LIQUIDATION OF JOINT

STOCK COMPANY
Lecture # 14
Winding up or Liquidation:

 Means end of the life of a company.

 It is the permanent closing down of its business.

 A company is the creature of law. It, therefore, cannot die a

natural death. The termination of its existence is affected by
law. Thus winding up of the company is a legal procedure in
which all the affairs of the company are wound up. Its assets
are sold out and claims of the creditors met out of sale
proceeds. The balance is than distributed among shareholders.
Modes of Winding up a company:

 There are 3 modes of winding up a company.

i. Winding up by Court.
ii. Voluntary winding up of a company.
i. Member voluntary winding up.
ii. Creditors voluntary winding up.
iii. Voluntary winding up subject to Supervision of
court.
1. Winding up by Court:

1. By special resolution:
 If the company itself, has passed a special resolution in the general meeting
to wound up its affairs. Special resolution means, resolution passed by
three-fourth (3/4) of the members present.
2. Default in delivering statuary report:
 If there is a default, in holding the statutory meeting or in delivering the
statutory report to the Registrar.
3. Delay in commencement of business:
 If the company fails to commence it's business within one year from the
date of it's incorporation, or suspends it's business for a whole year.
4. Members reduced below minimum:
 If the number of members, in a public company is reduced to less than
seven, and in case of private company less than two.
5. Failure to pay debt.
6. Ceases to be a listed company.
2. Voluntary winding up of a company:

1. Member Voluntary Winding up:

 In case of solvent companies capable of paying their liabilities in full.
1. Expiry of period.
2. By special resolution.
3. Declaration of solvency.
4. Appointment of liquidators.
5. Final meeting and dissolution.

2. Creditors Voluntary Winding up:

 Creditors' Voluntary Winding Up Possible in the case of insolvent
companies. Requires holding of meeting of creditors & they get the
opportunity to appoint liquidator .
3. Voluntary Winding up subject to supervision of
court:

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