Module – IX Company Meetings &

Company Secretary

Course Leader:

Dr. K. Srinivasan Department of Management Studies Christ University, Bangalore.

Winding Up

Winding Up of a company is the process whereby its life is ended and its property

administered for the benefit of its creditors and members.

An administrator, called liquidator, is appointed and he takes control of the company, collects its assets, pays its debts and finally distributes any surplus among the members in accordance

with their rightsProfessor. Gower

Modes of Winding Up

Winding up by the Court (Compulsory Winding Up)

Voluntary Winding Up

a) Member’s Voluntary Winding Up

b) Creditor’s Voluntary Winding Up

Winding Up subject to the supervision of the Court.

Winding Up by the Court Special Resolution of the Company Default in holding statutory meeting Failure to commence business Reduction in Membership Inability to pay its debts

Demand for payment neglectedDecreed debt unsatisfiedCommercial Insolvency

Just and EquitableSubstratum of the Company is goneMajority of the shareholders using the powers

unfairlyDeadlock in the management to achieve the

objectives

Petition for Winding UpBy the CompanyBy the Creditors

Debentures HoldersCentral or state Government whom any tax charge is due.Person who has monetary claim against the company

By any Contributory or ContributorsMembership is reduced below the statutory minimumOriginal Allottee of sharesHeld the company shares for at least 6 months during the 18 months immediately before the commencement of winding up.Shares have transferred through the death of a former holder.

By the RegistrarBy any person authorized by the Central Government

Content of the PetitionName of the Company with the date of its IncorporationAddress of the Registered OfficeAmount of Paid – Up CapitalStatement of facts to justify a winding Up order.Request to the Court to issue an order of winding upStatement in the form of an affidavit that the facts stated in the petition are correct and true.

Commencement of Winding Up

Advertisement of Petition

Power of Court to stay or restrain proceedings against company

Intimation to Liquidator or Registrar

Copy of Winding up order to be filled with the Registrar

Procedures for Winding Up

Consequences of Winding Up

Order for winding up deemed to be notice of discharge

Suits Stayed

Powers of the Court

Effect of Winding Up

Official Liquidator to be liquidator

Liquidator

Liquidator is a person who helps the court to complete the liquidation proceedings. An

official liquidator may be appointed from a panel of professional firms of CA, Advocates, Company Secretaries etc., which the Central Government shall constitute for the court; or may be a body corporate consisting of such professionals as may be approved by the central government from time to time; or may be a whole time or part time officer appointed by the central government.

Duties of LiquidatorProceedings in Winding UpReportCustody of Company’s PropertyControl of PowersMeetings of Creditors and ContributorsDirections from the CourtProper BooksAudit of AccountsAppointment of Committee of InspectionPending Liquidation

Powers of Official Liquidator

1. To defend any suit, civil or criminal proceedings in the name and on behalf of the company.

2. To carry on the business of the company so far as may be necessary for the beneficial winding up of the company.

3. To sell movable or immovable property of the company – wholly or in parcels either privately or through public action.

4. To raise money on the security of the assets of the company.

5. To do all things as may be necessary for the winding up of the affairs of the company and distributing its assets.

Execute all deeds, Receipts and other documents in the name and on behalf of the company under company’s seal.

Prove, rank and claim the insolvency of a contributory.

Draw, accept, make and endorse any bill of exchange or promissory note in the name and on behalf of the company.

Appoint an agent to do any business which the liquidator is unable to do himself, etc.

Appoint Security guards, Valuer, CA etc. Publish an advertisement inviting bids for sale of the

assets of the company etc.

Other Powers….

General Powers of the Court

Stay of Winding Up of the CompanySettlement of list of contributoriesDelivery of PropertySummoning of Persons suspected of having property of the companyExclusion of CreditorsOrder as to CostsArrest of Absconding ContributoryMeetings of Creditors or contributories

Voluntarily Winding Up

Voluntarily winding up means winding up by the members or creditors of a company without interferences by the Court.

The main objectives of this winding up is to settle their affairs without going to the Court of Law.

The company may wound up voluntarily on two ways;

By Passing an Ordinary ResolutionBy Passing an Special Resolution

Provisions Applicable for MVWU

Appointment of LiquidatorsBoard’s powers to cease on appointment of a liquidatorPowers to fill vacancy in office of liquidatorNotice of appointment of liquidator to be given to Registrar Power of Liquidator to accept shares etc.Duty of liquidator to call creditors meeting in case of insolvencyDuty to call General Meeting at the end of the yearFinal Meeting and Dissolution – Penalty Rs. 1,000

Provisions as to Annual & Final Meeting in case of Insolvency.

Duties of Secretary in MVWU

Arrange the Board Meeting, within 5 weeks immediately preceding the date of passing the resolution for MVWU.Arranging & Preparing P&L Account, B/S & Audited Report and ending with the latest practicable date before the date of declarationPrepare declaration of Solvency, get it verified by affidavit before the Magistrate & file with the Registrar with all reports.Prepare & Issue of notice of the meeting to members & to check special resolution passed, appointment & remuneration fixed in the meeting.Check the Official Gazette and newspapers within 14 days after passing resolution

Continued…..Notice of appointment of liquidator is filed with registrar with 10 days of passing resolution.Check the special resolution for winding up is filed with the Registrar within 30 days of the meeting.Check every invoice, order and business letter issued by the company during the period contains a statement that company is being wound upCheck all the Books, Documents, Movables & Immovable properties of the company are delivered to the liquidator, for public examination and give evidence as required.

Creditors Voluntarily Winding Up (CVWU)

Meeting of Creditors – 2 NewspapersResolution Notice given to Registrar – 10 Days & Rs. 500Appointment of LiquidatorCommittee Appointment Inspection – Not more than 5 PersonsLiquidator RemunerationBoard’s Powers to cease an appointment of LiquidatorPowers to fill vacancy in office of liquidatorDuty of Liquidator to call meeting of company & Creditors at the end of each yearFinal Meeting & Dissolution

WU- Subject to Supervision of Court

WU of a company subject to the supervision of the court presupposes a voluntary winding up of the CompanyAt any time after a company passed a winding up, the Court may make an order that voluntary winding up shall continue, but subject to the supervision of the Court.The court may give such liberty to creditors, contributors or others to apply to as it thinks.Petition for the continuance of a voluntary winding up subject to the supervision of the Court is deemed to be a petition for winding up by the Court.

Consequences of Winding Up

Consequence as to shareholders

Consequence as to Creditors

Consequence as to Servants & Officers

Consequence as to Proceedings against the Company

Consequence as to Costs