Insolvency Act 1986, section 110

Acceptance of shares, etc., as consideration for sale of company property

Part IV Winding Up of Companies Registered under the Companies Acts

(1)This section applies, in the case of a company proposed to be, or being, wound up voluntarily, where the whole or part of the company’s business or property is proposed to be transferred or sold

[F262 (a) F262] to another company (“the transferee company"), whether or not the latter is a [F263 company registered under the Companies Act 2006 F263][F262 , or

(b) to a limited liability partnership (the “transferee limited liability partnership"). F262]

(2) With the requisite sanction, the liquidator of the company being, or proposed to be, wound up (“the transferor company") may receive, in compensation or part compensation for the transfer or [F264 sale—

(a)in the case of the transferee company, shares, policies or other like interests in the transferee company for distribution among the members of the transferor company, or

(b)in the case of the transferee limited liability partnership, membership in the transferee limited liability partnership for distribution among the members of the transferor company.F264]

(3)The sanction requisite under subsection (2) is—

(a)in the case of a members’ voluntary winding up, that of a special resolution of the company, conferring either a general authority on the liquidator or an authority in respect of any particular arrangement, and

(b)in the case of a creditors’ voluntary winding up, that of either the court or the liquidation committee.

(4)Alternatively to subsection (2), the liquidator may (with that sanction) enter into any other arrangement whereby the members of the dfntransferor [F265company may—

(a)in the case of the transferee company, in lieu of receiving cash, shares, policies or other like interests (or in addition thereto) participate in the profits of, or receive any other benefit from, the transferee company, or

(b)in the case of the transferee limited liability partnership, in lieu of receiving cash or membership (or in addition thereto), participate in some other way in the profits of, or receive any other benefit from, the transferee limited liability partnership.F265]

(5)A sale or arrangement in pursuance of this section is binding on members of the transferor company.

(6)A special resolution is not invalid for purposes of this section by reason that it is passed before or concurrently with a resolution for voluntary winding up or for appointing liquidators; but, if an order is made within a year for winding up the company by the court, the special resolution is not valid unless sanctioned by the court.

Definitions used in section 110 2

the company

(a) in the construction of those provisions this Act is deemed the special Act and “the company” means the transferor company, and

Defined in s.111(4) · see it in the full Act

2 Section 233B does not apply in relation to a contract for the supply of goods or services to a company (“the company”) where any of paragraphs 3 to 11 applies.

Defined in Sch.4ZZA para.2 · see it in the full Act
a resolution for voluntary winding up

(2) In this Act the expression “a resolution for voluntary winding up” means a resolution passed under either of the paragraphs of subsection (1).

Defined in s.84(2) · see it in the full Act

Cases considering section 110 6

Secretary of State for Business, Energy and Industrial Strategy v PAG Asset Preservation Ltd

[2019] EWHC 2890 (Ch) · 30 October 2019Limits

The provision permits a liquidator, with the required sanction, to receive shares or other benefits in an acquiring company. It does not alter the underlying purpose of collecting, realising and distributing assets. (see paras [109]-[111])

Easynet Global Services Ltd, Re

[2018] EWCA Civ 10 · 18 January 2018

The court referred to a scheme of reconstruction under section 110 as an alternative domestic merger procedure and noted tax and reputational disadvantages associated with using it. (see para [6])

Parminder Singh Dosanjh v Vallipuram Balendran & Anor, (Re Webb Estate Developments Ltd)

[2025] EWHC 507 (Ch) · 7 March 2025

Considers a proposed structured demerger as a possible alternative to winding-up. The proposal did not become a realistic alternative because agreement between the shareholders was not achieved. (see paras [66]-[67])

What each judgment says about section 110 is in the case-law panel in the full Act.

Amendments and notes

6 notes from legislation.gov.uk

Amendments

  1. F262Words in s. 110(1) inserted (6.4.2001) by S.I. 2001/1090, reg. 9, Sch. 5 para. 15(2)
  2. F263Words in s. 110(1)(a) substituted (1.10.2009) by The Companies Act 2006 (Consequential Amendments, Transitional Provisions and Savings) Order 2009, (S.I. 2009/1941) arts. 2(1), 8, {Sch. 1 para. 75(11)} (with art. 10, Sch. 1 para. 84)
  3. F264Word in s. 110(2) substituted (6.4.2001) by S.I. 2001/1090, reg. 9, Sch. 5 para. 15(3)
  4. F265Words in s. 110(4) substituted (6.4.2001) by S.I. 2001/1090, reg. 9, Sch. 5 para. 15(4)

Modifications

  1. C303Ss. 109-111 applied (with modifications) (4.1.2024) by S.I. 2021/716, Sch. 1 para. 3 (as amended by The Payment and Electronic Money Institution Insolvency (Amendment) Regulations 2023 (S.I. 2023/1399), regs. 1(2), 20)

Extent

  1. E1This version of this provision extends to England and Wales only; a separate version has been created for Scotland only