Termination of companies in the United Arab Emirates can be examined under the following provisions

- Commercial Companies Law
- Free Zone Regulations
- Dubai offshore company

COMMERCIAL COMPANIES LAW

Termination of companies are covered by Chapter Ten of the Commercial Companies Law (Article 281 to 312)

Article 281 provides that a company can be dissolved for any of the following reasons
- expiry of its duration mentioned in the articles of incorporation or association unless renewed in accordance   with the provisions thereof
- completion of the objective for which the company was established
- loss of all or most of the company’s assets such as to preclude the profitable investment of the remainder
- merger - approval of the shareholders that the company’s term of existence be brought to and end as per   stipulated majority

Article 282 provides that a court may order the dissolution of any general partnership, limited partnership or joint participation company at the request of one of the partners if there are serious reasons warranting such dissolution. A court may order expulsion of a partner for his actions warranting dissolution, and may also order dissolution at the request of one of the partners on the grounds of another partner’s failure to meet his obligation.

Article 283 provides that general partnership, limited partnership and joint participation company can be dissolved for any of the following reasons in addition to those stipulated in Article 281

- withdrawal of one of the partners in a company consisting of two partners
- death of one the partners or the court orders arrest of partner or declares him bankrupt though    the contract may provide for continuation of the company with heirs of the deceased.

Article 284 provides that if the contract of general partnership, limited partnership and joint participation company does not provide for the continuation of the company in the event of withdrawal, death, arrest or bankruptcy of partner, then the partners may within 60 days of such event take an unanimous decision to continue the company between themselves, and such agreement shall be admissible as defence in relation to third parties only from the date on which it is recorded in the Commercial Register. In all such cases, the share of the partner who has left the company on such event shall be valued based on the recent accounts or as per valuation method stipulated in the contract.

Article 285 provides that if the losses of a joint stock company amount to half of the capital, the Board of Directors shall call an extraordinary general meeting to consider the matter of continuation of the company or dissolution of the company before the time limit specified in its Articles of Association. If the Board fails to call such meeting, then any interested person may file a suit applying for the dissolution of the company.

Article 286 provides that a partnership with limited shares shall be dissolved upon the withdrawal of general liability partner or upon his death or pronouncement of his arrest or bankruptcy unless the Articles of Association provide otherwise. If there is no such provision, an extra ordinary general meeting may be convened to continue the company.

Article 287 provides that in case of withdrawal, death, arrest, bankruptcy of all the jointly liable partners in partnership with limited shares, the company shall be dissolved unless its Articles specify that it ma be converted to another company.

Article 288 provides that a limited liability company shall not be dissolved upon the death, withdrawal or pronouncement of arrest or bankruptcy of one of the partners, unless the Articles of Incorporation provides otherwise i.e. there is a general presumption of continuity of the company for the duration specified in the Articles of Incorporation.

Under Article 289, if the losses of a limited liability company amount to half the capital, directors shall put the matter of dissolution before a general meeting, and the passing of the resolution to dissolve is conditional upon approval by the majority required to amend the Articles of incorporation (generally 3/4th majority or higher if so specified in the Articles). If the losses amount 3/4th of the capital, the partners who hold 1/4th of the capital may request dissolution.

Liquidation shall be carried out by one or more liquidators to be appointed by the partners or the general meeting approved by the majority by which the company’s decisions are taken (Article 294 (1)). In practice, such resolution needs to be notarised before the Notary Public. If liquidation is in compliance with a legal judgment, the court shall set out the method of liquidation and appoint a liquidator (Article 294(2)).

Notice shall be given of the dissolution of a company by entry in the Commercial Register, and publication of dissolution notice in two Arabic newspapers (Article 290).

A company has a legal personality to the extent required by the liquidation process and the name should have the suffix “under liquidation” added to its name (Article 291).

Immediately upon his appointment and by agreement with the Board of Directors, the liquidator shall take stock of the company’s assets and liabilities, and make available to the liquidator all ledgers, accounts and documents of the company (Article 296).

