When a company decides to wind up its business, the conduct of the winding-up is placed in the hands of a liquidator. The liquidator assumes control of the company’s affairs and all of the powers vested to directors cease during the winding-up process while the company remains in existence until it is deregistered by the Directorate of Investment and Company Administration (“DICA").
Who can qualify to be a liquidator under the new law?
Although the Insolvency Law 2020 (“IL”) has become effective on 25th March 2020, the registrar, DICA, has not yet established the Register of Insolvency Practitioners and the required qualifications of the receiver, rehabilitation manager, rehabilitation advisor, supervisor of a rehabilitation plan, liquidator including provisional liquidator and trustee remain to be defined. No detailed procedure for the related certification process has been implemented yet.
A liquidator must be a natural person who is qualified and registered as an Insolvency Practitioner under the IL. The Myanmar Insolvency Practitioners’ Regulatory Council (the “Council”) delegates to DICA for the registration of the Insolvency Practitioners (“IP”) and for certification purposes. To be eligible as an IP, a person must be a natural person and must hold a current practicing certificate issued by the Council.
DICA has started to allow the online registration to become a member of Myanmar Association of Insolvency Practitioners (“MAIP”). Pursuant to Section 21 of the IL, only the members of the MAIP can become licensed insolvency practitioners. The person who would like to apply membership at MAIP, can apply to DICA by filing Form 19 to acquire the insolvency practitioner license. As of now (December 2022), there are currently 166 members in MAIP according to their website. It should be noted that the Certificate of Membership issued by the MAIP is separate from the Insolvency Practitioner (IP) Registration Certificate.
In order to become a member, the applicant has to:
1. Be a full-fledged Certified Public Accountant or advocate; and
2. Have three years of relevant work experience.
The annual membership fee is 200,000 MMK. The Certificate of Membership of MAIP is valid one year.
Therefore, the companies willing to wind up their business voluntarily, need to appoint an appropriate practitioner chosen from the members currently registered with the MAIP to be able to commence the winding up procedure in timely manner.
What is the role of the liquidator in the winding up process?
Following its appointment, the liquidator is in charge of winding up the company’s affairs and distribute its property. The liquidator shall investigate general information, business and affairs of the company. Furthermore, the liquidator shall prepare the provisional lists of creditors. After settlement, the liquidator shall distribute the company’s property among the members according to their rights and interests in the company, unless the company’s constitution provides otherwise. The liquidator has also duty to call the final meeting and report to DICA.
At all times during the winding up proceedings, the liquidator assumes control of the company’s affairs and all of the powers of the directors cease.
During the conduct of the liquidation, the company will remain in existence as a separate legal entity until it is dissolved and deregistered by DICA, the company must cease to carry on its business except where doing so is required for the beneficial conduct of the winding up.
While a company is being wound up, every hard-copy and electronic document issued by or on behalf of the company or the liquidator, and all websites of the company, must contain a statement that the company is in liquidation.
Conclusion
The liquidator plays an instrumental role during the winding up process of a company and as a responsibility regarding the observance of the strict timeframe set by the IL.
Although there is no clear effective implementation of the Council and qualified liquidators prescribed by the new IL, a company winding-up its business has to appoint a liquidator anyway.
Therefore, in order to appoint the liquidator to wind up a company under the IL, chosing a member registered with the MAIP is the best option as for now.