Winding up is the process of dissolving a company where its assets are collected and debts paid off, with any surplus distributed to members. There are three modes - compulsory, voluntary, and under court supervision. Compulsory winding up occurs via a court order, while voluntary winding up is by member or creditor resolution. An official liquidator is appointed to oversee the process, taking assets, convening meetings, and submitting reports. The order of payment is secured then unsecured creditors, preferential payments, members. Dissolution occurs via a court order when winding up is complete.
OBJECTIVE
Liquidator is a person appointed by a Company or a Competent authority to manage the activities of winding up of the Company. Provisions pertaining to appointment of liquidator are stipulated under Chapter XX of Companies Act, 2013. The webinar covers the aspects of appointment of liquidator, types of liquidators, powers and duties of liquidator and judicial precedents.
OBJECTIVE
Liquidator is a person appointed by a Company or a Competent authority to manage the activities of winding up of the Company. Provisions pertaining to appointment of liquidator are stipulated under Chapter XX of Companies Act, 2013. The webinar covers the aspects of appointment of liquidator, types of liquidators, powers and duties of liquidator and judicial precedents.
covered all types of companies meeting plus essentials to make the meeting a valid meetings, cases related to the meetings, powers of board & tribunal to call the meetings
covered all types of companies meeting plus essentials to make the meeting a valid meetings, cases related to the meetings, powers of board & tribunal to call the meetings
Winding up - Legal Environment of Business - Business Law - Commercial Law - ...manumelwin
Winding up of a company is the process of putting an end to its life. At the end of the winding up, the company will be destroyed or dissolved and will have no assets or liabilities.
NZ Companies Act 1996 and Liquidation, Winding up of the company, reporting duties of liquidator, the liquidation process and powers of the liquidators
Role of board of directors - corporate management - Strategic Management - ...manumelwin
It acts as the Trustee of Shareholders – The director’s act as representatives of shareholders and work with utmost faith and degree of honesty in protecting long term aims of wealth maximization of company.
Winding up/liquidation represents the last stage in company’s life by which a company is dissolved. After winding up, the company is struck off from the Companies Register at Companies House. The company simply stops doing any business and employing staff.
WINDING UP of COMPANY, Modes of DissolutionKHURRAMWALI
Winding up, also known as liquidation, refers to the legal and financial process of dissolving a company. It involves ceasing operations, selling assets, settling debts, and ultimately removing the company from the official business registry.
Here's a breakdown of the key aspects of winding up:
Reasons for Winding Up:
Insolvency: This is the most common reason, where the company cannot pay its debts. Creditors may initiate a compulsory winding up to recover their dues.
Voluntary Closure: The owners may decide to close the company due to reasons like reaching business goals, facing losses, or merging with another company.
Deadlock: If shareholders or directors cannot agree on how to run the company, a court may order a winding up.
Types of Winding Up:
Voluntary Winding Up: This is initiated by the company's shareholders through a resolution passed by a majority vote. There are two main types:
Members' Voluntary Winding Up: The company is solvent (has enough assets to pay off its debts) and shareholders will receive any remaining assets after debts are settled.
Creditors' Voluntary Winding Up: The company is insolvent and creditors will be prioritized in receiving payment from the sale of assets.
Compulsory Winding Up: This is initiated by a court order, typically at the request of creditors, government agencies, or even by the company itself if it's insolvent.
Process of Winding Up:
Appointment of Liquidator: A qualified professional is appointed to oversee the winding-up process. They are responsible for selling assets, paying off debts, and distributing any remaining funds.
Cease Trading: The company stops its regular business operations.
Notification of Creditors: Creditors are informed about the winding up and invited to submit their claims.
Sale of Assets: The company's assets are sold to generate cash to pay off creditors.
Payment of Debts: Creditors are paid according to a set order of priority, with secured creditors receiving payment before unsecured creditors.
Distribution to Shareholders: If there are any remaining funds after all debts are settled, they are distributed to shareholders according to their ownership stake.
Dissolution: Once all claims are settled and distributions made, the company is officially dissolved and removed from the business register.
Impact of Winding Up:
Employees: Employees will likely lose their jobs during the winding-up process.
Creditors: Creditors may not recover their debts in full, especially if the company is insolvent.
Shareholders: Shareholders may not receive any payout if the company's debts exceed its assets.
Winding up is a complex legal and financial process that can have significant consequences for all parties involved. It's important to seek professional legal and financial advice when considering winding up a company.
Dissolution is the last stage of liquidation, the process by which a company (or part of a company) is brought to an end, and the assets and property of the company redistributed.
Dissolution may also refer to the termination of a contract or other legal relationship; for example, the dissolution of a marriage, or divorce.
The liquidation of the Company’s assets, which are collected and sold in order to satisfy the obligations accrued, is referred to as winding up. When a corporation is wind up, the debts, expenditures, and charges are first paid off and dispersed among the shareholders. When a company is subject to liquidation, it dissolves officially and ceases to exist.
NCLT is a quasi-judicial body established under companies act, 2013 on 1 June 2016.
IBC, 2016 is bankruptcy law of India came into force from 5 August 2016. It is a one stop solution for resolving insolvencies.
The process of striking off is an alternative mechanism to the winding up of a company.
