Normally the memorandum will not be allowed to be changed However the dynamics of business calls for the changes

to be made in the M/A The company law provided for the amendments of the various clauses of the M/A.

The amendments can be made by following the rules and regulations and also by following the procedure prescribed under the provisions of the company law

Alteration to the memorandum of association

NAME CLAUSE OF THE COMPANY

Alteration in the memorandum regarding NAME CLAUSE OF THE COMPANY May be made by passing a SPECIAL RESOLUTION In the general body meeting. The company has to obtain central Govt. permission In writing for the same. The registrar will enter the new name in the place Of the earlier name of the company and a certificate Will be issued from that date only the name of the Company stands changed.

Change in the Registered office of the company

[a] If the change of place is in the same town/city company can shift it registered office from place to another place in the same city, but it Must be intimated to the registrar with in 30 days. [b] if the change of place is from one city to another city in the same state company has to pass a special resolution

Change in the Registered office of the company from one state to another state
For this company has to obtain the confirmation from company law board. A notice must be give to the registrar with in 30 days and the company has to inform the

Registrar from which state it is shifted and also to

Registrar to which state is shifted.

Hence the procedure of shifting the Registered Office is: 1. Resolution of the board of directors 2. Special resolution in the General Body meeting 3. Permission from the company law board 4. Notice to the affected parties

5. Notice to the registrar as the case may be

6.Copy of the order to be filed with R.O.C

To change the object of the company On the following grounds the company is allowed To amend the object of the company To carry on the business more efficiently To attain its main purpose by new means To enlarge its local operations If it is advantageous to the company To delete any objectives the same procedure is to be followed To amalgamate with other company

To change the object of the company On the following grounds the company is allowed To amend the object of the company To carry on the business more efficiently

To attain its main purpose by new means

To enlarge its local operations If it is advantageous to the company To delete any objectives the same procedure is to be followed To amalgamate with other company

To amend or alter the capital clause By passing a ordinary resolution in the general Body meeting it can be changed, provided There is a clause in the article of association To this effect. It may be for Increase Consolidate Convert Sub-divide or Cancel shares

The ARTICLE OF ASSOCIATION is the second constitutional documents which lays down the rules and regulation for the conduct of internal affairs of the company. It defines the duties, rights, powers and authority of the share holder, and directors. It tells the mode and method in which the business is to be conducted. The ARTICLE OF ASSOCIATION constitute contract between the company and its members and between the members themselves. The ARTICLE OF ASSOCIATION are subordinate to the Memorandum of Association and should not therefore, contain any regulation which is contrary to the memorandum

The ARTICLE OF ASSOCIATION of a private company having share capital must restrict the transfer of share, and limit the maximum number of members to 50, and prohibit the invitation to public to subscribe for any of its shares or debentures

ARTICLE OF ASSOCIATION usually provide for the following The use of common seal of the company The alteration of capital how and to what extent The borrowings of the company the mode & limits The general meeting , notice, resolutions, voting rights, proxies and quorum etc. Appointment of directors, remuneration, qualification, powers, Minimum and maximum of directors, names of the first Directors And their duties and removal Dividends and reserve funds Accounts and audit Appointments of secretary, manager etc Adoption of contract entered into by the promoters Remuneration to promoters Special provisions for amalgamating and Winding up

Registration of Article of association The company has to register its article of Association with the registrar. If there is no article of association drawn up Then the Table A of the Schedule I automatically Apply to such companies The article of association may be amended By passing a Special resolution. The resolution and the alteration must be Sent to registrar within 30 days.

Doctrine of constructive notice means when the Company gets registered, the copies memorandum and Article of association of the company will be filed with the registrar of companies and hence It will become public documents and the persons Who deals with the company is having access to the above documents and it is presumed that the Persons who deals with the company knows or deemed to know the powers and authorities Delegated to Its directors.

