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.
2. Mode Of Winding Up
According to section 234, the winding up of a company), may be done in any three ways: one of the following (I) Compulsory winding up by the Court
(ii) Voluntary winding up b), the members or by creditors
(iii) Voluntary winding up under the supervision of the court. 2.1 Compulsory Winding Up By the Court
Section 241 states the following circumstances under which a company may be wound up by The Court:
* lf the company has by special resolution resolved that the company be wound up by the Court; or * lf default is made in filing the statutory report or in holding the statutory meeting; or * lf the company does not commence its business within a year from its incorporation, or suspends its business for a whole year; or * 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 * lf the company is unable to pay its debts; or
* If the Court is of opinion that it is just and equitable that the company should be wound-up
3.2 Voluntary Winding Up
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) If the company resolves by special resolution that the company voluntarily; (c) If 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.
2.2.1Types of Voluntary Winding Up
Voluntary winding up are of two types:
22.214.171.124 Members' voluntary winding up
When the company is solvent and is able to pay its debts in full, in which case it is not necessary to consult the creditors or call their meeting, then the company in general meeting must appoint one or more liquidators for Winding up the affairs of the company and fix his or other remuneration. On such appointment, all the powers of the directors of the company come to an end except in so far as the company in general meeting, or the liquidator, sanctions the continuance there of (Section 292). 126.96.36.199 Creditors' voluntary winding up:
In the case of the creditors' voluntary winding up, the company is obliged to convene a meeting of the creditors on the day on which the meeting for passing the resolution for winding up is to be held. The company must send the notices of such meeting to the creditors simultaneously with the notice of the company's meeting. The duty of the creditors of the company is to cause a full statement of the position of the company's affairs, together with a list of the creditors of the company and the estimated amount of their claims, to be laid before the creditors' meeting to be held as aforesaid. They must also appoint one of their members to preside at the meeting. At the same meeting, the creditors and the company may respectively nominate a person to be a liquidator or the purpose of the winding up. lf they each nominate a different person, the one nominated by the creditors shall be the liquidator unless, on an application of any director, member or creditor of the company made within seven days after the date of the nomination by the creditors, the Court orders that the person nominated by the company shall be the liquidator instead of or jointly with the one nominated by the creditors (Section - 299).
3. Company When Deemed Unable To Pay Its Debts
According to section 242, a company...