The company Act does not define the term liquidator nor his qualifications. However, a body corporate cannot be appointed liquidator. A liquidator is a person appointed for the purpose of collecting and realizing the company‟s assets, ascertaining and making good liabilities and distributing the remainder if any to members.
1. In a compulsory winding up, he is appointed the court on application failing which the official receiver becomes the liquidator
2. In a members voluntary winding up he is appointed the members
3. In a creditors voluntary winding up, he may be appointed the members or the creditors or both members and creditors or the court.
In a winding up subject to the supervision of the court, he may be appointed:
1. By members
3. Both members and Creditors
4. By the court
The appointment of a liquidator must be published in the Kenya Gazette A liquidator other than the official receiver is bound to:
1. Furnish the official receiver with any information which he may require
2. Deliver to the official receiver any books or documents as the official receiver may specify.
Legal Position of the Liquidator
Its exact legal position is difficult to define. However, if appointed the court he is an officer of the court and is answerable to it. He must act honestly and impartially
Liquidator as an Agent
He acts as an agent on behalf of the company hence the company is generally liable as principle. In Knowles V. Scott Romer J. observed. “I think any rate, agency more nearly defines his true position than trusteeship”.
In Stead Hosel V. Cooper Lawrence J. observed, “A liquidator is the agent of the company”. Liquidator as Trustee
The liquidator is a trustee for the general body of creditors. He is not a trustee for individual creditors or contributories. In the words of Romer J. in Knowles V. Scott, In my judgement, the liquidator is not a trustee in the strict sense….no doubt in a sense and for certain purposes, a liquidator may fairly enough be described as a trustee”.
The duties of a liquidator are equitable in character and he may be regarded as a fiduciary of the company
Duties or obligations of the liquidator
1. He must act in good faith for the of the company
2. He is bound to exercise powers for the proper purposes
3. He must exercise unfettered discretion
4. He is bound to avoid conflict of interest
5. He must act impartially and honestly
6. He must exercise his discretion personally unless appointed with others
7. He must demonstrate a degree of care and skill appropriate to the circumstances
8. He must secure control of the company‟s assets.
9. It is his duty to ascertain and pay the company‟s debts
10. He must keep proper books of accounts
11. He must ensure that minutes of proceedings of meetings are kept.
12. He must pay monies received him to a separate account for the credit of the
company‟s winding up.