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Section 514 of Insolvency Act CAP 53: Circumstances in which unregistered company can be liquidated

    

(1) The circumstances in which an unregistered company can be liquidated are as follows—
(a) if the company is dissolved, or has ceased to carry on business, or is carrying on business only for the purpose of liquidating its affairs;
(b) if the company is unable to pay its debts;
(c) if the Court is of opinion that it is just and equitable that the company should be liquidated.
(2) An unregistered company is, for the purposes of subsection (1)(b), unable to pay its debts if there is a creditor, by assignment or otherwise, to which the company owes an amount exceeding seventyfive thousand shillings then due and—
(a) the creditor has served on the company, by leaving at its principal place of business, or by delivering to an officer of the company, or by otherwise serving in such manner as the Court may approve or direct, a written demand requiring the company to pay the amount due; and
(b) the company has, within the twenty-one days after the service of the demand, failed to pay the amount or to secure or compound for it to the creditor's satisfaction.
(3) The amount of money for the time being specified in subsection (2) is subject to increase or reduction by the insolvency regulations, but no increase in the amounts so specified affects any case in which the liquidation application was made before the increase took effect.
(4) An unregistered company is, for the purposes of subsection (1)(b), also unable to pay its debts if legal proceedings have been brought against any member of the company for a debt or demand due, or claimed to be due, from the company, or from the member as such, and—
(a) notice of the bringing of the proceedings has been served on the company by leaving it at the company's principal place of business (or by delivering it to an officer of the company, or by otherwise serving it in such manner as the Court may approve or direct); and (b) the company has not within twenty-one days after service of the notice—
(i) paid, secured or compounded for the debt or demand;
(ii) obtained a stay to the proceedings; or
(iii) indemnified the defendant to the defendant's reasonable satisfaction against the proceedings, and against all costs, damages and expenses to be incurred by the defendant because of it.
(5) An unregistered company is, for the purposes of subsection (1)(b), also unable to pay its debts—
(a) if execution or other process issued on a judgment, decree or order obtained in any Court in favour of a creditor against the company, or any member of it as such, or any person authorised to be sued as nominal defendant on behalf of the company, is returned unsatisfied; or
(b) if it is otherwise proved to the satisfaction of the Court that the company is unable to pay its debts as they fall due.
(6) An unregistered company is also unable to pay its debts for the purposes of subsection (1)(b) if it is proved to the satisfaction of the Court that the value of the company's assets is less than the amount of its liabilities, taking into account its contingent and prospective liabilities.
(7) In this section (3), "officer", in relation to an unregistered company, means the secretary, or a director, manager or principal officer, of the company.

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Disclaimer: This document is not to be taken as legal advise.

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