Voluntary winding up - CORPORATE LAWS

                                         

 Voluntary Winding UP( Under Companies Act, 1956 ) :

Circumstances in which company may be wound up voluntarily.

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484 (1) :  A company may be wound up voluntarily—

(a)    When the period, if any, fixed for the duration of the company by the articles has expired, or the event, if any, has occurred, on the occurrence of which the articles provide that the company is to be dissolved, and the company in general meeting passes a resolution requiring the company to be wound up voluntarily;

(b)   if the company passes a special resolution that the company be wound up voluntarily

(2): In this act, the expression ‘ a resolution for voluntary winding up” means a resolution passed under clause (a) or (b) of sub-section(1)

Publication of resolution to wind up voluntarily.

485. (1) When a company has passed a resolution for voluntary winding up, it shall, within fourteen days of the passing of the resolution, give notice of the resolution by advertisement  in the Official Gazette, and also in some newspaper circulating

 in the district where the registered office of the company is situate.

( 2 ) : If default is made in complying with sub-section (1) , the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five hundred rupees for every day during which the default continues.

For the purposes of this sub-section, a liquidator of the company shall be deemed to be an officer of the company.

Commencement of voluntary winding up:

486 :  A voluntary winding up shall be deemed to commence at the time when the resolution for voluntary winding up is passed.

Consequences of voluntary winding up

Effect of voluntary winding up on status of company

487:  In the case of a voluntary winding up, the company shall, 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 of such business.

Provided that the corporate state and corporate powers of the company shall continue until it is dissolved.

DECLARATION OF SOLVENCY

Declaration of solvency in case of proposal to wind up voluntarily:

488: (1) Where it is proposed to wind up a company voluntarily, its directors or case the company has more than two directors, the majority of the directors, may , at a meeting of the Board, make a declaration verified by an affidavit, to the effect that they have made a full inquiry into the affairs of the company, and that, having done so, they have formed the opinion that the company   has no debts, or that it will be able to pay its debts in full winding up such period not exceeding three years from the commencement of the winding up as may be specified in the declaration.

(2) A declaration made as aforesaid shall have no effect for the purposes of the act, unless:-

(a)    it is made within the five weeks immediately proceeding the date of the passing of the resolution for winding up the company and is delivered to the Registrar  for registration before that date; and

(b)    it is accompanied by a copy of the report of the auditors of the company

( prepared, as far as circumstances admit, in accordance with the provisions of this act) on the profit and loss account of the company for the period commencing from the date up to which the last such account was prepared and ending with the latest practicable date immediately before the making of the declaration and the balance sheet of the company made out as on the last-mentioned date and also embodies a statement of the company’s assets and liabilities as at that date )

(3) Any director of a company making a declaration under this section without having reasonable grounds for the opinion that the company will be able to pay its debts in full within the period specified in the declaration, shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to fifty thousand rupees, or with both.

(4) If the company is wound up in pursuance of a resolution passed within the period of five weeks after the making of the declaration, but its debts are not paid or provided for in full within the period specified in the declaration, it shall be presumed, until the contrary is shown, that the director did not have reasonable grounds for his opinion.

(5) A winding up in the case of which a declaration has been made and delivered in accordance with this section is in this act referred to as “ a members’ voluntary winding up “, and a winding up in the case of which a declaration has not been so made and delivered is in this act referred to as “ a creditors’ voluntary winding up ‘.

                Provisions applicable to a members’ voluntary winding up

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Provisions applicable to a members’ voluntary winding up

489 :  The provisions contained in section 490 to 498, both inclusive, shall subject to the provisions of section 498, apply in relation to a members’ voluntary winding up.

 Power of company to appoint and fix remuneration of liquidators.

490 (1 ) The company in general meeting shall—

                

 ( a ) appoint one or more liquidators for the purpose of winding up the affairs and distributing the assets of the company; and

( b) fix the remuneration, if any, to be paid to the liquidator or liquidators.

(2) Any remuneration so fixed shall not be increased in any circumstances whatever, whether with or without the sanction of the Tribunal.

(3) Before the remuneration of the liquidator or liquidators is fixed as aforesaid, the liquidator, or any of the liquidators, as the case may be , shall not take charge of his office.

Board’s powers to cease on appointment of liquidator

491:  On the appointment of a liquidator, all the powers of the Board of Directors be any of these, shall cease, except for the purpose of giving notice of such appointment to the registrar in pursuance of section 493 or in so far as the company in general meting or the liquidator may sanction the continuance thereof.

Power to fill vacancy in office of liquidator

492 (1): If a vacancy occurs by death, resignation or otherwise in the office of any liquidator appointed by the company, the company in general meeting may, subject to any arrangement with its creditors, fill the vacancy.

(2) For that purpose a general meeting may be convened by any contributory, or by the continuing liquidator or liquidators, if any.

(3) the meeting shall be held in the manner provided by this act or by the articles, or in such other manner as the tribunal may, on application by any contributory or by the continuing liquidator or liquidators, determine.