In a company liquidation, what is generally the effect on the company’s business?
Correct answer: C. Its assets are collected and used to settle liabilities
- A. Its shares become government securities
- B. Its directors automatically become creditors
- C. Its assets are collected and used to settle liabilities
- D. Its annual filing duties disappear immediately
Explanation
Liquidation involves collecting and realising company assets, paying liabilities according to legal priorities, and distributing any surplus. Directors do not automatically become creditors, and statutory duties do not simply disappear at the start of liquidation.
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About Company Law Basics
Company law covers incorporation, separate legal personality, limited liability, shares, the memorandum and articles of association, and the powers and duties of directors. It also includes shareholder meetings, resolutions, company records, audit, winding up and the differences between a registered company, partnership and sole proprietorship.
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