Liquidator shall draw up a detailed list of the company’s assets and liabilities together with its balance sheet to be signed by him and the Directors. Liquidator shall keep a ledger to record the process of liquidation (Article 297).

Liquidator shall do everything necessary to safeguard the assets and the rights and obtain all company’s claims and deposit the monies received into the company bank account as soon as received (Article 298).

Liquidator shall perform all the tasks required by the liquidator, and in particular the representation of the company in law, settlement of the company’s debts and sale of the company’s movable and immovable property by public auction or other means unless the instrument appointing the liquidator specifies the sale be effected by a particular method. Liquidator cannot sell the assets wholesale except by permission from the partners or general meeting (Article 299).

Liquidator cannot commence any new business, and if he does he will be personally liable (Article 300).

Liquidator shall inform all the creditors by registered letter inviting them to present their claims. Notification shall be made in two Arabic daily newspapers. Time limit for submission of claims shall be not less than 45 days (Article 301).

If the company’s assets are not sufficient for the settlement of all debts, the liquidator shall discharge the debts proportionately without prejudice to the rights of the privileged creditors. (Article 302).

The company shall be bound by the transactions of the liquidator as long they are within the limits of his authority, and no liability shall devolve upon the liquidator by reason of his undertaking such actions (Article 305).

Liquidator shall be obliged to submit to the partners or the general meeting a provisional account every six months of the liquidation process (Article 307).

Assets of the company resulting from the liquidation shall be divided among the partners after settlement of its debts and at the division each partner shall receive a sum equal to the value of the stake in the capital he contributed. Remainder of the company’s assets shall be divided between the partners in proportion to their respective share in the profit (Article 308).

If the net assets of the company are insufficient to repay the partners stake in full, the deficit shall be distributed between them in accordance with the proportion laid down for the distribution of losses (Article 309).

Upon completion of the liquidation, the liquidator shall submit a final account to the partners or the general meeting for the liquidation process. Such process shall be concluded with the approval of the final accounts (Article 310 (1)).

Liquidator shall record the conclusion of the liquidation in the Commercial Register and request that the entry of the company be deleted from the Commercial register. (Article 310(2)).

Liquidator shall be liable to the company if its affairs are mismanaged during the period of liquidation and shall be liable for compensation for damage incurred by other parties by reason of his errors (Article 311).

Liquidator can be dismissed by the authority appointing him and such dismissal shall include appointment of another liquidator in replacement (Article 312).

A trader or a company can also be declared bankrupt. Bankruptcy and composition with creditors are separately governed by detailed provisions of the Commercial Transactions Law (Federal law no 18 of 1993-Articles 643 to 900).

A commercial company may be declared bankrupt if it ceases to pay its commercial debts at the time they fall due because of disruption of its financial operations. A company may be declared bankrupt even if it is in the process of liquidation.

In case of public joint stock companies and limited liability companies, if the declaration of bankruptcy is requested then the liquidation proceedings are suspended, and it may not be liquidated before completion of the bankruptcy.

FREE ZONE ENTITIES

Free Zone Company (FZC) and Free Zone Establishment (FZE) are governed by the Free Zone regulations.

In case of Jebel Ali Free Zone (JAFZA), FZC is governed by the Implementing Regulations No 1/99.

As per Regulation 54, if the net assets of the FZC fall below 50% of its share capital, the directors shall not later than 15 days from the earliest day on which that fact is known to a director, duly notify JAFZA, and the Board shall, within 7 days of such notification to it, take such steps as may be appropriate to remedy the situation so as to ensure that the net assets of the such FZC are restored to at least 50% of its share capital as soon as reasonably practicable.

As per Regulation 64, if JAFZA has reasonable cause to believe that any FZC is not carrying on business or operation, it may deregister the FZC after inquiring in writing of the FZC to ascertain if it is carrying on business or operation, and such FZC failing to respond to such inquiry or failing to satisfy the JAFZA of its intention to carrying the business or operation.

