Companies Act Section 2(61) Official Liquidator

Official Liquidator Section 2 (61)

Under Section 2(61) of the Companies Act, 2013, an "Official Liquidator" is an officer appointed by the Central Government to perform duties related to the winding-up or liquidation of companies as per the provisions of the Companies Act.

Key Responsibilities and Duties:

1. Winding-Up Proceedings:

The Official Liquidator’s primary responsibility is to conduct the winding-up of companies that are unable to pay their debts or have been ordered to be wound up by the National Company Law Tribunal (NCLT).

They take custody and control of the company’s assets, manage its affairs, and realize assets for distribution among creditors and shareholders according to the priority established by law.

2. Asset Realization:

The Official Liquidator identifies, collects, and realizes the company’s assets through liquidation sales, auctions, or other means authorized under the Companies Act.

Proceeds from asset realization are used to settle outstanding debts, liabilities, and claims of creditors in accordance with the statutory hierarchy of payments.

3. Distribution of Assets:

After settling all preferential and secured claims, the Official Liquidator distributes remaining funds, if any, among unsecured creditors and shareholders as per their respective rights and entitlements.

They prepare and submit reports, including statements of account and distributions, to the NCLT and other regulatory authorities as required by law.

4. Investigative Functions:

The Official Liquidator may conduct investigations into the affairs of the company, examine transactions leading to insolvency or default, and report findings of fraud, mismanagement, or misconduct to the NCLT.

They assist in identifying instances of fraudulent conduct or wrongful trading by directors and officers, which may lead to legal actions or disqualifications under the Companies Act.

Legal Framework and Appointment:

1. Appointment:

The Central Government appoints Official Liquidators who are typically officers from the Ministry of Corporate Affairs (MCA) or professionals with expertise in accounting, finance, and insolvency law.

They operate independently under the supervision of the NCLT, ensuring impartiality and adherence to statutory provisions during liquidation proceedings.

2. Powers and Authorities:

The Official Liquidator has powers akin to those of a court officer, including the ability to summon witnesses, examine documents, and take necessary steps to protect and realize company assets.

They exercise discretion and judgment in administering liquidation proceedings in the best interests of creditors, shareholders, and other stakeholders affected by the company’s insolvency.