Page 186 - DCOM205_ACCOUNTING_FOR_COMPANIES_II

Unit 9: Fundamentals of Liquidation of Companies

self assessment notes

State whether the following statements are true or false:
8. Insolvency is not a necessary condition for the liquidation of a company.

9. All persons who ceased to be shareholders within twelve months from the date of winding
up are placed in List B of contributories.
10. In the case of insolvency of a company, the interest on the liabilities is payable up to the
date of actual payment.

9.5 Statement of Affairs and Deficiency/Surplus Account

Where a company is wound up by the order of the court or an official liquidator is appointed
as provisional liquidator by the court, the officers, directors, managers, secretary or other chief
officials of the company must submit to the official liquidator a Statement of Affairs of the
company within twenty-one days of court’s order (or within such extended time, not exceeding
three months, as the court may permit). This statement should be verified by an affidavit and it
must contain the following particulars:

(i) The assets of the company stating separately the cash balance in hand and at bank; if any,
and the negotiable securities, if any, held by the company;
(ii) The debts and liabilities;

(iii) The names, residences and occupations of its creditors, stating separately the amount of
secured and unsecured debts and in case of secured debts, particulars of securities given,
whether by the company or its officers, their value and the debts on which they were
given;
(iv) The debts due to the company and the names, residences and occupations of the persons
from whom they are due and the amount likely to be realised; and
(v) Such further or other information as may be prescribed by the Central Government or as
the official liquidator may require.

The above-mentioned statement is prepared in the case of compulsory winding up of the
company, but there is no provision of preparing a statement in the case of voluntary winding up
of the company. It must be prepared in a form prescribed by law. The reasonable expenses of the
preparation of this statement are paid by the liquidator out of the amount realised by him from
the sales proceeds of the assets. The Statement of Affairs is always open to inspection by any
person claiming in writing to be a creditor or contributory of the company on the payment of the
prescribed fees at all reasonable. This person or his agent can demand the copy of the statement
or an extract from it.
The contents of the different lists of the statement in the legal form can be summarised as
below:

(1) List A: The assets of the company which are not specifically pledged are showed in
this list.
(2) List B: In this list, estimated realisable value of assets specifically pledged, amount
due to secured creditors, deficiency or surplus from such assets are recorded.
(3) List C: Preferential creditors are recorded in this list.
(4) List D: Debentures and other loans secured by a floating charge over particular assets
are shown in this list.

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