Q&As

If a liquidator of a solvent company is requested to make a distribution in specie to the members, rather than selling assets and making a cash distribution, are there any particular issues that the office-holder will need to consider to protect themselves from liability? Would there be any additional issues if a member requested that their distribution is made direct to a third party?

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Published on: 02 June 2021
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Where a liquidator proposes to make a distribution in specie, the liquidator should first ensure that the company has the requisite power to make such a distribution. They should check the Articles of association ahead of the general meeting to see whether powers have already been already granted, or if necessary request the members pass resolution so that an in specie distribution by the liquidator is permitted.

The assets will need to be valued on an agreed basis so that distributions to members (assuming more than one) are made in correct proportion to their shareholding. If necessary, there may be a need to adjust with cash payments, or cash transfers between members

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Jurisdiction(s):
United Kingdom
Key definition:
Articles of association definition
What does Articles of association mean?

The principal constitutional document of a company, dealing with management and administration issues, most notably powers of directors, transfer and issue of shares, and board and member meetings. The articles form the fundamental contract between the company and the shareholders and must be available for public inspection at Companies House.

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