A company is not a natural person and it is created by operation of law. In Fiji the Companies Act 2015 regulates Fiji companies and this includes how a company is created (incorporation) and how it ceases to be (dissolution).

A company may be dissolved either voluntarily or because it cannot meet the demands of its creditors and pay its debts. However, the law attempts to provide an orderly process when this happens, known as winding up.

When a company is wound up a liquidator is appointed who should act with professional efficiency to collect all the assets and settle all claims prior to the formal dissolution of the company. In this update, we highlight the recent changes to the Companies Act that aim to increase the regulation of liquidators by providing stricter requirements on who may be appointed as a liquidator.

The role of the liquidator is a serious and onerous one and it should not be undertaken lightly as it may attract personal liability. The liquidator’s powers (what he or she may do in the role of liquidator) is defined by the Companies Act 2015. This may include meeting with creditors of the company, carrying on legal proceedings, trying to recover company assets and other steps to secure a beneficial winding up such as carrying on the business of the company (excluding voluntary winding up where the company's business must cease).

Pursuant to section 411 of the Companies Act 2015, there are certain qualifications that must be met before a person can be registered as a Liquidator. The register of Liquidators (and Auditors) can be searched and is kept with the Ministry of Justice.

The requirements for registration of a liquidator, as set out in section 411 (5) are:

a. the liquidator must reside in Fiji;

b. the liquidator must hold a degree, diploma or certificate from a university acceptable to the Ministry of Justice;

c. the liquidator must be a chartered accountant with a current certificate of public practice from the Fiji Institute of Accountants;

d. the liquidator must satisfy the Ministry of Justice as to his/her experience with company winding ups and that he/she is capable and otherwise a fit and proper person.

There is also a requirement set out in section 412 (1) for a liquidator to maintain professional indemnity insurance and fidelity insurance to cover any claims against them arising out of their role as liquidator.

Given the legal duties and obligations on a liquidator, it is likely that only professionally trained and competent individuals from Fiji’s most reputable accounting profession could be considered. In our view, this change is welcomed as it should increase the efficiency of company dissolution to the benefit of members and creditors of the company.

Liquidators appointed under the previous Companies Act (now repealed) and still serving, were provided with a one year grace period after commencement of the Companies Act 2015 on 1 January 2016 to obtain registration as a liquidator under the new Act and fresh appointment to the post.

This update is for information purposes only and should not be relied on as commercial legal advice. Please contact either Seini seini@sas.com.fj or Mary mary@sas.com.fj for more information.