Winding up of Company

Business & Corporate Law By: Naveed Ahmad Mughal

Meanings of Winding Up
Company is an artificial legal person and it cannot die a natural death like a human being. Company is created by the process of law, it can only be destroyed by the process of law. To put an end to the life of a company, anyone of below mentioned legal processes
Through a scheme of reconstruction and amalgamation Through the removal of its name from the register of companies by the registrar; or Through the WINDING UP process.

Winding up is a method of putting an end to the life of a company. When the affairs of the company are completely wound up, the legal status comes to an end. This is called dissolution. When the affairs of a company are completely wound up, there is no purpose in keeping it alive. It shall be dissolved. An administrator, called a liquidator, is appointed and he takes control of the company, collects its assets, pays its debts and finally distributes any surplus among the members in accordance with their rights. Company may be dissolved without being wound up. In other words, there can be dissolution without winding up which happen in the case of amalgamation. The transferor company is dissolved without being wound up.

Winding Up
Modes of Winding Up
by the Court; or voluntary; or subject to the supervision of the Court.

Winding Up By Court
Company may be wound up by court;
if the Co has, by special resolution, resolved that the Co be wound up by the Court; if default is made in delivering the statutory report to the registrar or in holding the statutory meeting or any two consecutive annual general meetings; 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 if the company is unable to pay its debts; if, being a listed company, it ceases to be such company; if in the opinion of the Court it is just and equitable that the Co should be wound up; if a company ceases to have a member. if the company is Involved in unlawful or fraudulent activities; or carrying on business not authorised by MOA conducting its business in a manner oppressive to any of its members or persons concerned with the formation or promotion of the Co or the minority shareholders (20% or more) run and managed by persons who fail to maintain proper and true accounts, or commit fraud, misfeasance or malfeasance in relation to the company; or managed by persons who refuse to act according to the MOA, AOA, Ordinance or fail to carry out the directions or decisions of the Court or the registrar or the Commission

Winding Up By Court
Inability to pay Debt;
A company shall be deemed to be unable to pay its debts if a creditor, having a debt exceeding 1 % of paid-up capital or Rs 50,000, whichever is less, has served a demand for payment by registered post or otherwise at registered office and the company has for thirty days thereafter neglected to pay the sum, or to secure or compound for it to the reasonable satisfaction of the creditor; or if execution or other process issued on a decree or order of any Court or any other competent authority in favour of a creditor of the company is returned unsatisfied in whole or in part; or if it is proved to the satisfaction of the Court that the company is unable to pay its debts, and, in determining whether a company is unable to pay its debts, the Court shall take into account the contingent and prospective liabilities of the company. The demand for payment referred deemed to have been duly given under the hand of the creditor if it is signed by an agent or legal adviser duly authorised on his behalf, or in the case of a firm if it is signed by such agent or legal adviser or by any member of the firm on behalf of the firm.

Who can apply for Winding Up;

The company, any creditor or creditors, any contributory or contributories, all or any of the aforesaid parties, together or separately, the registrar, the Commission or a person authorised by the Commission in that behalf. A contributory is entitled to present a petition only if the number of members is reduced or the shares in respect of which he is a contributory are registered in his name or for at least six months during the eighteen months before the commencement of the winding up, or have transmitted on him through the death of a former holder; The registrar shall not be entitled to present a petition unless the prior approval of the Commission has been obtained and the company has been heard; SECP or a person authorized is not entitled unless an investigation has proved that the company is involved in unlawful or fraudulent activities; carrying on business not authorised by MOA, conducting its business in a manner oppressive to any of its members or minority holders (20% or more) ; or management has been guilty of fraud, misfeasance or other misconduct towards the company or towards any to its members. Petition not be presented unless the Co is being heard. contingent or prospective creditors petition shall not be heard until security for costs has been given as the Court thinks fit and until a prima facie case for winding up has been established to the satisfaction of the Court; Petition for winding up a company by the company shall not be heard by the Court until the company has furnished with its petition, in the prescribed manner, the particulars of its assets and liabilities and business operations and the suits or proceedings pending against it.

