Companies Act Section 291

Companies Act Section 291: Provision for Professional Assistance to Company Liquidator

Section 291 of the Companies Act provides a framework that empowers the Company Liquidator to engage professional assistance during the course of winding up a company. This section is vital in ensuring that the liquidator can perform his or her duties effectively by taking help from professionals who possess specialized knowledge and expertise. The section outlines the conditions and procedures under which such professional assistance may be sought, as well as the obligations of the appointed professionals. Here is a detailed interpretation of the section:

Subsection (1): Authority to Appoint Professionals

Under Subsection (1) of Section 291, the Company Liquidator is granted the authority to appoint one or more professionals to assist in the discharge of his responsibilities. However, such appointments can only be made with the sanction or approval of the Tribunal. This is to ensure that the process remains transparent and that the Tribunal retains supervisory control over the winding-up process.

The types of professionals that may be appointed include, but are not limited to:

Chartered Accountants, who can help in preparing financial reports, accounts, audits, and other finance-related tasks,
Company Secretaries, who can assist in compliance matters and documentation,
Cost Accountants, who can help in analyzing cost structures, budgeting, and expenditure review,
Legal Practitioners, who may be needed for advice on legal matters, representing the liquidator in proceedings, and ensuring legal compliance,
Any other professionals, as deemed necessary depending on the complexity and requirements of the liquidation process.
The terms and conditions of such appointments including remuneration, scope of work, duration, and reporting responsibilities shall be determined in accordance with the needs of the case and subject to approval by the Tribunal. This enables the liquidator to have access to a range of expert services in a structured and accountable manner.

Subsection (2): Obligation to Disclose Conflict of Interest

Subsection (2) lays down a crucial ethical and procedural requirement. It mandates that any person who is appointed under Subsection (1) must immediately disclose to the Tribunal any circumstances that may give rise to a conflict of interest or any situation where there is a lack of independence in relation to their appointment.

This disclosure must be made:

Forthwith (i.e., without any delay),in the prescribed form, which would be detailed in the rules or regulations applicable under the Act.
The objective of this requirement is to uphold the integrity of the liquidation process. It ensures that the professionals involved do not have any personal or financial interests that may compromise their judgment, objectivity, or actions while assisting the liquidator. Such transparency safeguards the interests of the company, its creditors, shareholders, and other stakeholders.