Association of Chartered Certified Accountants (ACCA) Certification Practice Test

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Who can petition the court for a compulsory liquidation?

Member (shareholder)
Director of the company
Administrator appointed by the court
Employee of the company

The correct answer is: Member (shareholder)

A member (shareholder) can petition the court for a compulsory liquidation because they have a vested interest in the company and its financial status. Shareholders often seek liquidation if they believe the company is insolvent or unable to meet its debts, which can ultimately protect their interests and investment. They are recognized under the legal framework as parties who can initiate this process when they see no viable path for the company to recover from its financial difficulties. In contrast, while directors of the company have significant responsibility for managing the company, they do not have the authority to petition for compulsory liquidation without the support of the shareholders. An administrator appointed by the court is usually involved after the decision has been made to enter liquidation, and employees cannot initiate the process themselves; rather, their interests are typically represented through other avenues.