WINDING UP OF COMPANY

Winding up of a Company
The term winding up of a company may be defined as the proceedings by which a company is dissolved all of its operations under law.

DEFINITION

Winding up of a company is the process whereby its life is ended and its property is administrated for the benefits of its creditors and members. And an administrated, called a liquidator, is appointed and he takes control of the company, collects its assets, pay its debts and finally distribute any surplus among the members in accordance with their rights.

MODES OF WINDING UP
1Compulsory winding up by the court.

2- Voluntary winding up with out intervention of the court. 3- Voluntary winding up under the supervision of court.

1-

Compulsory winding up by the court.

The court may wound up the company on a petition submitted to it on any of the following grounds:a)

Special resolution by the company : Sometimes, the company passes a special resolution to the effect that the company be wound up by the court. In such cases, the court may order the winding up the company on a petition presented by the company. Court has discretionary powers in this regard and may refuse to wind up the company.

Contin..

b) Default in holding statutory meeting: Company must hold statutory meeting within 6 months from the date of its formation. If company failed in holding of such meeting , the court may order the winding up of a company on petition presented to it by the registrar of company. Instead of winding up order, court may also direct that statutory meeting be held and report be submitted to registrar.

Contin..

c) Failure to commence business: Sometimes, company fails to commence the business within one year from its registration. In such case, the court may order the winding up of a company on a petition presented to it by the registrar.

Contin..

d) Reduction in membership: Public company must have at least seven members and private have two. If the membership of any company reduced below this limit, the court may order the winding up of a company. e) Inability to pay its current liabilities: Sometimes, company unable to pay its debts , the court may order the winding up of a company on petition presented by the creditors.

Contin..

f) Just and equitable: Under this clause, the court may order winding up of a company under any ground. However, there must be some strong grounds for winding up. The interest of general public should also be considered.

2- Voluntary winding up with out intervention of the court.

The company may also be wound up without intervention of court. And it is called voluntary winding up. In other words, it means the winding up by the members and the creditors. It requires for procedures:

By ordinary resolution:- Sometimes, company fixes the period for the duration of company, in such case it required ordinary resolution. By special resolution:- Company may, at any time, pass special resolution that company be wound up voluntary.

KINDS OF VOLUNTARY WINDING UP

1- Members voluntary winding up:It is the winding up in the case of which a declaration of solvency is made and delivered to registrar. 2- Creditors voluntary winding up:In such case, winding up shall arise where the company is unable to pay its debts in full. They are given the powers to control and supervise the winding up process.

3. VOLUNTARY WINDING UP UNDER THE SUPERVISION OF THE COURT

As a matter of fact, it is voluntary winding up but under the supervision of the court. At any time after a company has passed a resolution for voluntary 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 appoint liquidator, it may also remove any liquidator. It also has the advantages of compulsory winding up. Because the court gets all the powers which it can exercise in a compulsory winding up.