Advisory Committee in Winding Up: Section 287

An advisory committee in winding up is the body of creditors and contributories a Tribunal can put alongside the liquidator. Section 287 of the Companies Act, 2013 caps it at twelve members, gives it inspection rights, and has the liquidator chair it. Section 288 sets the separate reporting rhythm the liquidator owes the Tribunal. This page reads both sections as printed.

What is an advisory committee in winding up, and who creates it?

The Tribunal, at the moment it winds the company up. Section 287(1) states that the Tribunal may, while passing an order of winding up of a company, direct that there shall be, an advisory committee to advise the Company Liquidator and to report to the Tribunal on such matters as the Tribunal may direct.

Two functions are named there, pointing in different directions: advising the liquidator, and reporting to the Tribunal. The second is what makes the committee more than a creditors' forum. The timing phrase is while passing an order of winding up, and the power is a may, so a winding up under section 271 can run without one.

Who sits on it?

Creditors and contributories, in a proportion the Tribunal fixes, up to a hard cap. Section 287(2) states that the committee shall consist of not more than twelve members, being creditors and contributories of the company or such other persons in such proportion as the Tribunal may, keeping in view the circumstances of the company under liquidation, direct.

The cap is absolute. The composition is not: the sub-section admits such other persons, and leaves the proportion to the Tribunal against a stated yardstick, the circumstances of the company under liquidation.

Who those creditors and contributories are is not left to the liquidator's judgement either. Section 287(3) requires the Company Liquidator to convene a meeting of creditors and contributories, as ascertained from the books and documents, of the company within thirty days from the date of order of winding up for enabling the Tribunal to determine the persons who may be members of the advisory committee.

Three things are fixed in that sentence: the source of the invitation list is the company's own books and documents, the deadline is thirty days from the winding up order, and the purpose of the meeting is to enable the Tribunal, not the liquidator, to determine membership. The contributory side of that list is settled separately under section 285, covered in the list of contributories.

What can the committee actually do?

Inspect, without asking first. Section 287(4) gives it the right to inspect the books of account and other documents, assets and properties of the company under liquidation at a reasonable time. The right is stated directly, with no application to the Tribunal and no liquidator consent in the way. The only qualifier is the time being reasonable.

Section 287(5) leaves the machinery to rules: the provisions relating to the convening of the meetings, the procedure to be followed thereat and other matters relating to conduct of business by the advisory committee shall be such as may be prescribed.

Section 287(6) then places the chair: The meeting of advisory committee shall be chaired by the Company Liquidator. So the body that advises the liquidator, and reports to the Tribunal on such matters as the Tribunal may direct, is also chaired by him.

Whose directions win if the committee and the creditors disagree?

Not the committee's. Section 292(2) states that Any directions given by the creditors or contributories at any general meeting shall, in case of conflict, be deemed to override any directions given by the advisory committee. That precedence rule, and the section 292(1) duty on the liquidator to have regard to both sets of directions, are treated in the powers and duties of a Company Liquidator.

What reporting runs alongside the committee?

A quarterly one, owed by the liquidator directly to the Tribunal. Section 288(1) requires that the Company Liquidator shall make periodical reports to the Tribunal and in any case make a report at the end of each quarter with respect to the progress of the winding up of the company in such form and manner as may be prescribed.

Read the two limbs separately. Periodical reports are open ended, and the quarterly report is the floor beneath them: in any case, at the end of each quarter. This is a different obligation from the one off sixty day report under section 281, which is covered in the Company Liquidator's report.

Section 288(2) adds a power that sits oddly in a reporting section. The Tribunal may, on an application by the Company Liquidator, review the orders made by it and make such modifications as it thinks fit. The review is available only on the liquidator's application, and it is the Tribunal's own orders that are reviewed.

An advisory committee in winding up is therefore optional, capped, chaired by the person it advises, and armed with an inspection right that needs nobody's permission. Its existence does not change the liquidator's quarterly duty to the Tribunal, which section 288 imposes whether or not a committee is ever constituted.

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