ASSIGNMENT

ON
BUSINESS LAW
Course no: 108

Submitted To:
Professor Dr.Md.Shawquatul Meher
Department Of Marketing
University Of Chittagong
Submitted by:
1.Munimah Mahjabin ID.18304048
2.Sanjida Alam Dilhan ID.18304072
3.Md.Asadul Haque ID.18304126
4.Meer Riyashat ID.18304012
5.Turna Paul ID.18304061
6.MD. Shahidul Islam ID.18304122
Definition of Company:
The company is a form of business organization in which
the funds of a large number of investors are managed by
a few persons for the purpose of earning profits which
are shared by all the investors. It is registered according
to the law relating to companies. Section 3(1) of the
companies Act, 1956 states that a company means, "A
company formed and registered under this act or an
existing company. The common stock contributed is
denoted in money and is the capital of the company. The
person who contribute it or to whom it belongs are
members. The proportion of capital to which each
member is entitled is his share.

ORIGINS OF COMPANY AND COMPANY ACT 1994:

Companies Act 1994 (Act XVIII of 1994) governs company
law in Bangladesh. It received the assent of the President
of the People's Republic of Bangladesh on 11 September
1994. Before its enactment in 1994, company law was
governed by the Companies Act 1913 which was
amended in 1915, 1920, 1926, 1930, 1932, 1936, 1938,
1949 and 1969, 1973 and 1984.
The early history of company law of India was laid in the
British Companies Act 1844 on the basis of which the
Joint Stock Companies Act 1850, the first company law
for the sub-continent, was formulated. This act was
based on 'unlimited liability'. In 1857, the Joint Stock
Companies Act 1850 was amended with the provision of
unlimited liability was replaced by 'limited liability' and
the act was renamed as The Companies Act 1857. With
the expansion of trade and commerce in the sub-
continent, the Companies Act 1857 was amended in
1860, 1866, 1882, 1887, 1891, 1895, 1900 and 1908. The
Indian Companies Act 1913 was actually the amended
and reformed version of The English Companies Act
1908.

The Companies Act 1994 has eleven parts. Part-I contains

the preliminary aspects of the act including the short title
of the act, commencement and extent, definitions of
various terms. Part-II is concerned with formulation and
incorporation of companies, including bank companies,
and memorandum of association for various types of
companies, articles of association, general provision for
registration of memorandum and articles of association,
associations not for profit, and companies limited by
guarantee. Part-III mainly narrates the rules for share
capital, registration of unlimited company as limited, and
the limited liability of directors. This part states the rules
and procedures for distribution of share capital of
companies and the provisions for reduction of share
capital.

Part-V of the act provides details of the mode and

methods of winding up, liabilities of company directors,
owners of the shares and their successors, procedures
and options of winding up, ordinary and extraordinary
power of courts to be involved in the winding up process,
appointment of official liquidator and their powers and
duties, settlement of debts of companies and transfer
and distribution of assets and liabilities. Part-VI deals in
matters relating to the registered office/s of companies;
appointment of registrar/s by the government; their
powers and responsibilities, payment of registration fees
and submission of returns and documents to registrar by
the companies. Part-VII interprets the rules of application
of the act to companies formed and registered under
former Companies Acts. Part-VIII identifies and defines
the companies capable of being registered, the various
aspects required for registration and the power to
substitute memorandum and articles for deed of
settlement, etc.

ESSENTIAL ELEMENTS OF COMPANY:

The principal features of an incorporated company can be

summarized as follows:
1. Registration:
A company comes into existence only after registration
under the Companies Act. But a Statutory Corporation
is formed and commence business as notified or stated
in the Act and as passed in Legislature. In case of
partnership, registration is not compulsory.
2. Voluntary Association:
A company is an association of many persons on a
voluntary basis. Therefore a company is formed by the
choice and consent of the members.
 3.Legal Personality: A company is regarded by law as a
single person. It has a legal personality. This rule
applies even in the case of “One-man Company.”

4. Contractual Capacity:
A shareholder of a company, in its individual capacity,
cannot bind the company in any way. The shareholder of
a company can enter into contract with the company and
can be an employee of the company.

5. Management
A company is managed by the Board of Directors, whole
time Directors, Managing Directors or Manager. These
persons are selected in the manner provided by the Act
and the Articles of Association of the company. A
shareholder, as such, cannot participate in the
management.

6. Capital
A company must have a capital, otherwise it cannot
work.
7. Permanent Existence
The company has perpetual succession. The death or
insolvency of a shareholder does not affect its existence.
A company comes into end only when it is liquidated
according to provision of the Companies Act.
8. Registered Office
A company must have a registered office.
9. Common Seal
A company must have a Common Seal.
10. Limited Liability
The liabilities of shareholder of a company are usually
limited. The creditors of a company are not creditors of
individual shareholders and a decree obtained against a
company cannot be executed against any shareholders. It
can only be executed against the assets of the company.
11. Transferability
The shareholder of a company can transfer its share and
ordinarily the transferee becomes a member of the
company.

12. Statutory Obligations

A company is required to comply with various statutory
obligations regarding management, e.g., filing balance
sheets, maintaining proper account books and registers
etc.

13. Not a Citizen

A company is an artificial person, not a natural person.
Therefore a company is not a citizen, although it may
have a Domicile

14. Residence
A company has a residence (for taxation and other
purpose). A company does not posses any fundamental
rights.
15. No Fundamental Rights
Though a company has no fundamental rights, it can
challenge a law as void if the law happens to violate
fundamental rights of citizens. In order to succeed the
company must prove that the impugned law is
expropriator of a citizen’s property.

