“Winding up of a company is the process whereby its life is ended and its property

administered for the benefits of its creditors and members. AN Administrator called

‘LIQUIDATOR’, is appointed and takes control of the company ,collects its assets ,pays its

debts and finally distributes any surplus among the members in accordance with their

rights”

~ Prof. L.C.B. Gower

COMPULSARY WINDING UP.

VOLUNTARY WINDING UP.

a) MEMBERS’ VOLUNTARY WINDING UP.

b) CREDITORS’ VOLUNTARY WINDING UP.

The winding up of a company under the order of a court is called the compulsory winding up. Sec 433

Following circumstances of winding up by order of court—

1. Special resolution by the company. (on a petition by the co)

2. Default in holding statutory meeting and in delivering the statutory report to the Registrar

3. Failure to commence business within one year of its incorporation

4. Reduction in membership below statutory minimum5. Inability to pay debts (Current Liabilities)6. Just and equitable that the co should be winding up

Communication of order to official Liquidator & Registrar.

Notification of Winding Up Order in Official Gazette.

Winding Up Order to be treated as Notice of Discharge.

Stay of Suits on Winding Up Order.

Submission of Audited books & Accounts to Tribunal.

Cessation of the powers of Directors.

The Company.

Petition by the Creditors.

Petition by the Contributory.

Petition by the Registrar.

Petition by any person authorized by

the Central Government.

Petition by the Central Government or

the State Government.

Voluntary winding up means winding up by themembers or creditors of a company withoutinterference of the court.

A company may be winding up voluntarily By Passing an ordinary resolution in the general

meeting if the period fixed for the duration of the Company has expired or some event on the happening of which the Company has to be wound up.

By Passing a special resolution for any reason whatsoever.

Within 14 days of passing any resolution it must be advertised in the official gazette and in some important newspaper circulating in the area of the registered office of the Company.

Members Voluntary Winding Up Members voluntary winding up takes place only when the

company is solvent .

Its initiated by the members and is entirely managed by them.

Creditors Voluntary Winding Up Where the company proposes to wind up voluntarily and the

directors are not in a position to make the statutory declaration

of solvency ,the winding up is referred to as creditors

voluntary winding up.

Members 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 creditors

Creditors Winding up

APPOINTMENT OF A OFFICIAL LIQUIDATOR(Sec. 448)

Appointed by Central Government may be from a panel of professionals(Company Secretaries, Chartered Accountants , etc) or may be a corporate body.

APPOINTMENT OF DEPUTY OFFICIAL LIQUIDATOR

The Central Government may also appoint one or more Deputy or Assistant Official Liquidator to work in absence of Official Liquidator.

APPOINTMENT OF PROVISIONAL LIQUIDATOR(Sec.450)

The TRIBUNAL may appoint the Official Liquidator to be Liquidator Provisionally . Before appointing , the TRIBUNAL may give the notice to the company.

To conduct proceedings in winding up.

To submit preliminary report(sec.455).

To take custody of company’s property.

To take legal assistance (sec.459).

To maintain proper books.

To present accounts to tribunal.

To consider the wishes and directions of creditors and contributories.