This document discusses the winding up process for companies in India. It defines winding up as the process of dissolving a company by closing down its business, selling off assets, paying creditors, and distributing any remaining assets to members. There are three main types of winding up: compulsory (by court order), voluntary by members, and voluntary by creditors. The key differences between member and creditor voluntary winding up relate to control, meetings, liquidator appointment, and powers of the liquidator. Relevant sections of Indian law governing winding up are also cited.

1. COMPANY LAW
WINDING
UP A
COMPANY
SEMESTER
9TH
KALIM
SHAHAB

2. MERCANTILE LAW
Winding up of a
company

3. DEFINITION
• The existence of a company can be terminated by
means of winding up.
The process of which the company is dissolved is
known as winding up of a company.
The winding up of a company is a proceeding in
which the co business is closed down sell off it's
asset and the creditor are paid. the balance of asset
are distributed to the members

4. MODES OF WINDING UP
WINDINGUP
COMPULSORY WINDING UP
VOLUNTARY WINDING UP
MEMBERS
CREDITORS
WINDING UP UNDER THE
SUPERVISON OF THE COURT
Under section 297 there are 3 different
kinds of winding up a company.

5. MODES OF WINDING UP
A. COMPULSORY WINDING UP BY COURT:
two things must be shown before the court will make a winding
order on petition.
I. That the petitioner had the right a present the petition.
II. That on the ground set out in the act as justifying.
Section 305 of the companies ordinance that a company may be wound
up by the court on the following grounds are there:
1. If the company has, by special resolution, resolved that the company
should be wound up by the court.

6. MODES OF WINDING UP
2. if the company is unable to pays its debts.
3. the company does not commence its business within a year
from its incorporation, or suspends its business for a whole
year.
4.When the period fixed for duration of the co by
memorandum or articles expires OR the event if any occur on
the occurrence of which the memorandum or articles provide
that the co is to be dissolved.

7. MODES OF WINDING UP
5.The court is of opinion that it is just and equitable that the co
should be wound up.
6.The company has being used for unlawful purposes or any
purpose prejudicial to in compatible with peace, welfare,
security, public order, good order morality.
7.The company is used or act against the security of the nation.
8.If the company ceases to have a member.

8. MODES OF WINDING UP
Company are not confined to the grounds specified in section
305 of the companies ordinances. An order of winding up can
be made on any one of the following grounds also:
I. Where the substance of accompany has failed.
II. Where the company has been formed to carry out a fraud or
to carry on an illegal business.
III. If the company is a bubble i.e if it never had any business or
assets.

9. PETITION AND APPLICATION FOR
WINDING UP
•Who may petition for winding up:
Sec 309 provides the following persons may petition for winding up
of a company.
1) The company itself an application to the court for winding up of
a company shall be by petition.
APPLICATION BY THE COMPANY:
• Allows the company to apply to have itself compulsory wound up.
the general meeting is the appropriate organ to determine that the
company be wound up.

10. APPLICATION FOR WINDING UP
• Application by a company for its compulsory wounding up. As
voluntary winding up is quite rare.it is member wish to
liquidate their company. They will do and does not involve a
court hearing and its so cheaper.
2) Any creditor including a contingent or prospective creditor
an application to the court for winding up of a company shall
be presented by a contingent or prospective creditor.

11. CREDITOR APPLICATION
APPLICATION BY THE CREDITOR:
• Usually the vast majority of application for compulsory
winding up are presented by the creditor on the ground
contained. for example the co is unable to pay debts.
• Permits a creditor a contingent or a perspective creditor to
apply for compulsory winding up even though their debts are
not immediately due and payable at the date of application.

12. CONTINGENT AND PROSPECTIVE
CREDITORS
WHAT IS CONTINGENT CREDITOR:
A contingent is a person to whom a debts is awed, payment of
which is only due on the occurrence of some future event.
WHAT IS PROSPECTIVE CREDITOR:
A prospective creditor is a creditor to whom a debts is due but
no immediately payable.

