WINDING UP OF A COMPANY :-
The company is created by law when the legal existence of a company abolishes it is called the winding up of a company. Following are the various kinds or methods of winding up the company:
1. Compulsory winding up by the court.
2. Voluntary winding up.
3. Winding up under the supervision of the court.
COMPULSORY WINDING UP BY THE COURT :-
Under the following circumstances a court can wind up the company :
1. If a special resolution has been passed to wind it up by the court.
2. If the company is unable to pay its debts.
3. If company fails to submit the statutory report to registrar.
4. If statutory meeting is not held during a specified period.
5. If a company fails to start the business within one year of the date of incorporation.
6. If a company postpones its business for a one year.
7. If the number of members falls below than two in case of private and below than seven in case of public limited company.
8. A court can wind up the company on any reasonable ground.
VOLUNTARY WINDING UP :-
Under the following circumstances a company can be wind up voluntarily.
1. A company may be wound up on the expiry of period.
2. It may be wind up on the happening of any event on which company is to be dissolved.
3. If the company passes special resolution for this purpose.
4. If company passes extra ordinary resolution that it can not continue its business due to heavy liabilities.
The voluntary winding up has two kinds :
The members of the company can wind up the company voluntarily. The voluntary winding up can take place under the following circumstances :
1. Expiry of period :-
A company may be wind up voluntarily after the expiry of a period by passing a resolution in the general meeting.
2. Statutory declaration :-
The majority of the directors make statutory declaration to registrar that the company will be able to pay its debts in full with in three years.
3. Special resolution :-
After submitting the statutory declaration to the registrar, the company in the general meeting passes the ordinary or special resolution to wind up the company.
4. Appointment of liquidators :-
In the general meeting shareholders of the company appoint the liquidator to wind up the affairs of the company. Assets of the company are also distributed by the liquidator.
After the appointment all the powers of the directors and officers cease. The shareholders also fix the remuneration of the liquidator.
5. Final meeting :-
After winding up the affairs of the company, liquidator calls the general meeting of the shareholders. The full account of the company is placed in the meeting by the liquidators.
6. Dissolution :-
Within one week of the meeting, liquidator sends the copy of full accounts to the registrar. He also sends other important documents to registrar. The company shall be dissolved on the expiration of three months on the receipt of the copy of accounts and other documents.
CREDITORS VOLUNTARY WINDING UP :-
In case of creditors voluntary winding up there is no need to submit statutory declaration to registrar. A company can be dissolved by adopting the following methods :
1. Special resolution :-
In the general meeting of the company special resolution is passed by the shareholders, to wind up the company.
2. Creditors meeting :-
A meeting of the creditors must be called by the company on the same day or on the next day. A notice of the meeting should be sent to each creditor.
3. Statement of company affairs :-
In the meeting of the creditors directors of the company should intimate the names, addresses and claims of the creditors. One of the directors presides the meeting of the creditors.
4. Intimation to registrar :-
Within ten years after the date of creditors meeting, a copy of resolution passed should be sent to registrar.
5. Appointment of liquidator :-
The creditors and shareholders will nominate any person as a liquidator in their respective meeting. The opinion of the creditors is preferred.
6. Inspection committee :-
The creditors and shareholders can appoint the inspection committee consisting of five members in each case.
7. Remuneration of liquidators :-
It is fixed by the inspection committee or by the creditors. The duties and powers of the liquidators are also sanctioned by the inspection committee or creditors.
8. Final meeting :-
The liquidator calls the meeting of the creditors and paces before them the full account of the company assets.
9. Dissolution :-
Within one week after the date of meeting liquidator sends the copy of account and other documents to registrar. Registrar will register the documents. After three months from the date of registration a company will be dissolved.
WINDING UP UNDER THE SUPERVISION OF A COURT :-
Sometimes if Court feels necessary it may issue the order to dissolve the company under its own supervision. But this order is issued only in that case when the voluntary winding up for voluntary winding up. Dissolution of a company can take place under the supervision of a court under the following conditions.
1. If a liquidator is partial.
2. If the rules for winding up are not observed strictly.
3. If the winding up resolution is obtained by fraud.
4. If the liquidator is not taking keen interest.
Thursday, 16 June 2011
WINDING UP OF A COMPANY :-