The right to appoint a liquidator in the case of a vacancy in such office

In OMNIDEA AB soċjetà Svediża (bin-numru ta’ reġistrazzjoni 556586-8386) bħala kreditriċi tas-soċjetà Pegion Operations Limited (C 54638) vs Pegion Operations Limited (C 54638), decided by Mr. Justice Ian Spiteri Bailey (Civil Court – Commercial Section) on 24 January 2024, the Court appointed a liquidator for the company Pegion Operations Limited (C 54638) (the “Company”) in terms of Article 292 of the Companies Act (Chapter 386 of the Laws of Malta) (the “Companies Act”), so that the dissolution and winding up process of the Company can continue and be finalised.

Facts of the Case

The applicant company (the “Applicant”), duly represented by its director, had filed an application on 14 February 2023 whereby it asked the Court to appoint a liquidator to continue the dissolution and winding up process of the respondent Company, and to give all other remedies, in terms of Article 292(1) of the Companies Act. The Applicant had shown that it was a creditor of the Company in respect of various services paid by it in the name of the Company. The Company had been called to pay the amounts due to the Applicant several times, but the Company remained in default. The Applicant, through an affidavit by the director representing it in these proceedings, explained that up until 17 February 2021, the Applicant was a subsidiary of the Company, and due to liquidity problems of the Company, it was agreed that the Applicant pays the Company’s creditors, for the benefit of both companies, including a patent.

In the meantime, the Company had passed an extraordinary resolution for its voluntary dissolution and winding up, as it could not continue operating in the circumstances, and on this basis a liquidator had been appointed on 28 February 2021, as evidenced by the statutory Form L which was notified to the Registrar of Companies. Before such decision, the Applicant had given the Company a detailed account of the amount due by the Company to the Applicant of SEK 690,000. The Applicant also stated that it had settled more amounts due by the Company after the liquidator’s appointment, but these were not reclaimed by the Applicant.

However, by means of a letter dated 4 April 2022, the liquidator resigned from his role for a number of reasons, including disagreements between the shareholders of the Company, as a result of which he could not continue his work as the liquidator of the Company. The Court was informed that due to such disagreements, it was impossible to appoint a liquidator in terms of Article 271(1) of the Companies Act, which provides that if a vacancy occurs by death, resignation or removal in the office of a liquidator appointed by a company, such vacancy can be filled by the company by means of an extraordinary resolution. Therefore, the Company found itself in a position where its dissolution process was initiated but there was no one occupying the office of the liquidator, and hence, the dissolution process was stalled until someone else was appointed. The Applicant informed the Court, evidenced accordingly by means of letters, that through its lawyers, it had asked the company service provider of the Company to furnish it with all the documents in its possession pertaining to the Company, but the company service provider had refused.

Consequently, the Applicant had no other option but to resort to the Court to appoint a liquidator to be able to continue the dissolution and winding up process of the Company.


The Court first noted that this was an action made in terms of Article 292(1) of the Companies Act, based on the above facts, and also noted that the Company’s company service provider had all the documents related to the dissolution and winding up, but had refused to furnish them to the Applicant. The Court therefore contented that the Applicant had no other action available but to resort to such an action.

The Court considered Article 292 of the Companies Act which provides:

(1) The liquidator or  any  member,  contributory  or creditor may apply to the court to determine any question arising in the course of winding up of a company, or to exercise, as respects the enforcement of calls or any other matter, all or any of the powers which the court might exercise if the company were being wound up by the court.

(2) The liquidator may apply to the Court to fix a time or times within which creditors are to prove their debts or claims or to be excluded from the benefit of any distribution made before those debts are proved.

(3) The court, if satisfied that the determination of the question or the required exercise of power referred to in sub-articles (1) and (2) will be just and beneficial, may accede wholly or partially to the application on such terms and conditions as it thinks fit or may make such other order on the application as it so determines.

(4) A copy of any order made by virtue of this article staying the proceedings in the winding up shall forthwith be forwarded by the Registrar of Courts to the Registrar who shall make a minute of the order in the register relating to the company.

