Introduction
The Liquidation or winding up a company is a process through
which life of company and it’s all affairs are wound up and its property
administered for benefits of its creditors and members. An administrator, who
is called liquidator, is appoint to take control of company, collect its
assents, pay its debts and finally if any surplus assents are left, they are
divided among the members of the company in proportion to their rights under
the articles. This being done the company is dissolved on compliance within the
requisite formalities prescribed by the companies’ ordinance.
Different modes of winding up a Company
According to Section 297 of ordinance these are the
following modes of winding up a company.
1. Winding up by the Court
A company formed and registered under the ordinance, may be
wound up by the court. This kind of winding up is also called compulsory
winding up.
Explanation of winding up a company by Court
Following points are important to explanation
i. Special Resolution
As far as winding up of company by court is concerned,
company can wound up only when company has passed special resolution for its winding
up and court orders for its winding up on basis of some specific grounds.
ii. Oppression
If it is conducting its business in a manner oppressive to
any member or person concerned with the formation or minority share-holders.
iii. Inability to pay debts
When is it’s proved that public company is unable to pay its
debts, court can order for its winding up.
iv. Unauthorized business
If it is carrying on business not authorized by the
memorandum.
v. Non-maintenances of accounts
If company fails to maintain its accounts, court can order
for its winding up.
vi. Non-holding of Statutory Meeting
When statutory meeting is not held within prescribed period,
court can order for winding up of company.
vii. Non-submission of Statutory Report
When statutory report is not submitted to registrar, court
can order for winding up of company.
viii. Failure to commence or suspend business
If the company does not commence its business within a year
from its incorporation or suspends the business for a whole years.
ix. Reduction of members
If the number of member is reduced in the case of a public
company, below seven and in the case of a private company, below two.
x. Failure to carryout directions
If it is managed by person who fail to carry out the
directions of the court or Registrar or commission.
2. Voluntary winding up a Company
The object of a voluntary winding is that the company and
its creditors shall be left to settle their affairs without going to Court, but
they may apply to the court for any directions and order if and when necessary.
Explanation voluntary winding up a company
Following are the points are important to explanation
i. Expiry of period
When the period if any fixed for the duration of the company
expires.
ii. Occurrence of events
When the event occurs, on the occurrence of which the
articles provide that the company is to be dissolved and the company has passed
a resolution to winding up.
iii. Special Resolution
If the company by a special resolution resolves that the
company be wound up voluntarily for any reason whatsoever.
iv. Extraordinary Resolution
When the company has passed an extra-ordinary resolution
that it cannot by reason of its liabilities carry on its business, and that it
is expedient that the company be wound up.
3. Winding up a company under supervision of court
When company has passed special or extra-ordinary resolution
for its liquidation or winding up, court can pass an order on application of
creditors, contributors or other persons for conducting of liquidation or
winding up of company under supervision of court.
Explanation of winding up a company under supervision of
court
As far as winding up a company under supervision of court is
concerned, all proceedings for winding up of company are though conducted
voluntarily, yet it is necessary that these proceedings should be conducted
under supervision of court.
Conclusion
I say include that bankruptcy of company is not the same
thing as winding up a company. There is difference between bankruptcy of
company and winding up of company in bankruptcy of company, court appoints a
trustee to sell property to pay the debts of the bankrupt party. Contrary to
this, liquidator fulfills prescribed procedure for winding up of company.