As per Regulation 65, if FZC is deregistered all property and rights vested in it and not owned by JAFZA or any other person are deemed held by its shareholders, unless deregister is a consequence of breach of the JAFZA regulations or licence conditions in which case all such property rights shall be forfeited and vested in JAFZA without compensation of any kind.

Under Regulation 66, FZC may also be deregistered as per order of any Court in Dubai.

Regulation 70 provides that FZC shall be deregistered upon application being made by the Board of Directors or shareholders to JAFZA or if the FZC or it shareholders are in breach of the Implementing Regulations or licence conditions.

As per Regulation 67, upon deregistration of FZC all trading and other business operations of such FZC must cease and the Board of Directors must ensure that FZC’s affairs are wound up under the supervision of a accountant licensed in Dubai as liquidator

- to ensure that such winding up is conducted in a timely and organised way taking account of all assets of the   FZC, claims of all creditors and employees thereof and ensuring the payment or provision of all claims, debts,   liabilities and obligations of FZC.
- to distribute any surplus asset of the FZC to the shareholders
- cause to be prepared by the liquidator a statement of account in respect of his actions and transactions
- and ensure that a copy of the Report is delivered to JAFZA within 7 days of such report being made.

As per Regulation 77, matters not provided for in the Implementing Regulations shall be subject to Commercial Companies Law.

In case of Free Zone Establishment (FZE) in JAFZA, deregistration provisions similar to FZC are provided in the Implementing Regulations No 1/92.

If business is operated in the Free Zone as a branch of an overseas entity, then liquidation will be governed by the provisions of the law applicable to such an overseas entity at the place of its incorporation or registration. Deregistration of the branch in the Free Zone will be permitted once all the obligations of the branch are settled.

It is beyond the scope of this presentation to cover all the Free Zones, but the above provisions can be considered representative of the deregistration provisions for business operating in a Free Zone.

DUBAI OFFSHORE COMPANY

Detailed provisions exist for winding up and termination of a Dubai offshore company in Part 13 of Jebel Ali Free Zone Authority Offshore Companies Regulations 2003

Under Regulation 69, the winding up of an offshore company may either be:
(a) Summary winding up under Chapter 1 of this Part;
(b) By its creditors under Chapter 2 of this Part; or
(c) By the Court under the UAE Commercial Transactions Law No. 18 of 1993 (Articles 643-900 referred to      above) and other applicable legislation

Summary winding up

This Chapter applies to the winding up of an offshore company which has no liabilities or which is able to discharge its liabilities in full within six months after the commencement of the winding up and such a winding up is a summary winding up.

Under Regulation 71, an offshore company may be wound up under this Chapter by making a statement of solvency in accordance with Regulation 71 (2):
(a) By passing, within 28 days after the statement has been signed by each of the directors of the offshore company, a Resolution that the offshore company be wound up summarily; and
(b) By delivering to the Registrar, within 21 days after the Resolution has been passed, a copy of it together with the statement.

A statement of solvency shall be signed by each of the directors and state that, having made full inquiry into the offshore company's affairs, each of them is satisfied -
(a) That the offshore company has no assets and no liabilities; or
(b) That the offshore company has assets and no liabilities; or
(c) That the offshore company will be able to discharge its liabilities in full within six months after the commencement of the winding up, as the case may be.

Under Regulation 72, a summary winding up under which assets of the offshore company are to be distributed commences on the passing of the Resolution for summary winding up.

Under Regulation 73, after the commencement of a summary winding up of an offshore company which has assets, the corporate state and capacity of the offshore company continue until the offshore company is dissolved but, from the commencement of the winding up, its powers shall be exercised only so far as may be required for the realisation of the assets of the offshore company, the discharge of any liabilities of the offshore company and the distribution of its assets in accordance with Regulation 75.

