This document summarizes the winding up process for companies in Pakistan. It discusses the three modes of winding up a company: compulsory winding up by court order, voluntary winding up initiated by shareholders, and winding up under court supervision of a voluntary process. The consequences of winding up are outlined for shareholders, creditors, company operations and employees. Key steps in the process include ascertaining company assets and liabilities, paying off creditors, distributing any surplus to shareholders, and formally dissolving the company.

1. BY
Brig(R) Muhammad Saleem SI(M)

2.  Meaning of winding up
 Modes of winding up
◦ Compulsory by court
◦ Voluntary
◦ Under the super vision of the court
 Consequences of winding up
Section 297-418

3.  The liquidation or winding up of the company is a
proceeding in which all its affair are wound up.
 Its rights and liabilities ascertained and the claims of
its creditors paid off out of the assets of company
including the contribution by its member to the
extent to which they may be necessary
 If any surplus assets are left they are divided among
the members of the company in proportion to there
rights under the articles
 This being done, the company is dissolved
 A company can never be declared bankrupt although
it is unable to pay its debts although some provisions
of the insolvency law are made applicable to
companies in liquidation.

4.  Compulsory winding up by court
 Voluntary winding up
 Winding up under the supervision of the court
Section297

5.  A company may be wound up by the court when :
◦ It has passed a special resolution to be wound up by the
court
◦ Default is made in delivering the statutory report are in
holding the statutory meeting or any two consecutives AGM
◦ It does not commence its business with in a year from its
incorporation or suspend its business for a whole year
◦ The number of its member falls below 7 or 2 in case of
private company
◦ Unable to pay its debts
◦ Carrying out unlawful or fraudulent activities
◦ Carrying on business not authorized by the memorandum
◦ Conducting its business in a manner oppressive to its
members

6. ◦ Managed by person who fail to maintain proper accounts
or commit fraud, misfeasance or malfeasance in relation
to the company
◦ Managed by persons who refuse to act according to the
companies ordinance, memorandum, or articles or fail to
carry out the directions of the court or registrar or the
corporate law authority
◦ Seizes to be a listed company if it is such a company
◦ The court is of opinion that it is just an equitable that it
should be wound up
Section 297-305

7.  A voluntary winding up can be affected
◦ Fixed duration of the company has come to an end or
◦ An event upon which the company is to be dissolved
has occurred and
◦ The company has in general meeting passed an ordinary
resolution to wind up OR
◦ If the company by a special resolution resolve that the
company be wound up voluntarily for any reason what
ever
Section 358

8.  Members voluntary winding up
 Creditors voluntary winding up
TIME SCHEDULE
 Voluntary winding up commences at the time of
passing of the resolution authorizing it
Section 358- 359

9.  When a resolution has been passed to wind u a company
voluntarily the court may order that the winding up shall
proceed but subject to its super vision and on such terms
and conditions as it thinks fit to impose the order which is
called a super vision order pre-supposes the existence of
a voluntary winding up
 The affect of the super vision order is the same as an
order for a compulsory winding up except that the
liquidator may, subject to any restriction imposed by the
court, exercise all his powers without the sanction or
intervention of the court, in the same manner as if the
company was being wound up all together voluntarily
Section 396

10.  Consequences as to the share holder
 Consequences as to the creditor
 Consequences as to disposition by company
 Consequences as to servants
 Consequences as to officers
 Consequences as to proceedings against the
company
 Consequences as to costs
 Dissolutions
 Liquidators
Section 301,404, 406,409,411,418

11. THANK YOU