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³Any document described or issued as a prospectus
& includes any notice, circular, advertisement or
other document inviting deposits from the public for
the subscription or purchase of any shares in, or
debentures of, a body Corporate.´
m ³any section of the public whether elected as
member or debenture holders, or as clients of the
person issuing the Prospectus or in any other
manner´
m it does not include a small & closely restricted
group of investors which have been described by
the Act as ³being domestic concern of the persons
making & receiving the offer or invitation´.
Schedule II of the Act provides a model which has
to be strictly followed to prepare a Prospectus.
Part I D state the matters specified in Part I of
Schedule II
Part II D set out the reports specified in Part II of
Schedule II
Part III D the provisions as stated, have effect
subject to the provisions contained in Part III of
Schedule II.
m
of the company & details of the signatories.
m & about redemption in case of redeemable
preference shares.
m -details of them, qualification shares, remuneration, etc.
m
to be raised to meet preliminary expenses.
m the subscription list.
m á
on application & allotment.
m particulars of
.
m particulars of
issued.
m á
on each share issued.
m
acquired or to be acquired.
m á
within 2 preceding yrs.
m with managing director manager.
m of every promoter or director in the promotion or
property of the company acquired within preceding2yrs to be acquired.
m reasonable where copies of balance sheets & profits & loss
accounts
m
of the company w. r. t. profits &
losses of last 5 yrs, assets & liabilities.
Cont.
1) To institute or defend any suit, prosecution or other legal proceedings (civil
or criminal) in the name of the Company or on the behalf of the Company.
2) To carry on business so far it may be necessary for the beneficial winding of
the Company.
3) To sell the immovable and movable property of the Company by the public
auction.
4) To raise on the security of the assets of the Company.
5) To sell the movable or immovable property of the Company under the
private contract of sale.
6) To secure loan by mortgaging the property of the Company.
7) To enter into necessary compromise or arrangement with regard to payment
to creditors.
8) To enter into any compromise or accept suitable security in connection with
payment to debtors and calls outstanding on shareholders.
9) To appoint any advocate or legal advisor to assist him in connection with
the discharge of his duties.
10) To do all such things as may be necessary for winding up the affairs of a
Company and distribution of its assets.
1) To execute all deeds and other documents in the name and on the behalf of
the company and to use the Company¶s common seal,
2) To prove and claim from an insolvent contributory for any balance against his
estate.
3) To draw, accept and endorse any negotiable instrument of behalf of the
Company.
4) To obtain letters of administration to any deceased contributory and take
necessary steps for obtaining payment of any money due from the
contributory of his estate.
5) To appoint an agent to do any business which the liquidator is unable to do
himself.
6) To check the records and returns of the Company.
7) To extend the date of final payments by the buyers in an auction sale of
Company¶s property.
8) To call the meetings of the creditors and contributories to discuss the matters
related to winding up process.
In this form of winding up , the Company and its creditors
are left to settle their affairs by themselves, without going to
the Court , but the parties can request the Court for general
direction or orders, wherever necessary. It is the most easy,
common popular form of winding up.
Circumstances for Voluntary inding Up-
a) The article fixed for tenure of the Company has expired or
an event upon which the Company has to be wound up
has happened and the Company in general meeting has
passed a special resolution.
b) The Company has for any cause whatever passed a
special resolution to wind up voluntarily [ Section 484].
The Company may be wound up by a special resolution
even if it is prosperous.
1. Members voluntary winding up,
&
2. Creditors voluntary winding up.
1) Appointment of liquidator [Section 490]- The Company in general meeting or
shall appoint one or more liquidators for winding up the affairs of the Company
and for distributing the assets. The Company shall also fix his remuneration and
unless his remuneration is not fixed, he will not take charge of his office.
2) Boards power to cease [Section 491]- On appointment of liquidator , all powers
of Board of Directors, Managing director(s) and manager, shall cease to exist
except when the Company or liquidator may sanction their continuance.
3) Power to fill the vacancy of liquidator [Section 492]- If any vacancy occurs in the
office of liquidator, the Company may in general meetings fill the vacancy subject
to any arrangement with its creditors. The vacancy may arise due to death,
resignation or otherwise.
4) Notice of appointment of liquidator to Registrar [Section 493]- ith in 10 days of
the date of appointment of liquidator, a notice of information may be given to
registrar of the event. PENALTY- In case of default the Company and every
officer of the Company who is in default shall be punishable with a fine,
extending Rs.100/- for every day of default.
5) Disposal of property [Section 494]- The liquidator may, with the sanction of a
special resolution of the Company , sell all or part of the Company¶s business or
property or shares or like interest in another Company to be distributed among
the members.
6) Meeting of the Creditors [Section 495]- If, at any time, the liquidator is of the
opinion that the Company will not be able to pay its debts in full within the
period mentioned in the declaration of solvency, he must call a meeting of the
creditors and lay down before them a statement of the assets & liabilities.
PENALTY- On default the penalty is a fine which may extend to Rs.500/-
where a liquidator has called a creditors meeting under Section 495, the
winding up, then, would proceed as if it was creditors voluntary winding up
[Section 498].
7) Annual general meeting at the end of first year and subsequent years[
Section 496]- If the winding up continues for more than one year, the
liquidator must call a general meeting of the Company and a meeting of the
creditors at the end of first year of the commencement of winding up and at
the end of each of the subsequent years and may lay before them an account
of the acts or the dealings.
