The winding up is the process of putting an end to the life of the company. And during this process, the assets of the company are disposed of, the debts of the company are paid off out of the realized assets and if any surplus is left, it is distributed among the members in proportion to their shareholding in the company
Q.1 WHAT ARE THE POWERS OF LIQUIDATOR
A person appointed to carry out the winding up of a company is called liquidator. If the winding up is through Court, the term used for such person is official liquidator . The duties of liquidator include to realize the property of the company, to pay its debts, and to distribute the surplus (if any) among the members. The following are the general powers of liquidator:-
❖ To institute or defend any suit, action, prosecution or other legal proceeding, civil or criminal on behalf of the company. ❖ To carry on the business of the company so far as may be necessary or beneficial to it. ❖ To pay to the creditors.
❖ To make any compromise or arrangement with creditors.
❖ To sell the movable and immovable property of the company by public auction or private contract, with power to transfer to any person or to sell the same in parcels. ❖ To do all acts and to execute all deeds, receipts and other documents in the name and on behalf of the company and for that purpose to use in the company’s seal when necessary. ❖ To draw, accept, make and endorse any bill of exchange or promissory note in the name and on behalf of the company ❖ To raise any money on the security of the assets of the company.
Q.2 WHAT ARE THE Consequences of winding up OF A COMPANY?
Consequences of winding up As regards the company itself:
Winding up does not mean that the company has ceased to exist. The company exists as a corporate entity with all the rights of such entity, with only change that its management and administration is to be carried on through liquidator till the final dissolution of the company As regards the shareholders :
Every transfer of shares or alteration in the status of a shareholder, after the winding up has commenced by the order of the Court , shall be void unless approved by the liquidator. As regards the creditors:
❖ They cannot file or continue suits against the company, except with the leave of the Court. ❖ They cannot proceed with the execution, if they have obtained decrees already. ❖ They must lodge their claim and prove their debt before the liquidator As regards the management
On appointment of liquidator, all the powers of the directors, chief executive and other officers, shall cease, except for the purpose of giving notice of resolution to wind up and appointment of liquidator and filing of consent of liquidator etc. As regards the disposition of company’s property
All such dispositions are void unless with the leave of the Court or the liquidator.
Modes of winding up:
The winding up of a company may be either-
❖ By the Court
❖ Subject to the supervision of the Court
Q.3 UNDER WHAT CIRCUMSTANCES COURT MAY ORDER WINDING UP OF COMPANY Winding up of the company by the Court:
The winding up of a company by an order of the Court is called the compulsory winding up. Section 305 of the Ordinance envisages the following circumstances, under which a company may be wound up by the Court on the petition submitted to it:- ❖ If the company has, by special resolution, resolved that the company be wound up by the Court
❖ If default is made in delivering the statutory report to the registrar or in holding the statutory meeting or any two consecutive annual general meetings ❖ If the company does not commence its business within a year from its incorporation, or suspends its business for a whole year ❖ If the number of...