The Companies Act facilitates two modes of strike-off – namely, strike off by the ROC (Registrar of Companies) under Section 248(1) of the Companies Act 2013, and strike off by a company on its own accord under Section 248(2) of the Companies Act, 2013.
Service Life cycle - new service development - Service blue print - Gap model of service quality - measuring service quality - SERVQUAL - Service quality function development
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Definition – Service Economy – Evolution and growth of service sector – Nature and Scope of Services – Unique characteristics of services - Challenges and issues in Services Marketing.
2. Winding up a Company
• Process of putting an end to the life of a
company
• It is a proceeding by means of which a
company is dissolved, its assets collected, its
debts paid off out of the assets or from
contribution from members if necessary.
• If any surplus is left, it is distributed among
the members in accordance with their rights
3. Modes of Winding up
3 modes
• Compulsory winding up
• Voluntary winding up
• Winding up under the supervision of the Court
(abolished by Companies (Amendment) Act,
2004)
4. Compulsory Winding Up
• Wound up by an order of the Court
• Grounds for winding up of a company
– Company by special resolution resolved to wind up
– Default in delivering the Statutory Report to the
Registrar or in holding the Statutory Meeting
– Does not commence its business within a year from its
incorporation
– Number of members reduced below 7 in case of public
limited company and 2 in case of private
– National Company Law Tribunal may order if it is unable
to pay its debts
5. Compulsory Winding Up
• Grounds for winding up of a company
– NCLT may order when it is of the opinion that it is just
and equitable that the company should be wound up
(instances)
– Dead lock in management
– Impossible to carry on business except at a loss
– Company engaged in illegal business
– Objective of company is impossible to carry on
– Minority is disregarded or oppressed
– Lack of confidence in directors
– Company has been conceived and brought forth in fraud
6. Persons eligible to file petition for
winding up
• The Company
• Any creditor or creditors
• Any Contributor or contributories
• All or any of the aforesaid parties, together or
separately
• The Registrar
• Any person authorized by Central Govt.
7. Official Liquidator
• Appointed by Central Government
• After a winding up order is received, a
statement as to the affairs of the company is
to be prepared and submitted to official
liquidator
– Assets of the company
– Debts and Liabilities
– Names and addresses of its creditors and amount
– Debts due to the company; names and addresses
of them from whom it is due
8. Duties of the Liquidator
• To submit preliminary report
• To take over company’s assets
• To convene meetings of creditors and
contributories
• To keep proper books
• To submit accounts
• To submit information in pending liquidation
9. Powers of Official Liquidator
• Powers to be exercised with sanction of NCLT
– To institute or defend suits, prosecution, etc on
behalf and in the name of the company
– To carry on business till it may be necessary for
beneficial winding up
– Sell immovable and movable property by public
auction or private contract
– To raise money on security of any asset
– To do all other acts as may be necessary to wind
up the company and to distribute assets
10. Powers of Official Liquidator
• Powers to be exercised without sanction of NCLT
– To use company seal for acts and execute in name of
company all deeds, documents , receipts, etc
– To inspect the records and returns of the company
on the files of the Registrar
– To prove, rank and claim the insolvency of any
contributory and to receive dividend out of his estate
– To draw, accept, make and endorse bill of exchange
on the name of the company
– To appoint agents where necessary
11. Voluntary Winding Up
• Company and its creditors are left to settle
their affairs without going to Court
• Most common and popular form of winding
up
• If period is fixed by Articles for the duration of
the company has expired
• If company passes a special resolution for any
cause
12. Voluntary Winding Up
• Types of Voluntary winding up
– Member’s voluntary winding up and declaration
of solvency
• Directors at a meeting declare solvency that company
will pay in full within period not exceeding 3 years
– Creditor’s voluntary winding up
• If declaration of solvency is not made then winding up
is referred to as Creditor’s winding up
• Creditors appoint the liquidator, fix his remuneration
and conduct the winding up
13. Winding up subject to supervision of
Court
• Any time after a company has passed
resolution for voluntary winding up, the Court
may make an order that voluntary winding up
will continue, but subject to the supervision of
the court.
• The Court appoints Liquidator
14. Consequences of Winding up
• Consequences as to Shareholders (liable to
pay full amount upto the face-value of the
shares held by him)
• Consequences as to Creditors (Solvent
company : all claims when proved are met
fully; Insolvent company : Law of Insolvency
shall apply)
15. Order of Payment
1. Secured Creditors
2. Costs, Charges and expenses of winding up
including liquidators, remuneration
3. Preferential payments (revenues, taxes, cess
and rates due; wages & salaries; fund payable
for the welfare of the employees; expenses of
any investigation, etc)
4. Creditors secured by floating charge
5. Unsecured or ordinary creditors
6. Members
16. Dissolution of a Company
• Court makes an order for dissolution on the
following grounds
– When affairs of the company have been
completely wound up
– When Court is of the opinion that liquidator
cannot proceed with winding up for want of funds
or assets
– When it is just and reasonable in the
circumstances of the case
– For any reason whatsoever
17. Dissolution of a Company
• Company is dissolved from the date of the
order of the Court
• Within 30 days the Official Liquidator must
send a copy of the Court to the Registrar
(otherwise he will be penalized Rs.50 for every
day)