Procedure of Winding Up By Court

Application and hearing by court as per hearing procedure mentioned in section 9 The court may appoint a provisional manager for the administration who have the same qualification of official liquidator and have same powers unless otherwise mentioned by court. On winding up orders, he would cease to hold office or elevated as liquidator.

Order of the Court other than Winding Up Orders;

The court may accept or dismiss the petition with or without cost, adjourn the hearing conditionally or unconditionally, make any interim order or any other order it deems fit Where the petition is made on the ground that it is just and equitable to wind up, court may refuse to make winding up order, if it is of opinion that some other remedy is available to the petitioners and they are acting unreasonably. Where the petition is made on the ground of default in delivering the statutory report or in holding the statutory meeting or any two consecutive annual general meetings, the Court may, instead of making a winding up order, direct that the statutory report shall be delivered or that a meeting shall be held, and order that costs to be paid by any persons who, in the opinion of the Court, are responsible for the default. If, on hearing a petition, although the facts would justify the making of a winding up order, the Court thinks that such order would unfairly harm the members or the creditors, it may make order as it thinks fit in the circumstances for regulating the Co and to bring to an end the matters complained of, including an order for a change in the management of the company

Procedure of Winding Up By Court

Winding Up Order of the Court; Where the Court makes an order for the winding up, it shall send intimation thereof to be sent to the official liquidator appointed by it and to the registrar. The petitioner and the Co shall file a certified copy of the order with the registrar within 15 days from the date of order. If default is made, the petitioner or the company and every knowing officer of the company fined up to Rs 100 per day of default. The registrar shall forthwith make a minute thereof in his books relating to the company, and shall simultaneously notify in the official Gazette that such an order has been made. Such order shall be deemed to be notice of discharge to the servants of the company, except when the business of the company is continued. An order shall operate in favour of all the creditors and of all contributories of the company as if made on the joint petition of a creditor and of a contributory.

Procedure of Winding Up By Court

Stay of Suits upon Winding Up;
On application of the company itself or of any its creditors or contributories, the Court may restrain further proceedings in any suit or proceeding against the Co, upon such terms as the Court thinks fit, at any time before making an order for its winding up. When a winding up order has been made or a provisional manager has been appointed, no suit or other legal proceeding to be proceeded with or commenced against the company except by leave of the Court, and subject to such terms as the Court may impose. Court have jurisdiction to entertain, or dispose of, any suit or proceeding by or against the Co. Any suit or proceeding by or against pending in any Court other than that in which the winding up of the company is proceeding may be transferred to and disposed of by the Court.

Power of Court to stay winding up

On application of any creditor, contributory, the registrar, the Commission or a person authorised by it, and on proof to the satisfaction of the Court that all proceedings in relation to the winding up ought to be stayed, withdrawn, cancelled or revoked, the Court may make an order accordingly at any time within three years of winding up order. Before order, court may require the official liquidator to furnish a report with respect to any facts or matters which are in his opinion relevant to the application. A copy of every order to be forwarded by the Court to the registrar, who shall make a minute of the order in his books relating to the company.

Official Liquidators
Appointment of official liquidator.
The Court shall maintain, from amongst persons recommended by the Commission, a panel of persons from whom it shall appoint a provisional manager or official liquidator. The person appointed as official liquidator shall inform the Court about his inability to act as such, within three days of the communication of the order otherwise start performing the duties and functions of official liquidator till the conclusion of winding up proceedings: No person shall be appointed as liquidator of more than three companies at one point of time. If more persons than one are appointed the Court shall declare whether any act is to be done by all or any one or more of such persons. The Court may determine whether any, and what, security is to be given by any official liquidator on his appointment. Any vacancy in the office of an official liquidator shall be filled up by the Court by the appointment of another person on the panel. The Court may appoint a person (other than the official receiver) whose name does not appear on the panel after notice to the registrar, if court considers necessary to do so for reasons to be recorded, or on the application of creditors to whom amounts not less than 60% of the issued share-capital of the company being wound up are due. An official liquidator shall be described by the name of the official liquidator of the particular company in respect of which he acts, and not by his individual name.

