Business Law (BUSI 210) – Week 4 (Continued)

Financial Disclosures & Auditors

Role, Function, and Responsibilities of the Auditor

  • Primary duty: Examine company’s finances to give an opinion and report on financial statements.

  • Section 172 Companies Act:

    • Grants auditors the right to inspect finances.

    • Directors (present and former) must provide:

      • Relevant information and explanations.

      • Access to records, books, accounts, and vouchers.

Winding Up of a Company

Petition for Winding Up (S. 379)

  • Application to court may be made by:

    • (a) The company itself

    • (b) A creditor (including contingent/prospective)

    • (c) A contributory (shareholder with liability)

    • (d) Trustee in bankruptcy/personal representative of creditor or contributory

Court-Appointed Liquidators (S. 391)

  • Court may appoint liquidator(s) to:

    • Conduct winding-up proceedings.

    • Perform duties imposed by court.

Powers of the Liquidator

  • Broad authority to manage winding-up, including:

    • Realizing assets.

    • Paying debts.

    • Distributing surplus to shareholders.

Dissolution of Company (S. 425)

  • Marks formal end of company’s legal existence.

Voluntary Winding Up

Notice of Resolution (S. 428)

  • When company resolves to wind up voluntarily:

    • Must publish notice in Gazette and notify Registrar within 14 days.

    • Failure to comply = offence (company + officers liable).

Final Meeting & Dissolution (S. 438)

  • Once affairs are wound up:

    • Liquidator prepares final audited account.

    • Calls general meeting (via Gazette + newspaper ad, published at least 1 month before meeting).

    • Within 1 week after meeting:

      • File audited account + meeting return with Registrar.

      • Failure = offence by liquidator.

Case Studies & Discussion

Question 1

  • Discuss auditor’s role in ensuring company’s balance sheet accurately reflects financial position.

Question 2 (Trident Stars Ltd.)

  • Grenada-based manufacturing company, earned $30M profits in 10 years.

  • In 2022: faced sales collapse due to defective products.

  • Directors seek to wind up company.

  • Task: Advise on steps for winding up, citing relevant legislation.