Question No 3:

Dissolution of Company by court:

Introduction: the dissolution which is not voluntary but made by court because of some actions
of the company.
Circumstances in which company may be wound up by court: there are some circumstances
where the company is wound up by the court;
Reference section: Such circumstances are given under section 301 of companies Act 2017.
1) Special resolution: it covered two situation;
a) Company is in loss: where company is in loss and the members of company
convene meeting where they decide through special resolution to wind up the
company.
What is special resolution: Special resolution is defined under companies Act as; a resolution
which is passed by a majority of not less than three- forth of such members of the company
entitled to vote as an person or by proxy.
b) Company delay the winding up: If the company belated or delay the winding up
of company after special resolution has passed then member can go to the court
for winding up.
2) In case of public company with share capital:
 If company failed to held statutory meeting
 If company delay to held statutory meeting
 If company does not deliver the statutory report to the registrar.
In these three situation, concerned authority can go to the court for winding up of the
company.
3) Two consecutive annual meeting: If company failed to hold two consecutive annual
meeting of company then register may go for winding up of company.
4) Default in financial statement or annual return: If company make default in filing its
financial statement or annual return with the registrar for two consecutive financial
years.
5) Number of member reduced: when number of members reduced in a company
Public company: in case of public company below three
Private company: in case of private company below two.
6) Not in position to pay debts: when company is not in position to pay debts;
 Creditor itself give notice to the court for winding up of company on the ground
that company is unable to pay debts.
 If it is proved to the satisfaction of court that the company is unable to pay
debts.
  If court execute company to pay debts of the creditors and the company is not
paying then creditors can go to the court for winding up.
7) Unlawful or fraudulent activities: if the company has been carrying on, unlawful or
fraudulent activities.
8) Oppressing minorities: conducting its business in a manner oppressive to the minority
members.
9) Prohibited by law: When company carry on business prohibited by any law for the time
being in force in Pakistan or restricted by any law rules or regulation for the time being
in force in Pakistan
10) Unable to maintain accounts: when the company is run and managed by persons who
fails to maintain proper and true accounts or commit fraud or misfeasance of
malfeasance.
11) Work against MOA: where company start working against the MOA or AOA or failed to
carry out the directions or decisions of commission.
12) If listed company: If company is listed company and remove listed from its name.
13) Commencement of business: If company does not commence its business within a year
from its incorporation or suspend its business for a whole year.
Who is contributories? At the time of winding up of company the share holders are called
contributories because now they will contribute according to their liabilities
Different from firm: Regarding liabilities firm is different form company. In case of firm partners
have unlimited liability while in company members have limited liability in proportion to their
shares in company.
Liabilities of contributories of present and past members:
This is given under section 294 of companies Act. According to which every present and past
member is liable to contribute to the assets of the company to an amount sufficient for
payment of its debts and liabilities and cost of winding up of company.
When past member is not liable:
1) If he ceased to be member: A past member shall not be liable to contribute if he
ceased to be member for one year or upward before the commencement of winding
up.
2) Liability contracted after he ceases to be member: A past member shall not be liable to
contribute in respect of any debts or liability of the company contracted after he ceases
to be member.
3) Present member able to satisfy: A person shall not be liable to contribute unless it
appears to the court that the present member are unable to satisfy the contributions
required to be made by them.
 4) In case of a company limited by shares: In case of a company limited by shares, no
contribution shall be required from any past or present member exceeding the amount
of unpaid on shares.
5) In case of company limited by Guarantee: in case of a company limited by Guarantee,
no contribution shall, be required from any past or present member exceeding the
amount undertaken.
Liability of directors whose liability is unlimited: Any director past or present whose liability in
limited company is unlimited under Companies act will contribute more in addition to the
contribution as an ordinary member.

 A past member shall not be liable to make such further contribution if he ceases to hold
officer for a year or upward
 If there is any contract done by company after he ceases to be director of that
company.
Official liquidator: Under section 315, for winding up of company official liquidator will be
appointed by the commission or by the court. Official liquidator will ne the one from directors
of company. Creditors may appoint liquidator for winding up in order to secure their interest.
Investigation by SECP: In case of any fraudulent activity, misfeasance or breach of trust the
case will not go the court directly but it will be handled by the SECP where the case will be
investigated properly and when commission find out that the company is so involved then
under section 268 of companies act petition for winding up of company will be filed in court.
Conclusion: Dissolution of company means winding up of business. There are many ways of
winding up of company like dissolution by court in which court order the company for
dissolution another one is voluntary dissolution where company itself voluntarily Go for
winding up and third one is winding up under supervision of court where the winding up of
company is supervised by the court for check and balance and to avoid misuse of authority.