Companies Act 2014 section 677

Effect of winding up on business and status of company

Section 677 deals with what happens to a company's business operations, corporate status and directors' powers once a winding up commences.

• Once winding up begins, the company must cease carrying on business except where necessary for the beneficial completion of the winding up, but the company retains its corporate status and powers until it is formally dissolved.
• When a liquidator is appointed (other than a provisional liquidator), the directors lose all their powers unless their continuation is specifically sanctioned — by the committee of inspection or creditors (with the liquidator's approval) in a court-ordered or creditors' voluntary winding up, or by the members in general meeting in a members' voluntary winding up.
• Even where directors' powers are continued by sanction, the liquidator's decisions and actions always take precedence, and any director action on matters falling within section 627 (the liquidator's powers) is invalid without the liquidator's prior consent.
• The court may grant relief from the invalidity sanction to a person who is not an officer of the company and who acted in good faith, provided that notice of the application is given to the liquidator, all creditors who have submitted proofs of debt, and every contributory on the list.

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