The liquidation of companies in Egypt is governed by the Egyptian Companies Law. No. 159/1981, the law governs all the aspects of the companies’ liquidation including the reasons of liquidation, status of the company under liquidation, the appointment of the liquidator, responsibilities of the liquidator and revocation of the liquidator.
The company may be liquidated for the following reasons:
- If the specified period of the company has elapsed or the work has been completed and the partners have continued to carry out the type of work for which the company is composed, the contract shall extend for one year under the same conditions.
- A creditor of one of the partners may object to such extension and its objection shall result in the suspension of its effect.
- In case of loss of half the capital of the company, the directors are required to submit to the General Assembly an order for dissolution of the Company. The issuance of such an order requires the majority of the shareholders’ votes necessary to modify the company’s articles of incorporation.
- If the loss attains three quarters of the capital, partners in possession of a quarter of the capital may demand the dissolution.
- If the loss entails the decrease of the capital below the limit prescribed by the executive regulation, any interested party may demand the dissolution of the company.
The status of the company under liquidation
The company may be liquidated by a decision of the shareholders or a court order, in both cases there are specific properties of the company under liquidation:
- Every company after its dissolution is considered to be in a state of liquidation and the liquidation should take place in compliance with the terms of the present law unless its statutes or act prescribes other terms.
- The company shall conserve, during the period of its liquidation its moral personality within the extent required by the proceedings of liquidation.
- The term ( “under liquidation”) is to be added to the title of the company, and its organs will remain standing during the period of liquidation, but its powers will be confined to the affairs which are not in the competence of the liquidators.
The appointment of a liquidator
- The General Assembly will nominate one or more liquidators and fix their remunerations.
- The nomination of the liquidator will be from the shareholders, partners or others.
- In case a sentence is issued ordering the dissolution or invalidity of the status of the company, the Court shall indicate the mode of liquidation and will nominate the liquidator and fix his remuneration.
- The name of the liquidator and the partners’ agreement on the mode of liquidation, or the sentence issued in this respect will be published in the commercial register and in the companies magazines, and the liquidator shall fulfill the formalities of publicity.
- No protest against third parties on the nomination of the liquidator or the mode of liquidation except starting from the date of publicity in the Commercial Register.
The Role of the liquidator
The liquidator shall fulfill all the duties requisite for the liquidation, and in particular:
- Paying off all the debts on the company.
- Sale of the assets of the company whether moveable or immovable properties, by public auction or in any other manner unless it is indicated in the document of nomination of the liquidator that the sale should be effected in a specific manner.
- Representing the Company in front of the Courts and acceptance of compromise.
- The liquidator, directly after his nomination and in agreement with the board of administration or the directors, shall make a stocktaking of all the assets and liabilities of the company and draw a detailed list of them and a budget to be subscribed by the liquidator, and the directors or the administrative board members. The board of administration or the directors shall present their account to the liquidator and shall deliver to him the funds of the company and its books and vouchers.
- The liquidator shall hold a register for record of the works regarding the liquidation, and the holding of this register will be in compliance with the provisions of the law on commercial registers.
- The liquidator shall excite all what is needful for conservation of the funds and rights of the company. He should take all actions needful for acquisition of all the company’s rights from others. Nevertheless the partners should not be claimed the remainder of their parts except if the works of liquidation necessitate this, subject to observance of equality among them.
- The liquidator shall deposit the amounts he collects, in a bank to the account of the company under liquidation, this deposit shall be within 24 hours from the time of reception.
- The liquidator is not allowed to start on new business except if they are requisite for previous affairs. If he conducts new works not needed by the liquidation, he shall be responsible in these works on all his assets and if the liquidators are numerous, their responsibility will be a joint one.
- The liquidator is not allowed to sell the assets of the company in block except by a permission of the General Assembly or partners as the case may be.
- The liquidator’s duty does not end on the decease of partners, or publicizing their bankruptcy or inability to pay or practice of seizures on them, even if the liquidator is appointed on their part.
The revocation of the liquidator
- The revocation of the liquidator should be affected according to the procedure of his nomination.
- The Court may, at the demand of a shareholder or partner and for plausible reasons, decide the revocation of the liquidator. Every decision or sentence revoking the liquidator should comprise the nomination of another in his place.
- The revocation of the liquidator will be published in the Commercial register and in the Companies magazine, and it will not be opposable to third parties except from the date of publicity in the Commercial Register.