Official Liquidators
Resignation, Removal, filling up vacancies of official liquidator.
An official liquidator shall not resign or quit his office before conclusion of the winding up proceedings except for reasons of personal disability to the satisfaction of the Court but may be removed at any time by the Court for reasons to be recorded. Any vacancy in the office of an official liquidator shall be filled up by the Court by the appointment of another person from the panel and, the outgoing official liquidator shall, unless the Court directs otherwise, continue to act until appointed person takes charge

Remuneration of official liquidator.

An official liquidator is not a salaried officer of Government or of the Court, and entitled to remuneration fixed by the Court in a percentage of the amount realised by him by disposal of assets or otherwise Different percentage rates may be fixed for different types of assets and items. Can not be enhanced subsequently but may be reduced by the Court at any time. In addition to the remuneration fixed, the Court may permit payment of a monthly allowance for meeting the expenses of the winding up for a period up to twelve months If the official liquidator resigns, removed or ceases to hold office before conclusion he shall not be entitled to any remuneration and has to refund the remuneration already received. No remuneration shall be payable to official liquidator who fails to complete the winding up proceedings within the prescribed period.

Powers of Official Liquidators

Powers with sanction of the Court or of the Inspection committee
To institute or defend any suit, action, prosecution or other legal proceeding, civil or criminal, in the name and on behalf of the company; To carry on the business of the Co so far as may be necessary for the beneficial winding up To pay any classes of creditors in full or make any compromise or arrangement with creditors To compromise all calls and liabilities to calls, debts and liabilities, all claims, between the company and a contributory , debtor or person apprehending liability to the company, and all questions in any way relating to or affecting the assets or the winding up of the company, To sell the movable and immovable property by public auction or private contract, with power to transfer the whole thereof to any person or company or to sell the same in parcels.

Powers of Official Liquidators

Powers without sanction of the Court or of the Inspection committee
To do all acts and to execute all deeds, receipts and other documents, and to use company seal; To prove and claim in the bankruptcy, insolvency of any contributory for any balance against his estate, and to receive dividends in the bankruptcy, insolvency in respect of that balance To draw, accept, make and endorse any negotiable instrument in the name and behalf of Co to raise on the security of the assets of the company any money requisite; To take out in his official name letters of administration to any deceased contributory, and to do in his official name any other act necessary for obtaining payment of any money due from a contributory or his estate and in all such cases the money due shall, be deemed to be due to the liquidator himself; To appoint an agent to do any business which the liquidator is unable to do himself ; and To do all such other acts and things as may be necessary for winding up the affairs of the company and distributing its assets. To inspect any record related to company without paying any fee.

Committee of inspection
The liquidator call separate meetings of the creditors and contributories within thirty days to determine the need for application to the Court for the appointment of a committee of inspection to act with the liquidator, and composition of the committee if appointed: Where the winding up order has been made on the ground that the company is unable to pay its debts, it is not be necessary for the liquidator to call meeting of the contributories. Constitution and proceedings of committee of inspection.
A committee consist of creditors and contributories or persons having general power of attorney on their behalf in agreed proportions as may In case of difference, the Court may determine the composition: In case of inability to pay debt basis, the committee shall consist of creditors or persons holding general powers of attorney from creditors. The committee shall meet at such times as it may from time to time appoint, and, failing such appointment, at least once a month, and the liquidator or any member of the committee may also call a meeting of the committee as and when he thinks necessary. The committee may act by a majority of its members present at a meeting but shall not act unless a majority of the members of the committee are present.

Committee of inspection
Resignation Removal and Vacancy.
A member of the committee may resign by notice in writing delivered to the liquidator. If a member becomes bankrupt or compounds or arranges with his creditors or is absent from five consecutive meetings of the committee without leave, his office shall become vacant. A member of the committee may be removed by an ordinary resolution at a respective meeting of creditors or contributories, of which seven days notice is given, stating the object. On a vacancy in the committee the official liquidator shall forthwith summon a meeting of creditors or of contributories, as the case may require, to fill the vacancy, and the meeting may, by resolution, reappoint the same or appoint another creditor or contributory to fill the vacancy: Provided that, if the official liquidator, having regard to the position in the winding up, is of the opinion that it is unnecessary for the vacancy to be filled, he may apply to the Court and the Court may make an order that the vacancy shall not be filled, or shall not be filled except in such circumstances as may be specified in the order. The continuing members of the committee, if not less than two, may act notwithstanding any vacancy in the committee.