Under Regulation 74, on or after the date of commencement of a summary winding up of an offshore company, it may by Resolution appoint a person to be liquidator for the purposes of the winding up.

On the appointment of a liquidator all the powers of the directors cease except so far as the Resolution appointing the liquidator or any subsequent Resolution otherwise provides and, subject to any such Resolution and to Regulation 75, all those powers shall thereafter be exercisable by the liquidator.

Under Regulation 75, on the registration by the Registrar of a statement delivered under Regulation 71 that the offshore company has no assets and no liabilities the offshore company is dissolved.

On the registration by the Registrar of a statement so delivered that the offshore company has assets and no liabilities, the offshore company shall forthwith proceed to distribute its assets among its members according to their rights or otherwise as provided by the Regulations (Regulation 75(2)).

On the registration by the Registrar of a statement so delivered that the offshore company will be able to discharge its liabilities in full within six months after the commencement of the winding up, the assets of the offshore company shall be applied in satisfaction of the offshore company's liabilities and, subject to that application, shall be distributed as aforesaid (Regulation 75(3)).

As soon as the offshore company has completed the distribution of its assets in accordance with Regulation 75(2) or (3), it shall deliver to the Registrar a statement signed by each of the directors or, if the distribution has been completed by a liquidator appointed under Regulation 74, by the liquidator, that each director or (as the case may be) the liquidator, having made full inquiry into the offshore company's affairs, is satisfied that the offshore company has no assets and no liabilities and, upon the registration of the statement, the offshore company is dissolved.

Regulation 76 deals with the effect of insolvency as under-

(1) This Regulation applies where after the commencement of a summary winding up the directors (or, if there is a liquidator, the liquidator) form the opinion that the offshore company has liabilities which it will be unable to discharge in full within six months after the commencement of the winding up.

(2) When that opinion is formed, it shall be recorded in the minutes of a meeting of the directors or, as the case may be, by the liquidator.

(3) The directors (or, if there is a liquidator, the liquidator) shall:
           (a) By not less than 14 days' notice given by post, call a meeting of the creditors of the offshore                  company to be held within 28 days after that opinion was recorded and the offshore company shall                  in the notice nominate a person to be liquidator for the purpose of a creditors' winding up;
           (b) When that notice is given to the creditors, deliver a copy of it to the Registrar;
           (c) Not less than 10 days before the day for which the meeting is called, give notice of the meeting by                 advertisement in the newspaper prescribed by the Registrar;
           (d) During the period before the creditors' meeting is held, furnish any creditor free of charge with such                  information concerning the affairs of the offshore company as he may reasonably request; and
           (e) Make out a statement as to the affairs of the offshore company and lay that statement before the                 creditors' meeting.

(4) The statement as to the affairs of the offshore company shall be verified by affidavit by some or all of the directors or (if there is a liquidator) by the liquidator.

(5) If there is a liquidator, he shall preside at the creditors' meeting and, if there is no liquidator, a director nominated by the directors shall preside.

(6) As from the day on which the creditors' meeting under this Regulation is held the winding up becomes a creditors' winding up and these Regulations have effect as if that meeting was the meeting of creditors mentioned in Regulation 83.

(7) If the directors or, as the case may be, the liquidator without reasonable excuse fail to comply with their obligations under this Regulation or if a director or, as the case may be, the liquidator fails to comply with paragraph (5) so far as requiring him to preside at the creditors' meeting, the directors or the director or the liquidator, (as the case may be) commits an offence.

(8) A director or liquidator who signs a statement delivered to the Registrar under Regulation 71 or 75 without having reasonable grounds for stating that the offshore company has no liabilities or that it will be able to discharge its liabilities in full within six months after the commencement of the winding up commits an offence.

Under Regulation 77, a liquidator appointed under Regulation 73 shall be entitled to receive from the offshore company such remuneration as is agreed between him and the offshore company before his appointment or as is subsequently approved by the offshore company in general meeting or by the court.

