Association of Chartered Certified Accountants (ACCA) Certification Practice Test

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Who does a liquidator become an agent for upon appointment?

The shareholders
The creditors
The company
The court

The correct answer is: The company

A liquidator becomes an agent for the company upon appointment. When a liquidation process begins, the liquidator steps into the shoes of the company for the purpose of winding it up. This means that the liquidator is responsible for managing the assets of the company, settling debts, and distributing any remaining assets to shareholders as applicable. The role of the liquidator involves acting in the best interests of the company as they proceed with paying off creditors and dealing with any remaining affairs. While they do have an obligation to consider the interests of creditors and shareholders during this process, their primary agency relationship is with the company itself. This ensures that the liquidator can make decisions based on the company's legal requirements and obligations, facilitating an orderly dissolution of the company. Understanding this agency relationship is essential, as it highlights the liquidator's responsibility to act within the framework of the company's interests while also balancing the needs of creditors during the liquidation process.