COMPANYAn association of individuals formed for some

common purpose

Carry on some business for profit ,to promote art ,science, education or charitable purpose

artificial person

Registered according to the law relating to companies

Sec 3(1)(i)of companies act 1956

Winding upPutting an end to its life All its affairs are closed or wound upAssets and properties are realized and distributed

among the creditors and shareholders(act)ie, the process involves @ Realization of assets @ Payment of liability to creditors @ Distribution of surplus At the end the company will have no assets or

liabilities

Reasons for winding up Main reasons are :The main object of the company for which it

was established has been accomplishedIt has become impossible to carry out the main

objects of the company Has sold the business or the undertaking to

another company or individual Not in a position to pay its debts in full

Modes of winding upWinding up by Tribunal Voluntary Winding up (a) Member’s voluntary winding up (b) Creditor’s voluntary winding up

Winding up by Tribunal Under the order of tribunal Compulsory winding up Tribunal will make order on an application by

any of the person enlisted in sec.439

They can order the winding up under the sec 433 on certain grounds

Grounds for compulsory winding up

Special resolution{sec.433(a)}Default in holding statutory meeting[sec.433(b)]Failure to commence business [sec.433(c)]Inability to pay debts [sec.433(e)]Just and equitable [sec.433(f)]Failure to file balance sheet Acted against integrity of India

Who can apply for orderThe company {sec.439(1)(a)}Registrar{sec.439(1)(e)}Creditors{sec.439(1)(b)}Share holders{sec.439(1)(e)}Central /state government{sec.439(1)(f)}

Commencement of winding up Is deemed to commence at the time of the

presentation of petition (sec.441)

If a resolution has been passed by the company before the petition .it shall be deemed to commence from the time of passing of resolution

Disposal of petition On receiving petition ,issues notice to the

company Cause the issue of public notice and will

invite objections After hearing both sides ,the tribunal may @ dismiss the petition @ adjourn the hearing @ make an interim order necessary @ pass an order

Appointment of provisional liquidation

After the presentation of petition but before the order

Appoint the official liquidator to be the provisional liquidator of the company

Objective is to protect and preserve the assets of the company during the pendency of winding up

becomes the liquidator of the company as soon as the order is passed

Consequences Order is passed, shall cause to send intimation to

the official liquidator and registrar (sec.444)The petitioner and the company should file a

certified copy of order with the registrar with in 30 days

The registrar shall notify in the official gazette that the order has been passed {sec.445(1)&(2)}

It shall be deemed to be a notice of discharge to officers and employees of the company except when the business of the company is continued{sec445(3)}

The official liquidator becomes the liquidator of the company {sec449}

A statement of affairs of the company should be made and submitted to the liquidator

It should be verified by director,manager,secetary or chief officer

The statement should show @the assets of the company @the debts and liabilities @the names &addresses of the creditors

including the amount of debts @The debts due to the company and the

names and addresses of the persons and the amount likely to be realized

After the statement of affairs the liquidator must submit a preliminary report to the tribunal ,within 6 months

Liquidator takes the company’s property onto his custody

The accounts of receipts and payments has to be presented twice in a year to the tribunal

A copy should be send to every creditor and contributory

A copy is also filed with registrar When the affairs of the company is completely

wounded up or when ,for want of funds, the liquidator cannot proceed with winding up

The tribunal shall make an order that the company is dissolved from the date of the order

Voluntary winding upWinding up of the company on the basis of

resolution passed by the share holders without the interference of tribunal

Company at its meeting passes the resolutionit is more advantage than compulsory

winding up

Circumstances By passing an ordinary resolution {sec.484(1)

(a)}By passing a special resolution{sec.484(1)

(b)}

Types of voluntary winding up The 2 types are @members' voluntary winding up @creditors' winding up

Members voluntary winding upIf the company at the time of winding up is a

solvent company and is able to pay its liabilities in full

The declaration of solvency is made before the general meeting which passed the resolution

Declaration of solvency Shareholder’s resolution

Various provisions & act In general meeting appoints one or more

liquidators the company shall also fix the remuneration (sec.490)

Vacancies in the office of the liquidators' are filled in the general meeting {sec492)

The power of board of directors come to an end (sec.491)

Shall give notice of appointment of the liquidator to the registrar(sec.493)

Must call general meeting twice a year final meeting of the company (sec.497)

A copy of final accounts of the winding up should be send to registrar

Should make a scrutiny of books and papers and send a report of scrutiny to tribunal

The order of tribunal will be based on the statement of affairs

Creditors voluntary winding up If the company posses to winding up

voluntarily the directors are not in a position to make

statutory declaration of solvency{sec.488(5)}Creditors who appoints the liquidator and

generally conduct the winding up the provisions are by and large similar to

those of members voluntary winding up

Provisions in the act of c’vwu Call a meeting of creditors before the general

meeting The notice of the meeting should be sent by

post to creditors Must advertise in the official gazette and in

two newspapers (sec500)A director is nominated for preside over the

creditors meeting Copies of the resolution passed are to be sent

to the registrar

A liquidator is nominated by the respective e meeting

creditors may in a meeting appoint a committee of inspection

Remuneration of the liquidator is to be fixed by the committee or else by the court (sec.504)

The powers of the board of directors come to an end (sec.505)

The final meeting (sec.509)

Reference Business laws by L.R.POTTICompany law by ANIL K.NAIRCompany law by S.S GULSHANLaws for business by M.M Sulphay, Az-har

Basheer

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