Introduction

Corporate liquidation is a legally regulated process under Kuwaiti law whereby a company’s affairs are wound up, debts paid, and remaining assets distributed to stakeholders. The role of a lawyer during this process is essential for ensuring compliance, transparency, and protection of legal rights. This article outlines the stages of liquidation and how a lawyer supports the process at every level.

What Is Liquidation?

Liquidation (التصفية) refers to the legal process of closing down a company, settling its obligations, and distributing any surplus to shareholders. It may be:

• Voluntary: Decided by shareholders or the board of directors
• Judicial: Ordered by the court, often due to insolvency or legal violations

Stages of Liquidation in Kuwait

1. Passing a Resolution: Shareholders agree to dissolve the company through a general meeting or court decision
2. Appointing a Liquidator: Either an individual, a firm, or a lawyer, approved by the shareholders or court
3. Inventory and Notification: Notify the Ministry of Commerce, tax authorities, and creditors
4. Debt Settlement: Pay debts, taxes, and employee dues
5. Asset Distribution: Distribute remaining assets to shareholders in accordance with company bylaws

Legal Duties of the Lawyer During Liquidation

A lawyer can serve either as a legal advisor to the liquidator or as the liquidator themselves. Responsibilities include:

• Reviewing corporate records and liabilities
• Supervising asset valuation and liquidation
• Preparing and submitting legal notices and reports to relevant authorities
• Defending the company in ongoing litigation or resolving disputes with creditors
• Ensuring legal compliance with the Companies Law and protecting stakeholder rights

Relevant Legal Provisions

• Commercial Companies Law No. 1 of 2016: Articles 302–315 outline the dissolution and liquidation process, responsibilities of the liquidator, and required timelines
• Civil Code: Governs debt priority, distribution of funds, and protection of creditors
• Tax and Labor Laws: Establish liabilities that must be settled before asset distribution

Reporting and Accountability

The lawyer is required to:

• File interim and final liquidation reports
• Document all transactions and asset sales
• Notify stakeholders and creditors via official publication
• Submit a final balance sheet approved by the shareholders and Ministry of Commerce