Presentation on theme: "winding up The winding up or liquidation of a company means the termination of the company by stopping its business, collecting its assets and distributing."— Presentation transcript:
winding up The winding up or liquidation of a company means the termination of the company by stopping its business, collecting its assets and distributing creditors and shareholders, in the manner laid down in the Act 1994.
A company which decides not to be in business any more or to discontinue its operations, for various reasons, may go for winding up. The part – v of the Companies Act - 1994 spells out in thorough details the various ways of Winding up. Section 234 provides the modes of winding up which are as follows: a)Winding up by the Court, b)Voluntary winding up, and c)Winding up, subject to supervision of the Court.
Winding up by the Court Section 241 states the following circumstances under which a company may be wound up by the Court: 1.lf the company has by special resolution resolved that the company be wound up by the Court; or 2.lf default is made in filing the statutory report or in holding the statutory meeting; or 3.lf the company does not commence its business within a year from its incorporation, or suspends its business for a whole year; or 4.lf the number of members is reduced, in the case of a private company below two, or, in the case of any other company, below seven; or
5.lf the company is unable to pay its debts; or 6.If the Court is of opinion that it is just and equitable that the company should be wound -up.
Voluntary winding up (section 286) As mentioned in section 286, a company may be wound up voluntarily under the following circumstances: – ( a) When the period, it any, fixed for the duration of the company by the articles expires, or the event, if any occurs, on the occurrence of which articles provide that the company is to be dissolved and the company in general meeting has passed a resolution requiring the company to be wound up voluntarily; – (b) lf the company resolves by special resolution that the company be wound up voluntarily; – (c) lf the company, resolves by extraordinary resolution to the effect that it cannot by reason of its liabilities continue its business, and that it is advisable to wind up.
Winding up subject to supervision of court (Sec-316) Power to order winding up subject to supervision. -- when a company has by special or extraordinary resolution, resolved to wind up voluntarily the Court may make an order that the voluntary winding up shall continue, but subject to such supervision of the Court, and with such liberty for creditors, contributories; or other to apply to the court and generally on such terms and conditions as the court thinks just.
The court may also appoint liquidators, in addition to already appointed, or remove any such liquidator. The court may also appoint the official liquidator, as a liquidator to fill up the vacancy. Liquidator is entitled to do all such things and acts, as he thinks best in the interest of company. He shall enjoy the same powers, as if the company is being wound-up voluntarily. The court also may exercise powers to enforce calls made by the liquidators, and such other powers, as if an order has been made for winding up the company altogether by court.
Official liquidators Person appointed by the shareholders or unsecured creditors, or on a court order, to manage the winding up of a firm by selling off its assets. Most countries require a suitably qualified liquidator. On appointment, the liquidator assumes control of the business, collects and auctions off its free (un-pledged) assets in a reasonably short time, pays the unsecured creditors from the proceeds of the sale, and (if any money is left) distributes it among the shareholders in proportion to their shareholdings