Step by Step Guide to Fund Liquidation (Updated June 20, 2019)
Step 1 – SUITABILITY: Firstly, the directors of the Company need to agree that the Company is suitable for a voluntary liquidation. To determine suitability, the Directors should satisfy themselves as to whether the Company is solvent. To pass the test for solvency in the Cayman Islands specifically, the Company must be able to pay its debts in full as they fall due, for a period of no more than twelve months. If the Company is not able to pay its debts, it is possible for the Company to receive support from another entity (the Investment Manager, for example) to enable the Company to pass the test for solvency.
Step 2 – DECLARATION OF SOLVENCY: At Apex we suggest that the Board of Directors hold a meeting to formally document the fact that the Directors have satisfied themselves that the Company is indeed solvent. The Directors will then sign a Declaration of Solvency to be filed with the Registrar of Companies.
Step 3 – SPECIAL RESOLUTION:
After the Directors have declared the company solvent, the voting/management shareholder of the Company will pass a Special Resolution to:
Once the shareholder resolution has been passed, the Company will be in formal voluntary liquidation. In some instances, the Company being liquidated may not have issued a voting/management share, or the voting/management share may have been repurchased. When this is the case, Apex Cayman will draft the necessary Board resolution to issue a single voting share so that the Special Resolution can be passed allowing the Company to enter into voluntary liquidation; Apex will draft this resolution at no additional cost.
Step 4 – LIQUIDATOR’S CONSENT: The Liquidator will sign a consent form (to be filed with the Registrar of Companies) notifying the Registrar of the appointment. The Consent will be filed along with a Notice to the Registrar of the liquidation and shareholders resolution to liquidate voluntarily.
Step 5 – NOTICE TO CREDITORS: A Notice to Creditors is then submitted to the Cayman Islands Gazette, advertising that the Company has been placed in to voluntary liquidation. The Liquidator’s contact information will also be advertised at this time allowing any potential creditors the opportunity to submit any outstanding claims. In some instances it may be necessary to advertise notices in other jurisdictions.
Step 6 – NOTICE OF FINAL GENERAL MEETING: Notice of the Final General Meeting of the Company will be published in the Cayman Islands Gazette. Creditors are advised to submit evidence of any outstanding claims/invoices to the Voluntary Liquidator within the Notice Period advertised. Typically, the Notice Period is at least 21 days from the date of publication of the Gazette. The notice will also advertise the date of the Final General Meeting.
Step 7 – SETTLEMENT OF CLAIMS: Any invoices/claims submitted to the Voluntary Liquidator will be reviewed for authenticity. The Voluntary Liquidator will work with the Company’s other service providers to determine whether the claim is genuine.
Step 8 – LIQUIDATOR’S REPORT AND ACCOUNT: The Voluntary Liquidator will prepare a Report and Account of the liquidation process from the point of formal liquidation (Step 3), to the date of the Final General Meeting as advertised in the Notice (Step 6).
Step 9 – FINAL GENERAL MEETING: The Final General Meeting will be held on the advertised date. At the meeting, the Voluntary Liquidator will table the Report and Account for approval by the voting/management shareholder. The voting/management shareholders can be represented at the meeting by proxy. Apex Cayman will draft the Proxy form at no additional cost.
Step 10 – FINAL NOTICE: A Final Notice will be filed with the Registrar of Companies within 7 days of the Final General Meeting.
The entire Voluntary Liquidation Process can be completed from start to finish in as little as 5 weeks, though most take between 2 to 3 months. For Companies that are registered as mutual funds with the Cayman Islands Monetary Authority, the process will take a bit longer. Apex Cayman will draft all necessary documents to accomplish a smooth and successful voluntary liquidation at no additional charge; including any documentation necessary to deregister with CIMA.
Apex Cayman’s Voluntary Liquidation Services
Most fund administrators do not directly provide voluntary liquidation solutions and usually limit service to calculating the value of the fund. The Apex Group is committed to going the extra mile and delivering more than just basic administration services by providing a complete suite of products spanning the full value chain of a fund – to be available at any time throughout a funds lifecycle. As part of this commitment, Apex Cayman not only partners with experienced legal firms when required, but also employs expert resource in-house to deliver dissolution services to various finance vehicles and investment funds. The team of professional liquidators have participated in (and acted as) voluntary liquidator for over 400 successful dissolutions of Cayman companies, Mutual Funds and Limited Partnerships. It is important that during this process overheads are kept low, which is why Apex Cayman provides the most competitively priced voluntary liquidation service in the Cayman Islands.
Click Here to contact Apex Cayman, or email Ken Stewart at [email protected].
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