Welcome to our presentation

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 Group Member’s

SN Name Batch ID
01 Md. Harun Or Rashid 12th 160114015
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Department of Law
Z. H. Sikder University of Science and Technology
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Winding Up of a Company

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Winding up

Winding up of a company represents the process

whereby its life is ended and its property
administrated for the benefit of its creditors and
members.

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 Characteristics
1. It is the termination of legal existence of a company.
2. It stops the business.
3. Through the termination of the company all the
assets of the company are collected.
4. Through liquidation company has to distribute the
assets between the creditor and shareholder.

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Modes of Winding Up

There are 3 modes of winding up:

1. By the court

2. Voluntary winding up

3. Subject to the supervision of the court

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Compulsory winding up by the Court

If the court order to wind up a company according

to the special resolution of shareholders or by the
application of creditors or contributors or by the
application of the registrar in case of failure of
doing certain formality by the company or for
some other logical reason, it is called compulsory
winding up by the court.

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• In this case all formalities are done under the
guidance of court.

• Government appoints a Government Liquidator

for all supervision.

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According to the section 241 of company act 1994,
the company may be wound up:

1. If the company has by special resolution

resolved that the company is wound up by
court.

2. If default is made in filing the statutory report

or in holding the statutory meeting.

3. If the company does not commence its business

within a year of from its incorporation or
suspends its business for a whole year.
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4. If the number of members is reduced in the case
of private company below 2 and for public
company below 7.

5. If the company is unable to pay its debts.

6. If the court is of opinion that it is just and

equitable that the company should be wound up.

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Voluntary Winding Up

The object of a voluntary winding up is that the

company and its creditors shall be left to settle
their affairs without coming to the court and to
provide them with every facility for applying the
court.

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Types of Voluntary Winding Up

There are 2 types of voluntary winding up:

1. Member’s voluntary winding up

2. Creditor’s voluntary winding up

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 Member’s voluntary winding up
If a company which declared its capacity of paying
of its debt, take the decision to wind up the
company under its control it in member’s voluntary
winding up.

• Section 290 (I)

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 Creditor’s voluntary winding up
A Creditors’ Voluntary Liquidation is a process
which enables Directors to formally close an
insolvent company.

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 A company may be wound up voluntarily
1. When the period (if any) the duration of the
company expires by the articles or if any
occurrence occurs for which articles provide the
winding up of the company or in general meeting
that has passed a resolution to winding up the
company.

2. If the company resolves by special resolution that

the company be wound up voluntarily.

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4. Sometime winding up occurs without
declaration of the capability of paying the debt
by the directors. These are called creditor’s
voluntary winding up.

5. The shareholders make the resolution, but the

creditors do the formalities.

6. If the company cannot continue its business for

its liabilities, then it is advised by the extra
ordinary resolution to wind up.

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Winding up subject to supervision of
Court

When a company has resolved to wind up

voluntarily the court may make an order that
winding up will be occur under supervision of
court and with such liberty to creditors or
contributors or others.

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Winding up subject to supervision of Court

1. If the formalities of winding up is not

fulfilled properly.
2. If the resolution is resolved by fraudulent.
3. If the court gets proof of unlawful
distribution of company’s assets.
4. If the court thinks it logical for any other
reason.

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Difference between Member’s and Creditor’s
Voluntary Win1ding up
Factors Member’s Creditor’s
Application It applies to solvent It applies to the
companies and a insolvent companies
declaration of and no declaration of
solvency can be solvency can be
made. made.
Creditor’s Not necessary to There must be a
meeting have. creditor’s meeting
immediately
following the
member’s meeting. 19
Difference between Member’s and Creditor’s
Voluntary Winding up
Factors Member’s Creditor’s

Appointmen By the members. By members and

t of creditors both; but if
liquidator they nominate different
persons, the creditor’s
nominee becomes
liquidator.
Committee There is none. There may be one.
of Inspector
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