Functions Of a Liquidator in The Process of Liquidation According to The Law Governing The Sultanate of Oman.

Lukshila Akshini | 15 November 2022

The liquidator shall have complete authority to manage the company’s business and to take all necessary steps to retain its funds, accumulate its rights, and conclude its pending transactions, as well as to take all necessary actions for the liquidation of its assets and settlement of its debts, subject to any limitations provided in the resolution or judgment issued for the liquidation, according to the Article 51 of the Commercial Companies Law. The designated liquidator is responsible for ensuring duties such as;

• The manager or board should pass over funds, accounts, documents, and ledgers to the liquidator and comply with any information or data relating to the company. A liquidator must produce an inventory record of all the company’s assets, liabilities, and money.

Article 48 of the Commercial Companies Law states, “Upon assuming his/her functions, the liquidator shall jointly with the auditor or managers of the company, if any, prepare an inventory of the company’s assets and liabilities, a detailed list of which must be recorded and a financial statement of the company must be prepared. Each of such documents must be signed by the liquidator and the managers or the members of the board of directors and the auditor”.

• The liquidator must create a thorough list that includes all of the company’s available funds, the budget, and its existing liabilities. The list must be signed by the manager or board. After paying all the owed taxes, the liquidator must seek tax clearance. Additionally, he must provide the partners with a statement of liquidation every three months and tell them of any facts pertinent to the liquidation. The liquidator must present his final statement of liquidation for approval by the partners or court once the liquidation procedure has been examined. The liquidator will notify the partners to claim their entitlements after receiving the appropriate consent. If the partners fail to collect their shares, all of the shares will be kept in the court’s treasury.

According to Article 49 of the Commercial Companies Law, “The liquidator shall take possession of the company’s funds, books, assets and documents and shall keep a ledger for recording the works pertaining to the liquidation and he/she shall comply with the conventional accounting principles for keeping a such ledger. The liquidator shall enable the partners, shareholders and creditors to peruse the ledger pertaining to the recording of the works related to the liquidation”.

• The assets, funds, and legal rights of the company will always be protected by an appropriate liquidator, who will also place the money he gets from the company’s account and, most importantly, properly settle the company’s responsibilities with third parties.
• Only after all debts and obligations have been paid in full will the company’s funds be divided among its partners according to shares. It should be mentioned that following the company’s dissolution, all debt due dates will be waived. The liquidator will then properly notify the creditors by announcing the start of the liquidation in two local Arabic and English language publications. The publication must always include a request for the creditors to submit their claims within a grace period of no longer than 180 days.

In accordance with Article 46 of the Commercial Companies Law, after the creditors have submitted their claims, if it is demonstrated that the available funds cannot be used to pay all of the debts, the liquidator will then make a settlement based on the percentage of debts without harming the priority creditors. The liquidator must deposit the whole amount of the debt in the court’s treasury if the creditor(s) are disputing the debt. Otherwise, all obligations must be handled with the creditors and may be notarized in front of a public notary.

• The Company’s Partner or the Court shall specify in writing the duration of the liquidation. This period cannot be prolonged unless by a court order or a vote of the partners, and the liquidator must demonstrate justification for the extension. According to Article 54 of the Commercial Companies Law, the liquidator must finish the liquidation within the time frame provided by the decision or judgment that was issued for the dissolution.

A resolution of the partners or the extraordinary general meeting, if the liquidation is voluntary, or an order on a petition, by the president of the competent court, if the liquidation is compulsory, may, subject to the provisions of Article 43 of the Commercial Companies Law, extend the period designated for the liquidation for the reasons stated by the liquidator. If the liquidation process takes longer than a year, the liquidator must convene the partners or shareholders at the end of each year in question, in accordance with the rules for calling an extraordinary general meeting or the partners’ meeting, to give them a report on the liquidation process.

• According to Article 56 of the Commercial Companies Law, the liquidator must submit a final report and final statement of accounts for the liquidation works to the partners or shareholders and the creditors for their approval within thirty 30 days of the completion of such works. These documents must be audited by the company’s auditor.

The liquidation will be finished once the final report and the final statement of accounts have been approved by the partners or the shareholders. The liquidator must file a copy of this approval with the Commercial Registrar within seven days of the date it was issued, and the Registrar will then delete the company’s registration as of the date of filing this approval. According to Article 57 of the Commercial Companies Law, the liquidator must publish the partners’ or shareholders’ approval of the partners’ or shareholders’ approval of the completion of the liquidation within two days after the day it was filed with the Registrar.

• Whether this liquidation is forced or voluntary, it will ultimately end in the cessation of the company’s operations and the discharge of all employees. The employees are immediately let off once the liquidation procedure starts, which happens after the liquidator is appointed.

According to Royal Decree 113/2011, which amended Article 47 of the Omani Labour Law, the establishment’s dissolution, liquidation, closure, bankruptcy, or merger, as well as its transfer by inheritance, sale, lease, assignment, bequest, gift, or other disposals, do not prevent it from fulfilling all of its obligations.

The employment contract shall continue to be in effect, with the exception of situations involving liquidation, bankruptcy, and authorized final closure, and the successor shall be jointly liable with the prior employers for the performance of all legally required obligations, taking into account the priority established for worker rights. As a result, it’s important to remember that the employees are treated as preferential creditors and will get their money first.