Under Regulation 78, a liquidator appointed under Regulation 73 may be removed from office by a special resolution of the offshore company and shall vacate office if he ceases to be qualified to hold that office.

Creditors winding up

Regulation 80 provides that an offshore company may be wound up under this Chapter if the offshore company so resolves by Resolution.

Regulation 81 provides that when an offshore company has passed a Resolution for a creditors' winding up, it shall, within 14 days of the passing of the Resolution, give notice of the Resolution by advertisement in a newspaper prescribed by the Registrar. In the event of failure to comply with this Regulation, the offshore company and every officer of it who is in default commits an offence.

Under Regulation 82, a creditors' winding up is deemed to commence when the Resolution for winding up is passed or, where Regulation 76 (effects of insolvency) applies, when the winding up becomes a creditors' winding up; and the offshore company shall from the commencement of the winding up cease to carry on its business, except so far as may be required for its beneficial winding up.

The corporate state and capacity of the offshore company continue until the offshore company is dissolved.

A transfer of shares, not being a transfer made to or with the sanction of the liquidator, and an alteration in the status of the offshore company's members made after the commencement of the winding up is void.

After the commencement of the winding up no action shall be taken or proceeded with against the offshore company except by leave of the court and subject to such terms as the court may impose.

Regulation 83 provides for convening a meeting of creditors in creditors' winding up as under-

(1) The offshore company shall:
(a) Not less than 14 days before the day on which there is to be held the offshore company meeting at which the Resolution for a creditors' winding up is to be proposed give by post to its creditors notice calling a meeting of creditors to be held on the same day as, and immediately following the conclusion of, the offshore company meeting and nominating a person to be liquidator for the purposes of a creditors' winding up;
(b) Give notice of the creditors' meeting by advertisement in a newspaper prescribed by the Registrar not less than 10 days before the day for which that meeting has been called;
(c) During the period before the creditors' meeting furnish creditors free of charge with such information concerning the offshore company's affairs as they may reasonably require.

(2) The directors shall
(a) Make out a statement as to the affairs of the offshore company, verified by affidavit by some or all of the directors;
(b) Lay that statement before the creditors' meeting; and
(c) Appoint a director to preside at that meeting, and the director so appointed shall attend the meeting and preside over it.

(3) If:
(a) The offshore company without reasonable excuse fails to comply with Regulation 83(1);
(b) The directors without reasonable excuse fail to comply with Regulation 83(2); or
(c) A director without reasonable excuse fails to comply with Regulation 83(2), so far as requiring him to attend and preside at the creditors' meeting the offshore company; the directors or the director (as the case may be) commits an offence.

Regulation 84 provides for the appointment of liquidator as under-

(1) The creditors and the offshore company at their respective meetings mentioned in Regulation 83 may nominate a person to be liquidator for the purpose of the winding up.

(2) Where a creditors' meeting is called in accordance with Regulation 76, the person nominated to be liquidator in the notice calling the meeting shall be deemed, for the purposes of this Regulation, to have been nominated as aforesaid by the offshore company.

(3) The person nominated by the creditors, or if no person is nominated by the creditors, the person nominated, or deemed to have been nominated, by the offshore company is appointed liquidator with effect from the conclusion of the creditors' meeting.

(4) In the case of different persons being nominated, a director, member or creditor of the offshore company may, within seven days after the date on which the nomination was made by the creditors, apply to the Registrar for an order either: -
(a) Directing that the person nominated as liquidator by the offshore company shall be liquidator instead of or jointly with the person nominated by the creditors; or
(b) Appointing some other person to be liquidator instead of the person nominated by the creditors.

(5) A liquidator appointed under this Regulation shall within 14 days after his appointment give notice thereof signed by him to the registrar and to the creditors

(6) A liquidator who fails to comply with Regulation 84(5) commits an offence.