Every person dealing with the company is Presumed to have read and understood its Contents while dealing with the company This is known of doctrine of constructive Notice Even a party dealing has not read or does not Have actual notice it is presumed that he is Having the constructive notice Eg. In Kotla venkataswamy vs ram murthy,
The article of association prescribed that all the deeds Must be signed by 3 persons MD, Secretary and working Director. A mortgage deed was signed only by the Secretary,And working director, it was held invalid

Doctrine of indoor management means That the persons dealing with the company may Presume that the officer of the company will Follow the provisions of the article of association They are not bound to enquire the regularity of the internal proceedings, the outsider need not See whether the company is following their internal Rules and regulations. Eg. In Royal British Bank vs Turquand
The directors of the company were given powers to borrow But board should pass a resolution to this effect. The Directors borrowed money but no resolution was passed. It was held , that the company is held liable for the Borrowings even though there was no resolution.

The company may raise funds either by private placement with friends and relatives or by making public issues. A company may raise funds by various instruments like shares, debentures, bonds or public deposits.

Prospectus is the basics document to raise the funds from the public. It means, any document described or issued as a Prospectus inviting deposits from the public or inviting offers from the public for the subscription or purchase of any shares in or debenture of the company. Thus Prospectus is a general invitation to the public to subscribe to the capital of the company on the conditions specified in the application form.

Private companies are prohibited from inviting any public subscription. Every public company having share capital is not required to issue the prospectus or a statement in lieu of prospectus when it is not raising the share capital from the public and when it makes private placement. It must file a statement in lieu of prospectus before the registrar of the company at least 3 days before the allotment of the share.

Prospectus should contain the following important information Name and address of the Registered office, stock exchange where the application is filed for listing, date of opening the issue and date of closing, name and address of the auditors, lead managers, rating of the company if any from CRSIL, underwriters, capital structure, terms of the present issue, particulars of the issue i.e. why the issue Company management and project, future prospects, management perception of risk factor etc.,

Share is nothing but the share in the share capital of the company and includes stock except where a distinction between stock and share is expressed or implied. A share signifies the interest of the shareholder in the company The liability of the shareholder in the company to pay calls on shares until fully paid up The right of shareholder to transfer the share The binding term and conditions between company and the share holder.

NOMINAL CAPITAL
This is the nominal or face value of the share, which the company, is authorized to issue by its M/A. This is the maximum capital, which the company can have without altering the capital clause of the M/A

ISSUED CAPITAL
It is the nominal value of the shares, which are offered to the public for subscription. It cannot be more than the Nominal capital

SUBSCRIBED CAPITAL
It is the nominal value of the shares taken up by the public. If all the shares offered to the public have been subscribed by the public to the full extent then subscribed capital will be equal to the issued capital.

CALLED UP CAPITAL

This is that part of the subscribed capital which has been called up by the company If the board of directors has called up the total amount payable in the shares the called up capital will be equal to the subscribed capital

PAID UP CAPITAL
This is that part of the called up capital which has been paid up by the shareholders or which is credited by the company as paid up on the shares. If all the called up capital has been received, paid up capital will be equal to called up capital, if not received it is calls in arrears

The company may issue various types of shares to fund its capital depending upon various factors:
Share capital of a company is divided into certain indivisible units of a fixed amount. These units are called shares,. Shares means share in the share capital of a company. The shareholder will get dividend for the investment made in the company. Dividend is the part of the profit of the company distributed to the shareholders.

Kinds of shares PREFERENCE SHARES

Preference shares are those, which have preferential rights to the payment of the dividend during the lifetime of the company and a preferential right to the return of the capital when the company is wound up. It has the following character

 The dividend on them is fixed by the A/A

A preferential shareholder get fixed rate of dividend before any dividend is distributed among other class of shareholders.
At the time of winding up to of the company the preference shareholders must be paid back their capital before anything is paid to the ordinary share holders

T the preference shares may be v v v v v v Cumulative preference share Non cumulative preference share Participating preference share Non participating preference share Redeemable preference share Irredeemable preference share

Equity or ordinary share

It is nothing but the normal share capital of the company, which is divided into small units. Equity or ordinary shares will not carry any fixed rate of dividend and they will get the dividend only after preference shareholder got their fixed rate of dividend.

