winding up - legal environment of business
TRANSCRIPT
Prepared By
Manu Melwin Joy
Assistant ProfessorIlahia School of Management Studies
Kerala, India.
Phone – 9744551114Mail – [email protected]
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Definition
• Winding up of acompany is theprocess of putting anend to its life. At theend of the winding up,the company will bedestroyed or dissolvedand will have no assetsor liabilities.
Winding up and Bankruptcy
• Winding up is differentfrom Bankruptcy. Inbankruptcy, theproperty of the debtorsis divested from him andrests in the officialreceivers or the officialassignees while thewinding up the propertyof the company is notdivested from it.
Reasons for winding up of a company
• The main object of thecompany for which it wasestablished has beenaccomplished.
• It has become impossible tocarry out the main objects ofthe company.
• The company has sold thebusiness or the undertaking toanother company or anindividual.
• The company is not in aposition to pay its debts in full.
Grounds for winding up by tribunal• Special resolution• Failure in holding statutorymeetings.
• Failure to commence or suspendits business
• Reduction of membership belowminimum
• Inability to pay debts• Just and equitable• Default in filing balance sheets,profit and loss account or annualreturns
• Acted against sovereignty andintegrity of India
• Sick industrial company
Special resolution
• If a company by a special
resolution resolved that it
may be wound up by the
tribunal, the tribunal may
pass a winding up order.
Failure in holding statutory meetings
• If a company makes default
in holding a statutory
meeting or in delivering a
statutory report, the court
may order winding up the
company.
Failure to commence or suspend its business
• If a company does not
commence its business
within a year from its
incorporation or suspends
its business for a whole
year, the tribunal may order
for its winding up.
Reduction of membership below minimum
• When the number of
members is reduced below
7 in the case of a public
company and below 2 in the
case of a private company,
the tribunal may order
winding up of the company.
Just and equitable
• The tribunal may consider it
just and equitable that the
company should be wound up
if it is of that opinion. What is
just and equitable will depend
on the tests of each particular
case.
Default in filing balance sheets, profit and loss account or annual returns
• The tribunal may order for
winding up, if the company
has made a default in filing
with the registrar its balance
sheets, profit and loss account
or annual returns for any
consecutive years.
Acted against sovereignty and integrity of India
• If company has acted against
the sovereignty and integrity
of India, the security of the
state, public order, decency or
morality, the tribunal may
order for its winding up.
Sick industrial company
• If the tribunal is of opinion
that the company should be
wound up under the
circumstances specified in
Sec. 424 G, the tribunal may
order for its winding up.
Application of winding up
• According to section 439,the following can sendpetition to tribunal forwinding up of a company.
– Company itself.
– Contributories.
– Creditors.
– All or any of the aboveparties jointly or separately.
– Registrar
Definition
• Voluntary winding up
means winding up by the
members or creditors of the
company without the
interference of the tribunal.
Definition
• The object of a voluntary
winding up is that the
company as well as the
creditors is left free to settle
their affairs without going
to the tribunal.
Circumstances in which company can be wound up voluntarily
• By passing an ordinary
resolution.
• By passing special
resolution.
By passing an ordinary resolution
• When the period for the
duration of a company by the
Article has expired, the
company in General Meeting
may pass an ordinary
resolution for its voluntary
winding up.
By passing special resolution
• A company may at any time
pass a special resolution
what it be wound up
temporarily.
Dissolution
• A company is said to be
dissolved when it ceases to
exist as a corporate body
capable of holding
property or of being sued
in any tribunal.