Powers of the Court

The Court may, at any time after making a winding up order, Settlement of list of contributories and application of assets.
The Court shall settle a list of contributories, after rectifying the register of members in all cases where rectification is required. It may Cause the assets of the company to be collected and applied in discharge of its liabilities:

Power to require delivery of property. Require any contributory, trustee, receiver, banker, agent, officer or employee whether present or past, or auditor to pay, deliver, convey, surrender or transfer any money, property or books and papers to the official liquidator.

Power to order payment of debts by contributory

Make an order on any contributory to pay any money due from him or from the estate of the person whom he represents, exclusive of any money payable by him by virtue of any call.

Power of Court to make calls.

Either before or after ascertainment of the sufficiency of the assets, make calls on and order payment thereof by all or any of the contributories to the extent of their liability, for payment of any debts and liabilities, and the costs, charges and expenses of winding up, and for the adjustment of the rights of the contributories among themselves.

Power to exclude creditors not proving in time.

The Court may fix a time or times within which creditors are to prove their debts or claims, or to be excluded from the benefit of any distribution made before those debts are proved.

Powers of the Court

Power to order payment into bank.
The Court may order any contributory, purchaser or other person from whom any money is due to pay into the account of the official liquidator in a scheduled bank instead of to the official liquidator, and inform the official liquidator about within three days.

Adjustment of rights of contributories. The Court shall adjust the rights of the contributories among themselves, and distribute any surplus among the persons entitled thereto.

Power to summon persons suspected of having property of company.

The Court may, summon any officer or person known or suspected to have possession of any property or books or papers, or indebted to the company, or any person whom the Court deems capable of giving information concerning the promotion, formation, trade, dealings, books or papers, affairs or property of the company.

Power to order public examination of promoters, directors, etc.

On the report of official liquidator, the Court stating that in his opinion a fraud or other actionable irregularity has been committed in the promotion or formation or by any director or other officer since its formation, the Court may, publicly examine the involved persons.

Power to arrest absconding contributory.

On proof for believing that a contributory is about to quit Pakistan or otherwise to abscond, or to remove or conceal any of his property, for the purpose of evading payment of calls or of avoiding examination may cause the contributory to be arrested and his property to be seized,

Events after Winding Up

Distribution by official liquidator.
The official liquidator shall, distribute funds sufficient to distribute among the creditors or contributories after providing for expenses of the winding up or for other preferential payments within thirty days of the coming into his hands. Provided that the portion of the funds required for meeting any claim against the company which subject matter of adjudication or assessment shall not be distributed till the claim is finally settled: and this fund shall be invested by the official liquidator in Khas Deposit Certificates and the same shall be deposited by him with the Court and the distribution thereof shall be made by him after the pending claims are settled.

Dissolution of company.
When the affairs of a company have been completely wound up, or when the Court is of the opinion that the official liquidator cannot proceed with the winding up of the company for want of funds and assets or any other reason, and it is just and reasonable in the circumstances of the case that an order of dissolution of the company be made, the Court shall make an order that the company be dissolved from the date of the order, and the company shall be dissolved accordingly: Such dissolution of the company shall not extinguish and right of, or debt due to, the company against or from any person. A copy of the order shall be forwarded by the official liquidator to the registrar, within 15 days of orders, who shall make in his books a minute of the dissolution of the company. In default liquidator liable to a fine up to Rs 100 per day of default.

Voluntary Winding Up
Circumstances in which company may be wound up voluntarily.
when the period (if any) fixed for the duration of the company by the articles expires, on the occurrence of the event (if any) on which AOA provide that the company is to be dissolved The company in general meeting has passed a resolution requiring to be wound up voluntarily; The company resolves by special resolution that the company be wound up voluntarily;

Commencement of voluntary winding up.