What is sweat equity?

It is the equity shares issued by the company to its employees or directors or for consideration other than cash for providing the technical know how or rights given under intellectual property rights or value addition by whatever name called. A company may issue the sweat equity if the following conditions are fulfilled.

v A special resolution is to be passed in the general body v The resolution must specify the details like number of shares, current market price, and consideration, class of classes of directors or employees. v At least one year must have been completed from the date of commencement of the business v If the shares are listed in any stock exchange then the SEBI rules and regulations must be passed

ISSUE OF BONUS SHARES Bonus shares are shares of the company allotted to the existing equity shareholders without any consideration being received by the company in cash or kind. They are issued to capitalize the profit of the company. Bonus shares can be issued only if the article of the association of the company permit such an issue. The company has to seek the permission of the SEBI and to follow the guidelines of the central government.

Bonus share can be issued only out the free reserve made out of profits of the company or share premium collected in cash. Reserves made out of the revaluation of the asset cannot be used to issue the bonus shares After the issue of the bonus share, the remaining reserves should be at least 40% of the paid up capital of the company.

RIGHT ISSUE When the company which as already issued shares wants to make a further issue of shares it is under a legal obligation to first offer the fresh issue to the existing share holders. The right of the existing shareholder to buy such new issue is also transferable

Debenture
Debenture is nothing but the borrowing of the company It is defined as Debenture includes debenture stocks, bonds and any other security of a company, whether there is a charge or not on the asset of the company.

It is a document, which either create debt or acknowledge it and any other documents which fulfils either of those conditions is a debenture. Simply it means a document acknowledging a loan, which also provide the payment of the interest and repayment of the amount. The repayment of the debenture is known as redemption. Characteristics 1. It is issued by the company in the form of certificate of indebtedness 2. It normally specifies date of repayment and payment of interest specifying dates. 3. It generally creates a charge on the company.

If the declaration of the director is not based on the reasonable opinion to discharge the debts, and the debts are not discharged within the period specified in the declaration then the directors are punishable with fine up to Rs.50000=00 or imprisonment up to 6 months or with both. After filing the declaration of solvency a resolution will be passed by the members for voluntary winding up and a liquidator will be appointed On appointment of the liquidator the managerial powers will vest with the liquidator

The charge created by the issue of the debenture is known as PARIPASU CHARGE which means proportionately. Debenture stocks means A company instead of issuing individual debentures evidencing separate and distinct debts the company creates one loan fund known as debenture stock divisible among a class of lenders each of whom is given a debenture stock certificate evidencing the parts of the whole loan to which he is entitled

Kinds of Debenture 1. BEARER DEBENTURE

Bearer Debenture is a bearer documents just like share warrant transferable by delivery. It is transferable like a bearer instruments for value It usually has an interest coupon / the payment by company against the coupon is good discharge for the company to the bearer of the coupon

It enables the bearer to have right against the company The bearer who gets it for consideration is a bona fide holder The bearer is entitled to encase the coupon and redeem it

2. REGISTERED DEBENTURE These Debenture are payable to the registered holders whose name is appearing on the register of the company. It is transferable in the same was as share or as per the conditions endorsed on the reverse of the debenture. 3. PERPETUAL OR IRREEMABLR DEBENTURE This type of debenture contains no clause as to payment or which contains a clause that it shall not be paid back. The debenture is made perpetual i.e. it is repayable only on winding up or after a long period of time.

