Presented by GROUP 6

Liquidation: last stage of company life Proceeding by which a company is dissolved Assets are disposed off Debts are paid out Surplus distributed among the members (holding proportions) Done by an administrator (liquidator) Modes of winding up: Winding up by Court (Secs. 433 to 483) Voluntary winding up (Secs. 484 to 521) Members voluntary winding up Creditors voluntary winding up Winding up subject to Supervision of Court

If the company has, by special resolution, resolved that the company be wound up by the Tribunal
If default is made in delivering the statutory report to the Registrar or in holding the statutory meeting If the company does not commence its business within a year from its incorporation or suspends its business for a whole year

If the number of members is reduced, in the case of a public company, below seven, and in the case of a private company, below two
If the company is unable to pay its debts

If the Tribunal is of the opinion that it is just and equitable that the company should be wound up
If the company has made a default in filing with the Registrar its balance sheet and profit and loss account or annual return for any five consecutive financial year If the company has acted against the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality If the Tribunal is of the opinion that the company should be wound up under the circumstances specified in section 424G

Following persons can apply to the court, for petition for winding up The company itself The creditor Any Contributory Registrar Any person authorised by central govt, in case of oppression or mismanagement (397)

 1. 2. 3. 4.

5.
6. 7.

If the court is satisfied, that sufficient reasons exist in the petition for winding up, then it will pass a winding up order Court will send notice to an official liquidator, to take change of the company. He shall carry out the process of winding up, ( sec. 444) The winding up order, shall be applicable on all the creditors and contributories, whether they have filed the winding up petition or not. The official liquidator is appointed by central Government The company shall relevant particulars, relating to, assets, cash in hand, bank balance, liabilities, particulars of creditors etc, to the official liquidator. The official liquidator shall within six months, from the date of winding up order, submit a preliminary report to the court An opinion, whether further inquiry is required or not The Central Govt. shall keep a cognizance over the functioning of official liquidator, and may require him to answer any inquiry.

Winding up my members or creditors of a company without interference by court Objective- Members are left free to settle affairs without going to court They may apply to court for directions, if and when necessary

When the company may be wound up voluntarily: When period, if any fixed for the duration of company by its articles has expired or The event, if any, has occurred or the occurrence of which the Articles of Association provides that the company is to be dissolved and the company in General Meeting passes an ordinary resolution requiring the company to be wound up voluntarily If the company passes a Special Resolution that the company be wound up voluntarily.

A.

Members Voluntary Winding up I. When a declaration of solvency has been made by directors and filed with ROC Creditors Voluntary Winding up I. When no declaration of solvency has been made and delivered by the Directors to ROC II. When liquidator appointed by the company is of the opinion that the company will not be able to pay off its debts completely within the period as mentioned in declaration of the solvency

B.

COMPANY

LIQUIDATOR

OFFICIAL LIQUIDATOR

REGISTRAR OF COMPANIES

HIGH COURT

Directors of the company shall call for a Board of Directors Meeting, and make a declaration of winding up, accompanied by an Affidavit, stating that; The company has no debts to pay, or The company will repay it's debts; if any, within 3 years from the commencement of winding up, as specified in declaration

Company in the general meeting [in which resolution for winding up is passed, and the creditors in their meeting, appoint liquidator. They may either agree on one liquidator, or if two names are suggested, then liquidator appointed by creditor shall act Any director, member or creditor may approach the court, for direction that: 1.Liquidator appointed in general meeting shall act, or 2.He shall act jointly with liquidator appointed by creditor, or 3.Appointing official liquidator, or 4.Some other person to be appointed as liquidator. The remuneration of liquidator shall be fixed by the creditors, or by the court.

On appointment of liquidator, all the power of Board of Directors shall cease. In case, the winding up procedure, takes more than one year, then he will have to call a general meeting, and meeting of creditors, at the end of each year, and he shall present, a complete account of the procedure, and the status / position of liquidation

Where the resolution for winding up has been passed, but the Board of Directors are not in a position to give a declaration on the liability of company, they may call a meeting of creditors, for the purpose of winding up.
It is the duty of Board of Directors, to present a full statement of companys affairs, and list of creditors along with their dues, before the meeting of creditors.

Whatever resolution, the company passes in creditor's meeting, shall be given to the Registrar within ten days of its passing

A voluntary winding up is deemed to be commence at the time when the resolution for voluntary winding up is passed
The company ,from the commencement of the winding up, must cease to carry on its business except so far as may be required to secure a beneficial winding up The transfer of shares and alterations in the status of members, made after commencement becomes void

A resolution to wind up voluntarily operates as notice of discharge to the employees of the company
On the appointment of the liquidator all the powers of the board of directors shall cease except after the permission of the registrar.

PROCEDURE FOLLOWED BY THE REGISTRAR Letter by Registrar to enquire if company is in operation

Registered letter if no reply received within one month

Publication in the Official Gazette to strike off name and 3 month notice of expiration
Same procedure in winding up if no liquidator is acting or no return is received COMPANY STANDS DISSOLVED
Expiry of 3 month notice period Registrar publishes it in the Official Gazette

RESTORATION OF A COMPANYS NAME

Application to Court by the company or aggrieved member or creditor within 20 years
Restoration of name by Court on being satisfied Directions by the Court Certified copy of order of Court to be delivered to Registrar

LETTER OR NOTICE ADDRESSED TO

Company at its Registered office (under Sec. 560) To director, manager or other officer in the company To each person who subscribed the Memorandum Notice to liquidator at his last known place of business

The Calcutta High Court, on January 31, 2013 ordered the winding up of Dunlop India Ltd. (DIL) asking the official liquidator to takeover the possession of the companys assets and its books of records Creditors moved to court due to non-payment of dues of around Rs.1,000 crore Dunlop claimed that the management is genuinely trying to revive and run the factories as it has already cleared dues to 10 out of its 16 creditors, and repaid R39.73 crore out of its total debt of R52 crore between July 2012 and January 2013 Dunlop in its appeal stated that the HC did not even choose to ascertain the wishes of the creditors before directing winding up. Section 557 of the Companies Act, 1956, casts a mandatory obligation on the court to conduct a meeting for ascertaining the wishes of creditors and contributors in all matters relating to the winding up of a company. On the contrary, the HC held that Dunlop is not serious in its revival Supreme Court stayed winding up of Dunlop India on June 13, 2013

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