Voluntary Deregistration

 

Under the Company and Allied Matters Act 2020 in Nigeria, voluntary deregistration and voluntary winding up are distinct processes.

Voluntary Deregistration (Section 38 CAMA 2020):

1. Definition: Voluntary deregistration is the process by which a company, on its own accord, applies to be struck off the register of companies.
2. Eligibility: Applicable to small companies or companies with no assets or liabilities.
3. Procedure: The company must submit an application to the Corporate Affairs Commission (CAC) with required documents, and if approved, the CAC can strike off the company from the register.
4. Effect: The company ceases to exist as a legal entity, but this process is less formal and typically quicker than winding up.

Voluntary Winding Up (Section 602 CAMA 2020):

1. Definition: Voluntary winding up is a formal process initiated by the members of the company to dissolve it.
2. Eligibility: Applicable when the company is solvent and the members decide that it should be wound up.
3. Procedure: The members pass a special resolution to wind up the company, appoint a liquidator, and follow the prescribed steps for winding up, including settling debts and distributing assets.
4. Effect: The company is formally dissolved after the winding-up process is completed.

Both processes have their distinct characteristics and procedures, and the choice between them depends on the company’s circumstances. It is essential to comply with the specific sections of the CAMA 2020.

Voluntary Deregistration Step by Step (Section 38 CAMA 2020):

1. Eligibility (Section 38(1) CAMA 2020): Applicable to small companies or companies with no assets or liabilities.
2. Procedure:

– Step 1: The company’s directors must convene a meeting to pass a resolution for deregistration.

– Step 2: Submit an application to the Corporate Affairs Commission (CAC) for voluntary deregistration.

– Step 3: Include required documents such as financial statements and tax clearance certificates.

– Step 4: If the CAC is satisfied, it approves the application, and the company is struck off the register (Section 38(2) CAMA 2020).

3. Effect: The company ceases to exist as a legal entity. Voluntary Winding Up Step by Step (Sections 600-607 CAMA 2020):

 

1. Eligibility (Section 600 CAMA 2020): Applicable when the company is solvent, and the members decide that it should be wound up.
2. Procedure:

– Step 1: Convene a meeting of members and pass a special resolution to wind up the company (Section 600(2) CAMA 2020).

– Step 2: Appoint a liquidator by an ordinary resolution (Section 605 CAMA 2020).

– Step 3: The liquidator takes control, collects and realizes assets, settles debts, and distributes remaining assets among members (Sections 601-604 CAMA 2020).

– Step 4: The liquidator must file a winding-up report with the CAC, including an audited account of the winding-up (Section 606 CAMA 2020).

– Step 5: The CAC issues a certificate of dissolution, and the company is formally dissolved (Section 607 CAMA 2020).

 

3. Effect: The company is formally dissolved after the winding-up process is completed.

Both processes require adherence to specific sections of the CAMA 2020, including resolutions, documentation, and interaction with the CAC. It is imperative to ensure compliance and proper execution of these procedures.