Regulation 85 provides for the appointment of liquidation committee as under-

(1) A creditors' meeting may appoint a liquidation committee consisting of not more than five persons to exercise the functions conferred on it by or under these Regulations

(2) If a committee is appointed, the offshore company may, in general meeting, appoint such number of persons not exceeding five as they think fit to act as members of the committee.

(3) The creditors may resolve that all or any of the persons so appointed by the offshore company ought not to be members of the committee; and if the creditors so resolve:
(a) The persons mentioned in the Resolution are not then qualified to act as members of the committee; and
(b) On an application to the Registrar under this provision the Registrar may appoint other persons to act as such members in place of the persons mentioned in the Resolution.

Regulation 86 provides for remuneration of liquidator, cesser of directors' powers, and vacancy in office of liquidator as under-
(1) A liquidator in a creditors' winding up is entitled to receive such remuneration as is agreed between him and the liquidation committee or, if there is no committee, between him and the creditors.
(2) On the appointment of a liquidator in a creditors' winding up, all the powers of the directors cease, except so far as the liquidation committee (or, if there is no committee, the creditors) sanction their continuance.
(3) The creditors may at any time remove a liquidator.
(4) If a vacancy occurs, by death, resignation or otherwise, in the office of a liquidator (other than a liquidator appointed by the court) the creditors may fill the vacancy.

If no liquidator is appointed, under Regulation 87, during the period before the appointment of a liquidator, the powers of the directors shall not be exercised except -
(a) With the sanction of the court;
(b) To secure compliance with Regulation 83; or
(c) To protect the offshore company's assets.

If the directors, without reasonable excuse, fail to comply with this Regulation, they are guilty of an offence.

Under Regulation 88, all costs, charges and expenses properly incurred in a creditors' winding up, including the remuneration of the liquidator, are payable out of the offshore company's assets in priority to all other claims.

Under Regulation 89, an arrangement entered into between an offshore company immediately preceding the commencement of, or in the course of, a creditors' winding up and its creditors is (subject to the right of appeal under this Regulation) binding -
(a) On the offshore company, if sanctioned by a Resolution; and
(b) On the creditors, if acceded to by three-quarters in number and value of them.

A creditor or contributory may, within three weeks from the completion of the arrangement, appeal to the court against it; and the court may thereupon, as it thinks just, amend, vary or confirm the arrangement.

Regulation 90 provides for meetings of company and creditors as under-

(1) If a creditors' winding up continues for more than 12 months, the liquidator shall call a general meeting of the offshore company and a meeting of the creditors to be held at the first convenient date within three months after the end of the first 12 months from the commencement of the winding up, and of each succeeding 12 months, or such longer period as the Registrar may allow, and shall lay before the meetings an account of his acts and dealings and of the conduct of the winding up during the preceding 12 months.

(2) If the liquidator fails to comply with this Regulation, he commits an offence.

Regulation 91 provides for the final meeting and dissolution as under-

(1) As soon as the affairs of an offshore company in a creditors' winding up are fully wound up, the liquidator shall make up an account of the winding up, showing how it has been conducted and the offshore company's property has been disposed of, and thereupon shall call a general meeting of the offshore company and a meeting of the creditors for the purpose of laying the account before the meetings and giving an explanation of it.

2) Each such meeting shall be called by not less than 21 days' notice sent by post, accompanied by a copy of the liquidator's account.

Regulation 91 provides for the final meeting and dissolution as under-

(1) As soon as the affairs of an offshore company in a creditors' winding up are fully wound up, the liquidator shall make up an account of the winding up, showing how it has been conducted and the offshore company's property has been disposed of, and thereupon shall call a general meeting of the offshore company and a meeting of the creditors for the purpose of laying the account before the meetings and giving an explanation of it.

(2) Each such meeting shall be called by not less than 21 days' notice sent by post, accompanied by a copy of the liquidator's account.

(3) Within seven days after the date of the meetings (or, if they are not held on the same date, after the date of the later one) the liquidator shall make a return to the Registrar of the holding of the meetings and of their dates.