13. APPLICATION BY THE CONTRIBUTORIES:
3) A contributory or any person who is personnel representatives
of a deceased contributory or the trustee in bankruptcy.
APPLICATION BY THE CONTRIBUTORIES:
Defines a contributory includes:
i. A person liable as a member or past member to contributor to
assets of the company in the event of winding up and
ii. A holder of a fully paid share in the company.

14. EFFECTS OF WINDING UP
CONSEQUENSES OF WINDING UP ORDER:
The effect of order are:
1. Every transfer or shares or alteration in the status of a member made
after the commencement of winding up is void unless the court
otherwise orders.
2. Any transfer of property made within one year before presentation of
winding up petition is void unless otherwise ordered by the court.
3. On winding up order provisional manager ceases to hold office unless
the court directs otherwise.

15. VOLUNTARY WINDING UP
VOLUNTARY WINDING UP OF A COMPANY:
Voluntary winding up means winding up by the members or
creditors of a company without interference of the court.
RESOLUTIONS FOR WINDING OF A COMPANY:
The resolution may be of two types:
a. Ordinary resolution b. Special resolution

16. ORDINARY AND SPECIAL RESOLUTION
1. ORDINARY RESOLUTION:
it is passed when the AOA provides that the co is
wound up when the specified period elapsed.
2. SPECIAL RESOLUTION:
it requires no ground for winding up and is used in
any other case such as a solvent liquidator.

17. TYPES OF VOLUNTARY WINDING UP
• TYPES OF VOLUNTARY WINDING UP:
• A voluntary winding-up may be :
(a) a members' voluntary
winding-up
(b) a creditors' voluntary
winding-up

18. MEMBER VOLUNTARY WINDING UP
1. MEMBER VOLUNTARY WINDING UP:
Members voluntary winding up takes place only when the company
is solvent.
• In case of members voluntarily winding up, Board of Directors
have to make a declaration to the effect, that company has no
debts.
• Directors of the company shall call a board of directors meeting
and makes a declaration of winding up accompanied by affidavit,
stated that:

19. CREDITOR VOLUNTARY WINDING UP
The company has no debts to pay, OR
The company will repay its debts , if any within 3years from
the commencement of winding up as specified in declaration.
2) CREDITORS VOLUNTARY WINDING UP:
Where the resolution for winding up has been passed, but the
directors are not in a position to give declaration on the
liability of company, they may call meeting of the creditors,
for the purpose of winding up.

20. CONTINUED…….
It is the duty of board of directors to present full statement of a
company affairs and list of the creditors along with their dues
before the meeting of the creditors.
Whatever the resolution passes by the company in meeting shall
be given to the registrar within ten days of its passing.
Once the company is fully wound up its assets and properties are
sold or distributed shall be pay off to the creditors in equal
proportion and therefore any property or money are left may be
distributed among the members according to their rights and
interest in the company.

21. DIFFERENCE BETWEEN MEMBERS
AND CREDITORS WINDING UP
1. There is no committee
2. There is no meeting of creditors
3. Liquidator appointed by the company in
the general meeting
4. Power can be exercised by the liquidator
with the sanction of special resolution
passed at the general meeting
5. Controlled by the members themselves.
1. May appoint a committee
2. Meeting of contributor and there will be
corresponding meeting of the creditors
also
3. Both the member ad creditor nominate
the liquidator.
4. Power can exercised with the sanction of
the tribunals or committee of inspection
or meeting of creditors.
5. Controlled by the creditor
Members voluntary
winding up
Creditor voluntary
winding up

22. RELEVANT SECTIONS
• Sec 297: Modes of winding up
• Sec 305: Winding up of a company by court
• Sec 306: Company unable to pay debts
• Sec309: Application for winding up
• Sec310: Company wound up voluntary or subject to
supervision of courts
• Sec 311: commencement of winding up by court
• Sec 318: Effect of winding up order

23. THE END
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