A joint-stock company is a business entity which is owned by shareholders. Each shareholder owns the portion of the company in proportion to his or her ownership of the company's shares (certificates of ownership). This allows for the unequal ownership of a business with some shareholders owning a larger proportion of a company than others. Shareholders are able to transfer their shares to others without any effects to the continued existence of the company. In modern corporate law, the existence of a joint-stock company is often synonymous with incorporation (i.e. possession of legal personality separate from shareholders) and limited liability (meaning that the shareholders are only liable for the company's debts to the value of the money they invested in the company). And as a consequence joint-stock companies are commonly known as corporations or limited companies. Different Ways of the Winding up of the Joint Stock Company: 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
i. Members Voluntary Winding up
ii. Creditors Voluntary Winding Up
3. Winding up under the supervision of the court
1. 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.
2. Voluntary Winding Up:
i. Members Voluntary Winding up:
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 within 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.
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.
ii. 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...