Winding up of a comapny


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  • solvent. ADJ. Able to pay debts; having enough money to coverone’s expenses. N. solvency. See also insolvent.
  • Remuneration = fee ,salary,compensation,payment.Cease=stop,finish,end,come to an endLay=leave,put.
  • A statutory declaration allows a person to make a legal declaration under oath and in the presence of a lawyer. They are commonly used when an individual needs to satisfy a legal requirement by affirming the truth of something.Creditor voluntary winding upIn a creditors' winding up the company is obliged to summon a meeting of the creditors. The creditors must receive at least ten days notice and their meeting must be held on the same day or the day after the meeting of the members at which the resolution for voluntary winding up is to be proposed.
  • Cease=come to an end,finish.
  • Winding up of a comapny

    2. 2. Winding up  Winding up/liquidation represents the last stage of a company’s life.  Process of putting an end to the life of the company  It is a proceeding by which a company is dissolved.  Here the assets of the company are disposed of , the debts are paid off out of the realized assets , and the surplus , if any is then distributed among the members in proportion to their holdings in the company
    3. 3. Persons entitled to apply for winding up Sec. 439 1. 2. 3. 4. 5. 6. Company itself by passing of a special resolution Any Creditor or Creditors Contributory/s (on commencement of winding up the S.H are called contributories, liable to pay uncalled shares) The Registrar Any Person authorized by Central per sec. 243 The official liquidator
    4. 4. Modes of Winding up Three modes of winding up :1. Compulsory winding up by the court 2. Voluntary winding up 3. winding up under the supervision of the court.
    5. 5. The winding up of a company under the order of a court is called the compulsory winding up. Sec 433 Following circumstances of winding up by order of court— 1. Special resolution by the company. (on a petition by the co) 2. Default in holding statutory meeting and in delivering the statutory report to the Registrar 3. Failure to commence business within one year of its incorporation
    6. 6. 4. Reduction in membership below statutory minimum 5. Inability to pay debts (Current Liabilities) 6. Just and equitable that the co should be winding up
    7. 7. 2. Voluntary Winding Up Voluntary winding up means winding up by the members or creditors of a company without interference of the court. A company may be winding up voluntarily;  By Passing an ordinary resolution in the general meeting if the period fixed for the duration of the Company has expired or some event on the happening of which the Company has to be wound up.  By Passing a special resolution for any reason whatsoever. Within 14 days of passing any resolution it must be advertised in the official gazette and in some important newspaper circulating in the area of the registered office of the Company.
    8. 8. Types of Voluntary winding up ; 1. Members voluntary winding up 2. Creditors voluntary winding up
    9. 9. a. Members voluntary winding up  Members voluntary winding up takes place only when the company is solvent .  Its initiated by the members and is entirely managed by them.
    10. 10. Rules Regarding Members Voluntary Winding Up 1. 2. 3. 4. 5. 6. Appointment of liquidator Power to fill vacancy in the office of liquidator Notice of appointment of liquidator to registrar (within 10 days of such an appointment) Duty to call creditors meeting Duty to call general meeting at the end of the year (if winding up continues more than 1 year) Final meeting and dissolution • Showing how the property has been disposed, • Send a copy of account to the registrar
    11. 11. b. Creditors voluntary winding up  Where the company proposes to wind up voluntarly and the directors are not in a position to make the statutory declaration of solvency ,the winding up is referred to as creditors voluntary winding up.
    12. 12. Rules Regarding creditors voluntary winding up Meeting of creditor’s (same day or next day when its to be proposed) 2. Notice of resolution to be given to registrar 3. Appointment of liquidator (nominated by members and crs) 4. Appointment of committee of inspection 5. Liquidators remuneration (by committee of inspection) 6. Vacancy in the office of liquidator may be filled up by creditors 7. Meeting at the end of each year (if proceedings continue more than 1 year) 8. Final meeting and dissolution 1.
    13. 13. Difference between members voluntary winding up and creditors voluntary winding up Members voluntary winding up 1. 2. 3. 4. 5. There is no committee There is no meeting of creditors Liquidator appointed by the company in the general meeting Power can be exercised by the liquidator with the sanction of special resolution passed at the general meeting Controlled by the members themselves. Creditor voluntary winding up 1. 2. 3. 4. 5. May appoint a committee Meeting of contributor and there will be corresponding meeting of the creditors also Both the member ad creditor nominate the liquidator. Power can exercised with the sanction of the tribunals or committee of inspection or meeting of creditors. Controlled by the creditors
    14. 14. 3. Winding up subject to supervision of the court     Court only supervises winding up procedure. Resolution for winding up is passed by members in the general meeting. Liberty granted to creditors, contributories or others to apply to court for some relief. 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.
    15. 15.   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. (Section 526)
    16. 16. Priority in disposing liabilities (Sec. 529 A & 530) When the company is wound up, by any mode, the liabilities shall be discharged in following priority. 1. Workman's dues. 2. Debts due to secured creditors, in case of insolvency. 3. All , taxes, cesses and rates due from the company to the central government or a state govt. 4. All wages and salary of any employee due within four months. 5. All holiday remuneration becoming payable to any employee. 6. All such debts shall be paid in full. If assets are insufficient to meet them, they shall abate in equal proportions.