Deemed to commence at the time of the passing of the resolution for voluntary winding up

Effect of voluntary winding up on status of company.

From the commencement of the winding up, cease to carry on its business, except so far as may be required for the beneficial winding up thereof: but the corporate state and corporate powers of the company shall continue until it is dissolved.

Notice of resolution to wind up voluntarily.

Notice of any resolution for voluntary winding up shall be given within ten days of the passing resolution by advertisement in a newspaper circulating in the Province of registered office. In the case of a listed company, such notice shall also be published at least in one issue of a daily newspaper of English and Urdu language having circulation in the Province of stock exchange. A copy thereof shall be sent to the registrar immediately thereafter. In default , Co and every knowing officer liable to a fine up to Rs 100 per day of default; In Voluntary Winding Up, a liquidator shall be deemed to be an officer of the company.

Members Voluntary Winding Up

Declaration of Solvency Passing special resolution in general meeting Appointment of liquidator by members in general meeting Dissolution and final meeting Declaration of Solvency
Directors, or in case of more than three directors, the majority of the directors, including the chief executive, at a meeting of the board of directors make a declaration verified by an affidavit that the company has no debts, or that it will be able to pay all its debts in full within such period not exceeding twelve months from the commencement of the winding up, as may be specified in the declaration. Declaration to be made within the five weeks immediately preceding the date of passing of the winding up resolution and is delivered to the registrar for registration before that date To be accompanied by a copy of the auditors report and Financial Statements prepared, for the period from the date of last such account to the latest practicable date immediately before the making of the declaration . Any director making a declaration without having reasonable grounds shall be punishable with imprisonment for six months, or with fine up to 10,000 rupees, or with both. If the company is wound but its debts are not paid within the period specified it shall be presumed, until proved, that the director did not have reasonable grounds for his opinion.

Members Voluntary Winding Up

Appointment, Remuneration and filling Vacancy of liquidators.
In general meeting appoint one or more liquidators, who give written consent in advance, All the powers of the directors, chief executive and other officers shall cease, except for the purpose of giving notice of resolution to wind up and appointment of liquidator and filing of consent of liquidator or as the company in general meeting or the liquidator sanctions the continuance thereof. The liquidator or liquidators entitled to remuneration by way of percentage of the amount realized by disposal of assets or otherwise, as the company in general meeting may fix Provided that different percentage rates may be fixed for different types of assets and items. In addition to the remuneration fixed, the company in general meeting may authorize payment of a monthly allowance for meeting the expenses of the winding up for a period up to twelve months If the official liquidator resigns, removed or ceases to hold office before conclusion he shall not be entitled to any remuneration and has to refund the remuneration already received. The remuneration fixed not to be enhanced subsequently but may be reduced by the Court any time. No remuneration if fails to complete the winding up proceedings within the prescribed period. Shall not resign or quit his office before conclusion of the winding up except for personal disability to the satisfaction of the Court and may also be removed by the Court for reasons to be recorded. If a vacancy occurs by death, resignation or otherwise, it may be filled the company in general meeting, subject to any arrangement with its creditors. General meeting to be convened by the outgoing liquidator before his cession except the case of death, or by the continuing liquidator, and failing that by any contributory, or by the Court on the application registrar or any person interested.

Members Voluntary Winding Up

Creditors' meeting in case of insolvency.
If liquidator at any time thinks that the company will not be able to pay its debts in full within the period stated in the declaration or that period has expired without the debts having been paid in full, he will call a meeting of the creditors and present a statement of the assets and liabilities of the company and such other particulars as may be prescribed in the meeting. In such case winding up will be converted into creditors voluntary winding up A return of convening the creditors meeting with a copy of the notice, a statement of assets and liabilities and the minutes of the meeting to registrar within ten days of the date of the meeting. In default, to liquidator fine up to Rs5,000 and a further fine up to Rs100 per day on continuation.

General meeting at the end of each year.

