ICANBusiness LawInsolvency and Winding Up2024

Under the provisions of the Companies and Allied Matters Act (CAMA) 2020, which of the following is the essential statutory requirement that distinguishes a Members' Voluntary Winding Up from a Creditors' Voluntary Winding Up?

AA Statutory Declaration of Solvency made by the majority of directors stating that the company will be able to pay its debts in full within a period not exceeding 12 monthsCORRECT
BA mandatory sanction obtained from the Federal High Court prior to passing the special resolution for winding up
CA consent resolution signed by at least 75% in value of the company's preferential creditors
DA clearance certificate issued by the Corporate Affairs Commission stating that no debentures are outstanding
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Why the answer is A, and why the others tempt you.
Under Section 625 of CAMA 2020, a voluntary winding up is classified as a Members' Voluntary Winding Up if the majority of directors make a Statutory Declaration of Solvency asserting that the company can pay its debts in full within a period not exceeding 12 months from the commencement of winding up. In the absence of such a declaration, the voluntary winding up proceeds as a Creditors' Voluntary Winding Up.
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