In the first instance, the Court noted that the Applicant based its application on the premise that it was a creditor of the Company, and while the existence and amount of the debt was made clear, the same debt was contested by the Company. The Court noted that the law gives a creditor the right to file an application in similar circumstances to those at issue, and in the light of the evidence submitted, the Court considers the Applicant as having a claim as a creditor of the Company. It is not necessary, even because the law does not state so, that the creditor is confirmed as such by a court to be able to file such an application. In this context, the Court made reference to the definition of “creditor” found in the UK Companies Act 2006, within the context of voluntary dissolution, whereby it is stated, in Article 1011 of such Act, that “creditor includes contingent or prospective creditors”. The Court, therefore, considered that the Applicant could file for such an action.

In the second instance, the Court noted that the quoted Article 292 of the Companies Act finds its application in “any question arising in the course of winding up of a company”. The Court considered that the legislator pegged a very wide discretion to this and used the words “any question”. The Court therefore considered that the resignation of the liquidator, and the consequent vacancy in such office, is in actual fact “any question” that can arise “in the course of winding up of a company” and therefore a case where the Court must intervene if it is asked to do so. The Court considered that the question in this case is not only the resignation of the liquidator that the Company itself had appointed when it resolved to go into dissolution and be wound up, but more than that, the fact that due to the disagreements seemingly between the Company’s shareholders and directors, the vacancy in the office of liquidator remained, to the extent that the entire process was stalled. The Court noted that Maltese law provides, in Article 271 of the Companies Act, what is to happen in situations when a liquidator resigns. The Court also quoted Profs. Andrew Muscat’s Principles of Maltese Company Law (2nd ed., pg.1266) explaining as follows:

If a vacancy occurs in the office of the liquidator (by death, resignation or removal) in the course of a members’ voluntary winding up, the company should, by extraordinary resolution fill the vacancy. Every member (as well as any contributory and, if there is more than one liquidator, the continuing liquidator or liquidators) has the right to convene a general meeting for this purpose. In this manner, the law recognises that each member, independently of the number of shares held in the company, has a continuing interest to ensure that the company is properly managed during the liquidation stage and that the winding up process is conducted without undue delay. Notice of the meeting is to be given within fourteen days of the occurrence of the vacancy. The general meeting should be held in the manner provided by the Act or by the memorandum and articles, or in such manner as may be determined by the court on the application of any member, contributory or continuing liquidator or liquidators. If for any reason a liquidator is not appointed as aforesaid, or if a vacancy occurs in the office of a liquidator appointed by court, any member, contributory or the continuing liquidator or liquidators may, at any time thereafter, apply to the court for the appointment of a liquidator, and the appointment will then be made by court.

The Court went on to reason that it did not result that the Company had taken measures to substitute the liquidator who resigned, even though it was obliged to do so. Moreover, from the submitted acts, it transpired that the disagreements between the shareholders led to the Financial Statements, although prepared, not being approved, and on such basis the liquidator had to resign.

The Court therefore acceded to the request of the Applicant since this fell within Article 292 of the Companies Act, and the Court felt fit to intervene so that the dissolution and winding up process of the Company does not remain stagnant but can be concluded.

The Court also considered also, on what emerged from the acts, that were it to order the notification of its judgement on the Company itself in order to comply with Article 271 of the Companies Act, it would be superfluous and useless, a waste of time and with additional costs. Therefore, purely for practicality purposes, the Court itself proceeded to appoint a liquidator in order for the dissolution and winding up process of the Company to continue.

As a result, the Court:

  • ordered that the dissolution and winding up of the Company continues by the Official Receiver, with the costs to be borne by the Company;
  • authorised the Official Receiver to request the previous liquidator to provide to her all documents in his possession;
  • ordered all the directors of the Company in dissolution to pass on all information to the Official Receiver as may be required in such role;
  • gave all the powers to the Official Receiver in this dissolution and winding up as provided by law;
  • ordered the Applicant to collaborate with the Official Receiver so that the dissolution and winding up of the Company can be completed without delay; and
  • ordered the Court Registrar to send a copy of the Court’s judgement to the Registrar of Companies within the Malta Business Registry;

while assigning the costs in relation to these proceedings to the Applicant, and the costs in relation to the dissolution and winding up to the Company.

Disclaimer: Ganado Advocates is responsible for contributing this law report but was not in any way involved as legal advisor for the parties in the judgement being covered in this law report. This article was first published in The Malta Independent on 14/02/2024.