4 REDEEMABLE DEBENTURE
This type of debenture is issued for a particular period of time. After the expiry of the period the company has a right to repay the debenture money to the debenture holder and get the mortgage charge released to that extent. This is known as redeeming the debenture. The company may again re issue the debenture as per sec 121 of the companys act. as per the article of association.

5 NAKED DEBENTURE
Normally the debentures will be issued by creating a charge on the assets of the company. However, naked debenture are also issued by the company which means that the debenture is not backed by the charge on the assets of the company by way of mortgage. It is unsecured debenture. It is merely an acknowledgement of the debt by the company. The holders of such naked debenture are unsecured creditors of the company.

1. CONVERTIABLE DEBENTURE
A Company may also issue convertible debenture, which means that the holder has a choice of converting it into a share or a preference share at a stated rate of exchange after certain period. When converted to share then it cannot be re converted to debenture once again. It can be: Fully convertible debenture: Which can be fully converted to shares after a certain period Non-convertible debenture: Which cannot be converted to shares, there is no option to convert it in to shares

P partly convertible debenture: When the debenture can be partly convertible and partly non-convertible, partly convertible debenture will be issued. The convertible debenture will be converted to the share after the expiry of the specified period.

Director-Appointment - Powers and duties

Who is a Director? Since the company is an artificial person and as it cannot act on its own some one has to do the work on behalf of the company This makes it necessary that the companys business must be entrusted to some natural person hence there is a need for a human being to act as a director of the company. The director is not defined in the co law but

Directors are those natural persons who manager the affairs of the company. The are collectively called as board or board of directors.

Qualifications Only individual can be appointed as directors and no body corporate , association or firm shall be appointed as a director. This is to hold individual person responsible for the work done by him He should have signed as director and filed with register his consent to become director of a company. He should hold or purchase qualification shares as mentioned in the A/A, with in 2 months of his appointment The qualification share shall not be more than Rs.5000=00

Disqualification If a directors does not get qualification share within 2month of his appointment,

[ if he acted as director without qualification share then he has to pay Rs.500=00 per day
If he is of unsound mind

If he is undercharged insolvent
If he is convicted , and 5 years is not completed after jail term

If he not paid calls in arrears

If there is any court order

Appointment of director First directors will be named in A/A of the co If not they shall be determined by the subscriber of the M/A Or All the subscribed of M/A will be directors

Appointment of the directors by the company

In the General Body meeting the directors will be appointed

While 1/3 of director can be permanent and Remaining 2/3 are liable to retire by rotation They can be reappointed

Appointment of directors by Board of Directors

BOD can appoint additional director till next annual general body Casual vacancies may be filled if the A/A permits BOD can appoint an alternate directors if authorized by A/A or General body Appointment of directors by third party Some time when bank advances huge advances they nominate a director on the board of the company to ensure the end use of funds

Appointment of Director by Central Govt.

Central Govt. in order to prevent Mis management or To take care of minority share holder Will appoint directors for 3 years They need not have qualification or will retire by rotation

The powers of the directors can be broadly divided into two 1. Statutory powers

2. Managerial powers

Statutory power The law has given all directors statutory powers Board of directors can exercise the following powers by passing board resolution 1. Power to make calls on shares 2. Power to issue debentures 3. Powers to borrow money

4. Powers to invest the funds of the co

5. Powers to make loans 6. On taking approval from general beady they can:

sell or lease or dispose the whole or part of the companies undertaking

remit or allow time for repayment of debt due by directors appoint a sole selling agent for more than 5 years issue bonus shares

reorganize the share capital of the co

Other powers 1. To appoint additional director 2. To fill up casual vacancies of director 3. To sanction powers to director to enter into contracts with the co 4. To appoint MD 5. To invest in any share of any other company 6. To declare solvency

To make contract on behalf of co

To decide terms of additional share or debenture

To issue allot forfeit transfer share of the co To appoint director to fill up any casual vacancies

To appoint additional/alternative directors

To set goal and objectives and to make major policies To determine organizational structure of the co