(4) If the copy is not delivered or the return is not made in accordance with Regulation 91 (3), the liquidator commits an offence.

(5) If a quorum is not present at either such meeting, the liquidator shall, in lieu of the return required by Regulation 91(3), deliver a return that the meeting was duly called and that no quorum was present; and when that return is made the provisions of that paragraph as to the making of the return are, in respect of that meeting, deemed complied with.

(6) The Registrar on receiving the account and, in respect of each such meeting, either of the returns mentioned above, shall forthwith register them, and at the end of three months from the registration of the return the offshore company is deemed to be dissolved; but the Registrar may, on the application of the liquidator or of another person who appears to the Registrar to be interested, make an order deferring the date at which the dissolution of the offshore company is to take effect for such time as the Registrar thinks fit.

(7) If the liquidator fails to call a general meeting of the offshore company or a meeting of the creditors as required by this Regulation he commits an offence.

Regulation 92 deals with the powers and duties of liquidator as under-

(1) The liquidator in a creditors' winding up may, with the sanction of the liquidation committee (or, if there is no such committee, a meeting of the creditors)-
(a) Pay a class of creditors in full;
(b) Compromise any claim by or against the offshore company.

(2) The liquidator may, without sanction, exercise any other power of the offshore company as may be required for its beneficial winding up.

(3) The liquidator may:
(a) Settle a list of contributories (and the list of contributories is prima facie evidence of the persons named in it to be the contributories);
(b) Make calls;
(c) Summon general meetings of the offshore company for the purpose of obtaining its sanction by Resolution or for any other purpose he may think fit.

(4) The liquidator shall pay the offshore company's debts and adjust the rights of the contributories among themselves.

(5) The appointment or nomination of more than one person as liquidator shall declare whether any act to be done is to be done by all or any one or more of them, and in default, any such act may be done by two or more of them

Under Regulation 93, if for any reason there is, in a creditors' winding up, no liquidator acting, the Registrar may appoint a liquidator. The Registrar may, on reason being given, remove a liquidator in a creditors' winding up and appoint another.

Regulation 95 provides that subject to the provisions of any enactment as to preferential payments, an offshore company's property shall on winding up be realised and applied in satisfaction of the offshore company's liabilities pari passu and, subject to that application, shall (unless the articles or law otherwise provide) be distributed among the members according to their rights and interests in the offshore company.

Regulation 100 provides for liability as contributories of present and past members as under- When an offshore company is wound up, every present and past member is liable to contribute to its assets to an amount sufficient for payment of its liabilities, and the expenses of the winding up, and for the adjustment of the rights of the contributories among themselves: -

(a) A past member is not liable to contribute if he has ceased to be a member for one year or more before the commencement of the winding up;
(b) A past member is not liable to contribute in respect of a liability of the offshore company contracted after he ceased to be a member;
(c) A past member is not liable to contribute unless it appears to the court that the existing members are unable to satisfy the contributions required to be made by them in pursuance of these Regulations;
(d) No contribution is required from a past or present member exceeding the amount (if any) unpaid on the shares in respect of which he is liable;
(e) A sum due to a member of the offshore company (in his character of a member) by way of dividends, profits or otherwise is not deemed to be a liability of the offshore company, payable to that member in a case of competition between himself and any other creditor not a member of the offshore company, but any such sum may be taken into account for the purpose of the final adjustment of the rights of the contributories among themselves.

Regulation 101 provides for the disposal of records-

(1) When an offshore company has been wound up and is about to be dissolved, its records and those of a liquidator may be disposed of as follows:-
(a) In the case of a summary winding up, in the way that the offshore company by Resolution directs; and
(b) In the case of a creditors' winding up, in the way that the liquidation committee or, if there is no such committee, the offshore company's creditors, may direct.

(2) After 10 years from the offshore company's dissolution no responsibility rests on the offshore company, a liquidator, or a person to whom the custody of the records has been committed, by reason of any record not being forthcoming to a person claiming to be interested in it.