If winding up take more than one year, the liquidator call a general meeting at the end of year from the date of the winding up and, if the proceedings are not concluded during the first year and within 30 days of extended period; Liquidator will present an audited account of his receipts and payments together with a prescribed statement of the proceedings, position of the liquidation, reasons for the delay, steps taken and being taken to expedite it and the time required for completion. A copy of the account and statement referred together with the auditor's report and notice of the meeting at least ten days before the meeting to be forward by post to every contributory A return of convening of each general meeting together with a copy of the notice, account and statement and the minutes of the meeting to be filed to registrar within ten days of meeting date

Members Voluntary Winding Up

Final meeting and dissolution.
As soon as the affairs of the company are fully wound up, the liquidator shall Make a report and account of the winding up, showing how the winding up has been conducted and the property of the company has been disposed of and other particulars as prescribed Call a GM for the purpose of laying the report and account before and giving any explanation The account to be audited and a copy together with a copy of the auditor's report and notice of meeting to be sent by post to each contributory of the company at least ten days before the meeting The notice of the meeting specifying the time, place and object of the meeting to be published at least ten days before the date of the meeting in the manner specified. Within one week after the meeting, the liquidator send a copy of his report and account to the registrar, and make a return to him of the holding of the meeting with the minutes of the meeting. If a quorum is not present at the meeting, the liquidator make a return that the meeting was duly called and no quorum was present, in lieu of mentioned return. The registrar, on receiving the report and account and the return shall register them, after scrutiny On the expiration of three months from such registration, the Co shall be deemed to be dissolved: Provided that, if on his scrutiny the registrar found some irregularity, he may take action accordingly Court, may on the application of the liquidator or of any interested person make a deferring order and it is the duty of the concerned person , to deliver to the registrar a certified copy of the order for registration within fourteen days of the order, and, otherwise Rs 100 fine per day of default. In default, to liquidator fine up to Rs5,000 and a further fine up to Rs100 per day on continuation.

Creditors Voluntary Winding Up

Calling the creditors as well as members meetings Passing special resolution in general meeting Appointment of liquidator by members and creditors in their respective meetings Appointment of Committee of Inspection Dissolution and final meeting

Meeting of Creditors.
Co call a meeting of the creditors on the day, or the next day, on which general meeting for voluntary winding up is to be proposed, and the notices of the said meetings to be sent by post simultaneously. Notice of any resolution for winding within ten days of the passing by advertisement in a newspaper circulating in the Province of registered office and in the case of a listed company, in one issue of a daily newspaper of English and Urdu language having circulation in the Province of stock exchange. The directors and chief executive present a full statement of the position of the company's affairs and balance sheet together with a list of the creditors with estimated amount of claims to creditors Directors will appoint one of their numbers to preside at the meeting which will be binding on him. If GM for voluntary winding up is adjourned and the resolution is passed at an adjourned meeting, any resolution passed at creditors meeting have effect as passed after the WU resolution meeting. If default is made by the directors and chief executive and appointed director, Co and Every director and Chief Executive fined up to Rs 5000 & up to Rs 100/day if continue If default is made by Co, Co and every officer same penalty. Notice of resolution passed by creditors to the registrar by Co, along with the consent of liquidator within ten days of the passing. In default, Co and every default officer fined up to Rs 200/day

Creditors Voluntary Winding Up

Appointment and filling Vacancy of liquidators.
The creditors and Co nominate a person at their respective meetings who has given his written consent to act as liquidator. In case of different persons, the creditors nominated shall be liquidator. If no nomination by creditors, Co nominated shall be liquidator and if no nomination by Co, the creditors nominated shall be the liquidator. Any director, member or creditor may, within seven days after the date of nomination by the creditors, apply to the Court for an order either directing that the person nominated as liquidator by the company shall be liquidator instead of or jointly with the person nominated by the creditors or appointing some other person to be liquidator instead of the person appointed by the creditors. All the powers of the directors, chief executive and other officers shall cease, except for the purpose of giving notice of resolution to wind up and appointment of liquidator and filing of consent of liquidator or as the company in general meeting or the liquidator sanctions the continuance thereof. Shall not resign or quit his office before conclusion of the winding up except for personal disability to the satisfaction of the Court and may also be removed by the Court for reasons to be recorded. If a vacancy occurs by death, resignation or otherwise, it may be filled the creditors in general meeting, except the liquidator appointed by or on direction of court. General meeting to be convened by the out-going liquidator before his cession except the case of death, or by the continuing liquidator, and failing that by any contributory, or by the Court on the application registrar or any person interested.