General duties
1. To establish general objectives and to determine the business of the co 2. To issue directors for implementation of policies, review and check 3. To delegate power to any committee or to CEO or others if permitted by the article of the association 4. To appoint staff

STATUTORY DUTIES
1. To disclose the interest in the contract proposed to be entered into by the company 2. To disclose particulars of shares in other companies

3. To disclose name address occupation etc for entering in the registrar of directors
4. To issue prospect ion and set minimum subscription 5. To hold statutory and annual general meeting and to place reports accounts etc., 6. To convey extraordinary general body meeting 7. To circulate and filea with the register of company the resolution accounts etc required by the act. 8. To issue/allot/transfer of shares etc

9. To recommend declaration of the dividend 10 to maintain books and register 11 to all other acts

FIDUCIARY DUTIES DIRECTORS HOLD A TRUST IN RELATION TO THE COMPANY AND THEY ARE DUTY BOUND to act honestly to act for benefit of the co

not to give room to conflict

to act at most good faith no personal gains

1. To exercise reasonable skill and care in the discharge of their duties

2. If they fail to do they are liable for damages

3. Duty not to delegate

4. Remuneration

REMOVAL OF DIRECTORS
1. CAN BE REMOVED BY SHARE HOLDERS 2. CENTERL GOVT MAY REMOVE 3. CAN BE REMOVED BY CO LAW BOARD

1. LIABILITY TO THIRD PARTIES

a. issue of mis -statement in prospectus b. if they fail to refund application money

c. if the shares allotment are irregular

2. If they sign a Negotiable instruments without mentioning the co name and if they act in their own name 3. Liability to the company - ultra virus acts

- for negligence
- breach of trust/ statutory duty/ misfeasence[mis conduct

KINDS OF COMPANY MEETING

Broadly speaking , company meetings may be classified as follows 1. Meeting of shareholders or members : this against may be of four types: * * * * Statutory general meeting Annual general meeting Extraordinary general meeting Class meeting

2. Meeting of directors

* Meetings of board of directors * Meetings of committees of directors

3. Meetings of creditors, debenture and contributors

3 types of meeting are:

01. meeting of members 02.meeting of directors 03.meeting of creditors

REQUISITES OF A VALID MEETING

If the business transacted at a meeting is to be valid and legally binding, the meeting itself must be validly held. A meeting will be considered to be validly held, if It is properly convened by proper authority and by a proper notice It is properly constituted with requisite quorum of member and by duly elected chairman It is properly conducted, i.e. according to rules

PROPER AUTHORITY TO CONVENE MEETING A meeting be convened or called by a proper authority. Otherwise it will not be a valid meeting. The proper authority to convene general meetings of a company is the Board of Directors. The decision to convene a general meeting is issue notice for the same must be taken by a resolution passed at a validly held Board meeting.

NOTICE OF MEETINGS

A meeting in order to be valid, must be convened by a notice issued by the proper authority. It means that the notice convening the meeting be properly drafted according to the Act and the rule, must be served on all members who are entitled to attend and vote at the meeting.

LENGTH OF NOTICE
For general meeting of any kind at least 21 days notice must be given to members. A shorter notice for Annual General Meeting will be valid, if all members entitle to vote give their consent. The member of day in each case shall be clear day, i.e. the days must be calculated excluding the day on which the notice is issued, a day or so for postal transit, and the day on which the meeting is to be held.

CONTENCE OF NOTICE
Every notice of meeting of a company must specify the place and the day and hour of the meeting, and shall contain a statement of the business to be transacted thereat.

PLACE OF MEETING:

Every annual general meeting of a company must be held either at the registered office of the company or at some other place within the same city.

DAY OF MEETING:

Every annual general meeting of a company must be held on a day that is not a public holiday TIME OF THE MEETING Every annual general meeting shall be called for a time during the business hours of the company.