8) Final meeting and dissolution [Section 497]- The liquidator shall perform the
following ,as soon as the affairs of the Company are fully wound up-
? He shall make up the account of the winding up, showing how the same has
been conducted and how the property has been disposed of.
? He shall call a general meeting of the Company for laying before it the said
accounts. The meeting shall be called by advertisement specifying the time,
place and object thereof.
? ithin one week after the meeting, the liquidator shall send a copy of the
account to the registrar and the official liquidator and also a return of the
1) Meeting of creditors [Section 500]- If a voluntary winding up is proposed and no
declaration of solvency has been made, then the Board must call a meeting of
the creditors either on the same day or the next day of the general meeting in
which the resolution is passed. Notice of the meeting should be advertised in
the official gazette as well as in 2 newspapers.
2) Notice to registrar [Section 501]- Notice of any resolution passed at a creditors
meeting shall be given by the Company to the registrar within 10 days of the
passing thereof.
3) Appointment of liquidator [Section 502]- The creditors and the members may
nominate a liquidator for the purpose of winding up the affairs and distributing
the assets of the Company. If the creditors & the members nominate different
persons, the creditors nominee is the liquidator.
4) Appointment of committee of inspection [Section 503]- Creditors may appoint a
committee of inspection of not more than 5 members. Company may also
appoint members of this committee. In case of dispute matter will be referred to
the court.
5) Fixing of Liquidator¶s remuneration [Section 504]- The committee of inspection,
or where there is no such committee the creditors shall fix the remuneration of
the liquidator, where the remuneration is not fixed, it shall be determined by the
court. the remuneration once fixed cannot be increased in any case.
6) Board¶s powers to cease [Section 505]- on the appointment of
liquidator , all the powers of the Board of directors shall cease,
except in so far as the committee of inspection, or if there is no
such committee, the creditors in a general meeting, may
sanction.
7) Vacancy in office of liquidator [Section 506]- If any vacancy
occurs by death, resignation or otherwise in the office of the
liquidator ( other than a liquidator appointed by or by the
direction of the court), the creditors in a general meeting may fill
he vacancy.
8) Meeting at the end of each year [Section 508]- If the winding up
continues for more than one year, the liquidator must call a
general meeting of the Company and a meeting of the creditors
at the end of first year of the commencement of winding up and
at the end of each of the subsequent years and may lay before
them an account of the acts or the dealings.
9) Final meeting & dissolution [Section 509]
At any time after a Company has passed a resolution for voluntary winding up,
the court may make an order that the voluntary winding up shall continue, but
subject to such liberty, contributories or others to apply to the Court & generally
on such terms and conditions as the court thinks just [Section 522]
A petition for the continuance of a voluntary winding up subject to the supervision
of the court shall be deemed to be a petition for winding-up by the Court [Section
523]
The Court will not in general make a supervision order on the petition of a
contributory, unless it is satisfied that the resolution for winding up voluntarily was
so obtained that the minority of members were overborne by fraud or improper or
corrupt influence
here a Company is being wound up voluntarily or subject to the supervision of
the Court may be presented by-
? Any person authorized to do so under Section 4399(which deals with provisions
as to application for winding up), or
? The official liquidator [ Section 440(1)]
NoteD The Court shall not make a winding up order on the petition presented to it
unless it is satisfied that the voluntary winding up or winding up subject to
supervision of court cannot be continued with due regard to the interest of
creditors or contributors or both [Section 440(2)]
m hen the rules relating to the winding up are not
being strictly adhered to, or
m hen the majority is playing a fraud on minority
m hen the resolution for voluntary winding up was
obtained by fraud,
m hen the liquidator is negligent in collecting the
assets of a Company, or
m hen the liquidator is prejudiced or partial, etc.
However, the court had wide discretion in the matter of
either to grant or refuse the supervision order.
Any officer of Company, whether past or present, in the winding up of
Company is punishable with fine and imprisonment in connection with
certain offences. He is punishable for-
1. If he does not, to the best of his knowledge and belief, fully and truly
disclose to the liquidator all the property of the Company.
2. If he does not deliver up to the liquidator, or as he directs , all such part
of the Company as is in his custody or under his control and which he is
required by law to deliver up on;
3. If he does not deliver up to the liquidator, or as he directs , all such
books and papers of the Company as are in his custody or under his
control and which he is required by law to delivering up;
4. If he conceals any part of the property of the Company to the value of
Rs.100 or more, or conceals any debt due to or from the Company;
5. If he fraudulently removes any part of the property to the value of
Rs.100 or more within 12 months next before the commencement of the
winding up or at any time thereafter;
6. If he makes any material omission in any statement relating to the affairs
of the Company;
7. If he knowingly or believing that a false debt has been proved, by any
person under the winding up, fails for a period of one month to inform the
liquidator thereof;
8. If he, after the commencement of winding up, prevents the proportion of any
book or paper affecting or relating to the property or affairs of the Company
9. If he makes, or privy to the making of any false entry in any book or paper
affecting or relating to the property or affairs of the Company;
10. If he, by false representation or other fraud, obtains on credit for or on behalf
of the Company and property which the company does not subsequently pay
for;
11. If he attempts to account for any part of the Company by fictitious losses or
expenses;
12. If he pledges or disposes off any property of the Company which has been
obtained on credit and has not been paid for, unless such pledge or disposal is
in the ordinary course of business of the Company;
In the case of any offences mentioned in 10 and 12 the defaulting officer shall
be punishable with imprisonment for a term which may extend up to 5 years ,
or with fine, or with both and in case of any other offence with imprisonment
for a term which may extend to 2 years or with fine or with both.
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