Creditors Voluntary Winding Up

Remuneration of liquidators. The liquidator is entitled to remuneration by way of percentage of the amount realized by disposal of assets or otherwise, as the committee of inspection or in absence the creditors may fix Provided that different percentage rates may be fixed for different types of assets and items. In addition to the remuneration fixed, the company in general meeting may authorize payment of a monthly allowance for meeting the expenses of the winding up for a period up to twelve months The remuneration fixed not to be enhanced subsequently but may be reduced by the Court any time. If the official liquidator resigns, removed or ceases to hold office before conclusion he shall not be entitled to any remuneration and has to refund the remuneration already received. No remuneration if fails to complete the winding up proceedings within the prescribed period.

Creditors Voluntary Winding Up

Appointment of committee of inspection
The creditors at the meeting or at any subsequent meeting may, if they think fit, appoint a committee of inspection consisting of not more than five persons. If such a committee is appointed, the company may either at the meeting for voluntary winding up or at any subsequent general meeting, appoint such number of persons, not exceeding five, as they think fit to act as members of the committee: Provided that the creditors may resolve that all or any of the person so appointed by the company ought not to be member of the committee of inspection. If the creditors so resolve, the person mentioned in the resolution shall not unless the Court otherwise directs be qualified to act as a member of the committee. On any application, the Court may, appoint other persons to act as such members in place of the persons mentioned in the creditors resolution.

Creditors Voluntary Winding Up

Final meeting and dissolution.
As soon as the affairs of the company are fully wound up, the liquidator shall Make a report and account of the winding up, showing how the winding up has been conducted and the property of the company has been disposed of and other particulars as prescribed Call a GM of Co and a meeting of creditors for presenting the report and account and giving any explanation The account to be audited, a copy together with a copy of the auditor's report and notice of meeting to be sent by post to each contributory and creditor at least ten days before the meeting The notice of the meeting specifying the time, place and object of the meeting to be published at least ten days before the date of the meeting in the manner specified. Within one week after the meetings, the liquidator send a copy of his report and account to the registrar, and make a return to him of the holding of the meetings with the minutes of the meetings. If a quorum, which is two, is not present at the meeting, the liquidator make a return that the meeting was duly called and no quorum was present, in lieu of mentioned return. The registrar, on receiving the report and account and the return shall register them, after scrutiny On the expiration of three months from such registration, the Co shall be deemed to be dissolved: Provided that, if on his scrutiny the registrar found some irregularity, he may take action accordingly Court, may on the application of the liquidator or of any interested person make a deferring order and it is the duty of the concerned person , to deliver to the registrar a certified copy of the order for registration within fourteen days of the order, and, otherwise Rs 100 fine per day of default. In default, to liquidator fine up to Rs5,000 and a further fine up to Rs100 per day on continuation.

Winding Up under Supervision of Court

Power to order winding up subject to supervision.
When a company has passed a resolution for voluntary winding up, the Court may on its own or on application of any person entitled to apply to the Court for winding up, make a supervision order.

Effect of petition for winding up subject to supervision.

A petition for a voluntary winding up subject to the supervision of the Court shall be deemed to be a petition for winding up by the Court for purpose of any suit or legal proceedings.

Power to replace liquidator.

Where a supervision order is made, the Court shall by that order appoint an official liquidator who shall have the same powers, and obligations of company appointed auditor.

Effects of supervision order.

Where a supervision order is made, the liquidator may, subject to any court restriction, exercise all his powers, without the sanction or intervention of the Court, as if voluntary winding up. Order will be considered as winding up orders by court and give full authority to court. This order does not affect the duties and powers of liquidator assigned in voluntary winding up.

Appointment of voluntary liquidator as official liquidator in certain cases.

Where a supervision order has been made, and an order is afterwards made for winding up by the Court, the Court shall, either provisionally or permanently, and either with or without the addition of any other person, to be official liquidator in the winding up by the Court.