QUORUM
Quorum is the minimum number of members who must be present at a meeting as required by the rules. Any business transacted at a meeting without a quorum is invalid. The main purpose of having a quorum is to avoid a small minority of team members taking decisions which may be unacceptable to the vast majority of members

6.There are two kinds of resolutions which can be passed at members meetings. They are i) Ordinary ii) Special resolutions all mattes which are not required by the companies act or the articles to be done by a special resolution are done by ordinary resolutions. Also, the companies act,1956 requires certain matters of agenda to be passed by resolutions requiring special notice. Section 192 requires registration of certain resolutions passed at the meeting with the registrar of companies with in 30 days of the passing thereof.

The proceedings of the meeting are recorded and it is called minutes of the meeting It will be first drafted and corrected if any and finally it will be made final and the chairman of the meeting will sign
The minutes are a record of business transacted at meetings.

Application to Company Law Board for relief in cases of oppression.

397 (1) Any member of a company who complain that the affairs of the company are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member or members (including any one or more of themselves) may apply to the Company Law Board for an order under this section, provided such members have a right so to apply in virtue of section 399. (2) If, on any application under sub-section (1), the Company Law Board is of opinion (a) that the company's affairs are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member or members; and (b) that to wind up the company would unfairly prejudice such member or members, but that otherwise the facts would justify the making of a winding up order on the ground that it was just and equitable that the company should be wound up ; the Company Law Board may, with a view to bringing to an end the matters complained of, make such order as it thinks

398 - Application to Company Law Board for relief in cases of mismanagement.

(1) Any members of a company who complain (a) that the affairs of the company are being conducted in a manner prejudicial to public interest or in a manner prejudicial to the interests of the company ; or (b) that a material change (not being a change brought about by, or in the interests of, any creditors including debenture holders, or any class of shareholders, of the company) has taken place in the management or control of the company, whether by an alteration in its Board of directors or manager, or in the ownership of the company's shares, or if it has no share capital, in its membership, or in any other manner whatsoever, and that by reason of such change, it is likely that the affairs of the company will be conducted in a manner prejudicial to public interest or in a manner prejudicial to the interests of the company ; may apply to the Company Law Board for an order under this section, provided such members have a right so to apply in virtue of section 399.

(2) If, on any application under sub-section (1), the Company Law Board is of opinion that the affairs of the company are being conducted as aforesaid or that by reason of any material change as aforesaid in the management or control of the company, it is likely that the affairs of the company will be conducted as aforesaid, the Company Law Board may, with a view to bringing to an end or preventing the matters complained of or apprehended, make such order as it thinks fit.

399

Right to apply under sections 397 and 398.

(1) The following members of a company shall have the right to apply under section 397 or 398 :

(a)in the case of a company having a share capital, not less than one hundred members of the company
(b)(b) in the case of a company not having a share capital, not less than one-fifth of the total number of its members (c)(4) The Central Government may, if in its opinion circumstances exist which make it just and equitable so to do, authorise any member or members of the company to apply to the Company Law Board under section 397 or 398

(a) 402 - Powers of Company Law Board on application under section 397 or 398 a) the regulation of the conduct of the company's affairs in future ; (b) the purchase of the shares or interests of any members of the company by other members thereof or by the company ; (c) in the case of a purchase of its shares by the company as aforesaid, the consequent reduction of its share capital. (d) the termination, setting aside or modification of any agreement, howsoever arrived at, between the company on the one hand, and any of the following persons, on the other, namely (i) the managing director. (ii) any other director, (v) the manager,

(e) the termination, setting aside or modification of any agreement between the company and any person (f) the setting aside of any transfer, delivery of goods, payment, execution 403 - Interim order by Company Law Board. Pending the making by it of a final order under section 397 or 398, as the case may be, the Company Law Board may, on the application of any party to the proceeding, make any interim order which it thinks fit for regulating the conduct of the company's affairs, upon such terms and conditions as appear to it to be just and equitable.

