Section 291- Provision for Professional Assistance to Company Liquidator
Updated: Oct 13, 2022
In order to understand this Section, let us understand a few terms related to this Section.
-What is Company Liquidation?
Company liquidation is a process initiated by those companies under debt to wind up its operation and sell their assets to pay the debt, obligations, and other liabilities. A company is liquidated when it is not in a state to continue or run further.
- Who is a Company Liquidator?
A company liquidator is an officer who is appointed to wind up the affairs of a company when the company is on the verge of shutting down which is mainly due to bankruptcy. Here, the company liquidator sells the funds and shares of the company in order to pay the debts incurred by the company.
According to Section 291 of The Companies Act, 2013,
(1) The Company Liquidator may, with the sanction of the Tribunal, appoint one or more chartered accountants or company secretaries or cost accountants or legal practitioners or such other professionals on such terms and 174 conditions, as may be necessary, to assist him in the performance of his duties and functions under this Act.
(2) Any person appointed under this section shall disclose forthwith to the Tribunal in the prescribed form any conflict of interest or lack of independence in respect of his appointment.
Basically, the first clause of this section says that a company liquidator can appoint one or more chartered accountants or company secretaries or cost accountants or legal practitioners, or such other professionals with the permission from the tribunal to get assistance in order to perform his duties and functions.
The second clause specifies that the appointed person should reveal any kind of conflict of interest or lack of independence to the tribunal immediately or as soon as possible after getting appointed.
Companies (Winding Up) Rules, 2020
Rule 78- Declaration by Professional
The professional, referred to in section 291, appointed by the Company Liquidator with the sanction of the Tribunal shall file a declaration in Form WIN 38 disclosing any conflict of interest or lack of independence in respect of his appointment with the Tribunal forthwith.