WINDING UP OF COMPANIES

WINDING UP OF COMPANIES - Transcript

Dr Subhash Gupta

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DEFINITION
Means liquidation of companies Disposing of assets of the company Payment of debts and loans out of realisation

from sale of assets
Distribution of surplus if any to the members
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DISTINCTION WINDING UP DISSOLUTION
In winding up assets are realized and

liabilities paid off out of such realization by the liquidator whereas no such provision in case of dissolution
Dissolution is by an order of court whereas

court order is not essential in all type of winding up of companies

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MODES OF WINDING UP
Compulsory Winding up by an order of Court Voluntary Winding up


Members Voluntary Winding up Creditors Voluntary Winding up

Winding up subject to the supervision of

Court
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WINDING UP BY THE COURT OR COMPULSORY WINDING UP
By Special resolution of the Company Due to default


in holding statutory meeting in delivering statutory report to the Registrar

Failure to commence business Reduction in membership

below

the

minimum statutory requirement Inability to pay debts
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PETITION TO THE COURT FOR WINDING UP
Petition by the Company Petition by the Creditors Petition by the Contributories Petition by the Registrar By any person authorised by the

Central Government

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VOLUNTARY WINDING UP
Company and its Creditors settle their affairs

without going to the Court but may seek directions and orders from the Court if and when necessary
Most popular and most common form of

winding up

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CONDITIONS LEADING TO VOLUNTARY WINDING UP
Period fixed by the Articles for duration of

the company has expired The Company for any cause whatsoever has passed a special resolution to wind up voluntarily Types of Voluntary Winding up


Member s Voluntary Winding Declaration of Solvency Creditor s Voluntary Winding up
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up

and

WINDING UP SUBJECT TO SUPERVISION OF COURT
The Court may make an order at any time

that voluntary winding up would be subject to the supervision of the Court Creditors contributors and others shall have liberty to apply to the court on such terms and conditions as the court thinks fit A petition for continuance of voluntary winding up subject to the supervision of the court is deemed to be a petition for winding up by the court
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CONSEQUENCES OF WINDING UP
Consequences as to Shareholders

Both present and past shareholders and members of the Company are liable to pay the full amount upto the face value of the shares held Consequences as to Creditors

Solvent Company All claims when proved
are fully met Insolvent Company Rules under the Law of Insolvency apply
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ORDER OF PAYMENT
Secured Creditors Costs charges and expenses of the winding

up including liquidators remuneration Preferential Creditors Creditors secured by floating charge Unsecured or Ordinary Creditors Members or Contributories

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