416 - Contracts by agents of company in which company is undisclosed principal.

a) the contract shall, at the option of the company, be voidable as against the company ; and (b) the person who enters into the contract, or every officer of the company who is in default, as the case may be, shall be punishable with fine which may extend to two thousand rupees.

Winding up of company
Winding up of the company means the activities of the company coming to the end, or the process of putting an end to the companys life. It is a process by which the dissolution of the company takes place and the asset of the company will be distributed to the members and creditors, surplus if any is also distributed to the eligible members according to their rights.

MODES OF WINDING UP
WINDIND UP OF COMPANY

BY THE ORDE OF COURT

UNDER SUPERVISION OF COURT

VOLUNTARY WINDING UP

BY CREDITORS

BY MEMBERS

There are 3 modes of winding up

1. the Compulsory winding up by the order of court

2. Voluntary winding up

a. By members b. By creditors

3. winding up under the supervision of the court

Compulsory winding up by the order of the court

Sec 433 lays down the following grounds for this type of winding up by special resolution stating that the company be wound up by the order of the court if the company fails to deliver statutory reports to the registrar in holding the statutory meeting where the public company fails to commence the business within a year from the date of incorporation or suspends its business for a whole year the court may order for its winding up of the company where the number of members reduced below 7 in case of public co and 2 in case of private company when company ceased to be commercially solvent on just and equitable grounds

The court can order for compulsory winding up o any ground, which is warranted under th circumstances. The application may be filed into the court by an one of the following persons q petition by the company itself q petition by the creditors q petition by the contributors petition by the Registrar

CONSEQUENCES OF WINDING UP
The court will send immediately intimation to official liquidator The petitioner and the company with in 30 days has to file a certified copy of the court order. It acts as a notice of discharge of the all employees The power of the board is terminated and vests with O/L No suit can be filed against the company

VOLUNTARY WINDING UP

Winding up by the creditors or members without any intervention of the court is termed as voluntary winding up.

If the members of the company pass an ordinary resolution in the general body meeting on the completion of the period for which the company was started expired or if some event happens resulting in winding up of the company.

2. By passing special resolution in the general body to wind up voluntary for any reason.

There are two types Members voluntary winding up Creditors voluntary winding up

Members voluntary winding up

It requires the filing of a statutory declaration of the solvency by the majority of the director of the company with the registrar. The question of credit voluntary winding up will arise in a case where the company is not in a position to pay off of his liability in full. In such a case declaration of the solvency shall not be made and filed with the registrar.

If two directors of the company declare the solvency of the company and file with the registrar a statutory declaration of the solvency of the company verified by a affidavit to the effect they have enquired into the affairs of the company and that having done so they are of the opinion that the company has no debt or can discharge the debt in full and within 3 years as longest period. The declaration must contain the asset and liability of the company with auditors report. Notice of the appointment of liquidator should be given to the registrar

CREDITORS VOLUNTARY WINDING UP

The procedure in creditors voluntary winding up is based on the presumption the company is insolvent pprocedure 1. Meeting of the creditor is to be called A creditors meeting will be called for and the positions of the company and the creditors estimated claims list is placed in the meeting. 2. Notice to registrar is to be given A copy of the resolution passed must be filed with the registrar with in 10 days.

VOLUNTARY WINDING UP UNDER SUPERVISION OF THE COURT

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 should continue subject to the supervision of the court. This will take place under the following circumstances

3. Appointment of liquidator is to be made The creditors and the members may nominate a person to be The liquidator 1. Committee of Inspection may be appointed If the creditors want they may appoint a committee of inspection consisting of not more than 5 members. 2. Board powers to cease on appointment of the liquidator. The liquidator will take over and complete the liquidation process as per law

The resolution for winding up was obtained by fraud

The rules relating to winding up order are not being observed The liquidator is prejudiced or negligent in collecting assets When the company is wound up its name is struck off from the registrar