(3) The Registrar may direct that for such period as it thinks proper (but not exceeding 10 years from the offshore company's dissolution), the records of an offshore company, which has been wound up, shall not be destroyed.

(4) If a person acts in contravention of a direction made for the purposes of this Regulation, he commits an offence.

Striking off of companies

Registrar may strike defunct offshore company off register under Regulation 113 as under-

(1) If the Registrar has reason to believe that an offshore company is not carrying on business or is not in operation, he may send to the offshore company by post a letter inquiring whether the offshore company is carrying on business or in operation.

(2) If the Registrar receives an answer to the effect that the offshore company is not carrying on business or is not in operation, or does not within one month after sending the letter receive an answer, he may send to the offshore company by post, a notice that at the end of three months from the date of that notice the name of the offshore company, unless reason is shown to the contrary, be struck off the register and the offshore company will be dissolved.

(3) If, where an offshore company is being wound up in a creditors' winding up, the Registrar has reason to believe either that no liquidator is acting, or that the affairs of the offshore company are fully wound up, and the returns required to be made by the liquidator have not been made for a period of six consecutive months, the Registrar shall send to the offshore company or the liquidator (if any) a notice similar to that provided for in Regulation 113(2).

Under Regulation 114, the Registrar may strike company off register-

(1) Where it appears to the Registrar that:
(a) An offshore company is acting in breach of Regulation 15 permitted activities); or
(b) It is necessary to protect the good repute of the Zone as a centre for offshore business activities that an offshore company should be struck off the register.
The Registrar may send to the offshore company a letter setting out the reasons for that belief and requesting the offshore company to show reason why it should not be struck off.

(2) If within one month after sending the letter the Registrar does not receive an answer, the Registrar may send to the offshore company by post, a notice that at the end of the three months from the date of the notice the offshore company will unless reason is shown to the contrary be struck off the register and the offshore company will be dissolved.

(3) At the end of the period mentioned in the notice the Registrar may, unless reason to the contrary is previously shown by the offshore company or a member, creditor or liquidator of it, strike its name off the register, and on the striking off the offshore company is dissolved, but the liability (if any) of every director and member of the offshore company continues and may be enforced as if the offshore company had not been dissolved.

(4) Where an offshore company has been dissolved under Regulations 113 or 114, the Authority may, on an application made for the purpose by a liquidator of the offshore company or by any other person appearing to the Authority to be interested, make an order, on such terms as the Authority thinks fit, declaring the dissolution to be void and the Authority may by the order give such directions and make such provisions as seem just for placing the company and all other persons in the same position as if the company had not been dissolved. Thereupon such proceedings may be taken which might have been taken if the company had not been dissolved.

Under Regulation 115, the Registrar may strike company off register for non-payment of fees as under-

(1) If an offshore company has failed to pay any fees required to be paid to the Registrar under Regulation 111 the Registrar may send to the offshore company a letter requiring the offshore company to make the required payment within 30 days failing which the name of the company may be struck off the register.

(2) If the offshore company fails to pay the required fee due under Regulation 111 before the expiration of two months from the time specified in Regulation 115(1), the Registrar may strike the name of the offshore company off the Register.

(3) An offshore company, the name of which has been struck off the register under Regulation 115(2), remains liable for all claims, debts, liabilities and obligations of the offshore company, and the striking off does not affect the liability of any of its members, directors, officers or agents.

(4) If the name of an offshore company has been struck off the register under Regulation 115(2), the offshore company or a creditor, member of liquidator of the offshore company may, within two years following the date of the striking off, apply to the Registrar to have the name of the offshore company restored to the register and, upon payment of all fees due under Regulation 111 and any penalties imposed by the Registrar, the Registrar shall restore the name of the offshore company to the register. Upon restoration of the name of the offshore company to the register, the name of the offshore company is deemed never to have been struck off the register.