement that the company is in liquidation.  

Creditors' winding up: Where, after the commencement of the summary winding up, the directors (or any liquidator, as the case may be) form the opinion that the company has liabilities which it will be unable to discharge in full the directors (or any liquidator, as the case may be), must convene a creditors' meeting in accordance with Article 151 of the Law.  From that point on the winding up becomes a creditors' winding up (as opposed to a summary winding up) as set out in Chapter 4 of the Law.

Désastre: If a summary winding up has commenced and a declaration of en désastre (bankruptcy) is made by the Royal Court in respect of the company, the winding up immediately terminates and any liquidator appointed for the purpose of its winding up shall cease to hold office.

Offences
A director who signs a Commencement Statement (or a Completion Statement) which is delivered to the Registrar of Companies without having reasonable grounds for making the statement is guilty of an offence (punishable by up to 2 years' imprisonment and/or a fine) and may, in certain circumstances, be liable to contribute personally to meeting an insufficiency of assets of the company to discharge its liabilities.  Similarly, so will a liquidator, in the case of a Completion Statement.

Conclusion
Should any further information on the summary winding up of Jersey companies or assistance in preparing documentation be required, please contact us.