Domestic Procedures

1. Voluntary Termination and Initiation of Liquidation Procedure

Under Turkish law, the termination of a corporation may be due to various reasons (e.g., merger, division, voluntary termination). In case of voluntary termination, a general assembly resolution for the termination is required. If and when a corporation decides on the termination voluntarily, the liquidation procedure must be initiated and exhausted.

Domestic Procedures

In a recent decision of the Supreme Court of New South Wales (In the matter of Pacific Plumbing Group Pty Limited (in liquidation) [2024] NSWSC 525), Justice Black determined that a payment made by a third party was not an unfair preference because the payment did not diminish assets available to creditors.

Key Takeaways

In the recent case of Mitchell v Al Jaber [2024] EWCA Civ 423, the Court of Appeal confirmed that a shareholder and director may still be subject to a fiduciary duty when purporting to transfer company property, even after the company enters liquidation. The decision was made in relation to British Virgin Island (BVI) law, but on the basis of English case authorities.

Background

Liquidation is a legal process that ultimately dissolves the existence of a selected legal entity. During liquidation, the company empties itself of all its economic content, followed by the dissolution of its legal entity. The primary purpose is to sever the connection between the company and its shareholders once the company ceases to operate and exist.

The Israeli Companies Law outlines various paths for the liquidation of Israeli companies and also determines the process and schedule for each option.

In this guide, we explain what to do when you no longer need a company that has been incorporated or registered in the British Virgin Islands (Company). Assuming the Company is solvent, you have two options: (1) arrange for the Company to be voluntarily liquidated and dissolved (Liquidated); or (2) leave (or apply for) the Company to be administratively struck-off and dissolved (Administratively Dissolved). For the reasons set out below, we usually recommend a Company is Liquidated, rather than Administratively Dissolved.

In Foo Kian Beng v OP3 International Pte Ltd (in liquidation) [2024] SGCA 10 (OP3 International)¹ the Singapore Court of Appeal considered the trigger for when the director's duty to consider the interests of creditors is engaged (referred to in the judgment as the Creditor Duty).

The Court held that:

In the recent decision in Blockchain Group Company Limited (in liquidation) v. PKF Hong Kong Limited¹, Le Pichon DHCJ decided that despite an error resulting in a protective writ naming the defendant as a limited company and formerly a firm, the relevant provisions to amend a party’s name could not be used to essentially replace the limited company with the firm.

Introduction