Immediately upon dissolution of a company, for any reason whatsoever, its name shall be accompanied by the wording 'under liquidation' to enable third parties to be aware of the fact. Due to the liquidation process, the partners or the board of directors shall have no power or jurisdiction to run the affairs of the company. The power shall be entrusted or given to a liquidator.

The liquidator is normally appointed by the partners concerned or the general assembly of the company. The courts, in certain instances, could also appoint one. However, it is always advisable to make sure he is professionally qualified as otherwise the liquidation process could result in troubles and unpleasant ends.

Appointment of a liquidator by any one of the eligible bodies requires, among other things, the fixing of the liquidation period. The length or shortness of the period is immaterial by itself - however, it is required that it should be fixed.

This depends, of course, on the volume of work and the duties to be performed by the liquidator. However, in all cases it is advisable from the beginning to be very clear on this point and fix a certain time for the liquidator within which he should finish his task and present his report.

In many a case, it has been shown that liquidators fail to finish their assignment within the required period. This could be due to reasons beyond their control, or it could be for reasons such as intervention by third parties.

It is important to be realistic in fixing the period needed for the liquidation process so as not to face any professional or logistical difficulties. Time taken for the liquidation of other companies working in the same field, if any, could be taken as a general guide. Failure to achieve the time factor could be taken as a breach or violation of such legal obligation by the liquidator.

However, even though a time has been fixed for the liquidator, certain exigencies could arise such as difficulty in following the debtors and finalisation of debts with them, accounting or administrative problems in the company under liquidation, etc. However, the liquidator shall submit a report detailing the difficulties he has encountered and the necessary proposals, including his recommendations, for the required extension.

The power to grant the extension lies on the person or entity who has originally appointed the liquidator, being the partners or the general assembly of the company or the court. The need for the extension should be discussed in details between the liquidator and the competent person or entity so as to reach a sound and practical solution.

Some liquidators try to prolong the liquidation process, so as to gain financially. There are times when there are genuine reasons for the delay and each case should be examined on its own merits.

Finishing the liquidation assignment within the permissible period is always appreciated because it helps in settling all issues associated with the company under liquidation.

A. Warsama Ghalib is legal advisor to the Central Bank. The opinions expressed above are his own.