16. Social Objective

The present view as regard the legal nature of Company
Law is that the Company is a social institution having
duties and responsibilities toward the community, its
workers, the national economy and progress.

17. Centrally Administrated

The administration of company Law is entrusted to the
Central Government.
TYPES OF COMPANY:
There are different types of companies. Such as,

1. Private Company
2. Public Company
3. Statutory Company
4. Chartered Company
5. Registered Company
6. Unregistered Company
7. Unlimited Company
8. Non-profit Association

1. Private Company:

Private Limited (Pvt Ltd) companies have more than 2

and less than 50 members and their liability is limited or
unlimited depending on the type of the company it is.
Unlike Public Limited companies, here the transfer of
shares is limited to its members and the general public
cannot subscribe to its shares and debentures. Pvt Ltd
companies are exempted from many rules and
regulations which are applicable to Public Limited
companies, for example, the need to file a prospectus
with the Registrar, the need to hold the statutory general
meeting or maintain annual reports etc. Also, it can start
operations after receiving just the certificate of
incorporation, whereas a Public Limited company needs a
certificate of commencement as well. It is a great option
if you want the advantages of limited liability and yet
want greater control over your business and maintain its
privacy. This is the most popular type of company for
start-ups to be registered as.

2. Public Limited Company :

The legal existence of a Public Limited Company is

separate from its members (shareholders) and the
liability of its members is also limited. Its existence is thus
not affected by the retirement or death of its
shareholders. A minimum of 7 members is needed to
form a Public Limited company but there is no maximum
limit on this. The company collects its capital by the sale
of its shares to the shareholders. The shareholders of a
company do not have the right to participate in the day-
to-day management of the company, thus separating
ownership from management. All the major decisions of
the company are taken by the Board of Directors.

3. Statutory Company :

Statutory Companies are companies incorporated by

means of a special act passed by the central or state
legislature. They are mostly invested with compulsory
powers and are responsible to carry out some special
business of national importance. Some examples of
statutory companies are The Reserve Bank of India
(formed under RBI act, 1934), Life Insurance Corporation
of India (formed under LIC Act, 1956).

4. Chartered Company :

A chartered company is an association with investors or

shareholders and incorporated and granted, often
exclusive, rights by royal charter (or similar instrument of
government) for the purpose of trade, exploration, and
colonization.

5. Registered Or Incorporated Companies :

All the other companies which are incorporated under

the companies act passed by the government comes
under this head. These companies come under existence
only after they register themselves under the act and the
certificate of incorporation is passed by the Registrar of
companies. Google India Pvt Ltd is an example of
incorporated companies.

6. Unregistered Company :

In simple terms, an unregistered company is a business

that is not covered under the provisions of the
Companies Act 2006. Unregistered companies can be
sole traders, where there is a single owner, or
partnerships, where two or more people agree to
operate the business for profit.
The key difference between registered and unregistered
businesses is that registered companies have their own
legal identity, separate to that of the company directors,
while unregistered companies are simply an extension of
the business owners. The members (shareholders) of a
registered company also benefit from limited liability,
which means that they are only responsible for company
debts to the extent of the nominal value of their shares.
The owners of unregistered companies do not receive
this same level of protection, which means their personal
assets can be at risk.

7. Unlimited Company :

An unlimited company or private unlimited company is a

hybrid company incorporated with or without a share
capital and similar to its limited company counterpart,
but where the legal liability of the members or
shareholders is not limited: that is, its members or
shareholders have a joint, several and non-limited
obligation to meet any insufficiency in the assets of the
company to enable settlement of any outstanding
financial liability in the event of the company's formal
liquidation.

8. Non-profit Association :

A nonprofit association also known as a non-business

entity not-for-profit organization or nonprofit institution,
[3] is dedicated to furthering a particular social cause or
advocating for a shared point of view. In economic terms,
it is an organization that uses its surplus of the revenues
to further achieve its ultimate objective, rather than
distributing its income to the organization's shareholders,
leaders, or members. Nonprofits are tax exempt or
charitable, meaning they do not pay income tax on the
money that they receive for their organization. They can
operate in religious, scientific, research, or educational
settings.
How to convert a private limited company to
public limited company :
A private limited company may either automatically
become a public limited company or can be deliberately
converted into a public limited company :
Conversion of a Private limited Company into a Public
limited Company
Automatic conversion :
Automatic conversion of a private company into a public
company takes place by operation of law in the following
three cases:

(a) Conversion by default : Where a private company

makes a default in complying with the essential statutory
requirements as laid down infection 3(1)(iii) of the. Act
(i.e., if its membership exceeds fifty, it permits free
transfer of shares, or invites public to subscribe to its
shares or debentures), it becomes a public company
automatically. The Court, however, may relieve the
company from being treated as a public company, on
such terms and conditions as it thinks just and equitable,
if it is of opinion that the default was due to inadvertence
or accident or some other sufficient cause, on an
application of the company or any interested person .

(b) Where a private company becomes a ‘subsidiary’ of a

public company, (For the meaning of ‘subsidiary
company’, refer back in this chapter to the heading
“Holding Company and Subsidiary Company.”)

(c) Where a private company becomes a ‘deemed to be

public company’ by virtue of Section 43A. (For details of’
Section 43A, refer back in this chapter to the heading
“Deemed to be Public Companies.”)

It is to be noted that a private company which becomes a

public company automatically by virtue of the above
provisions need not comply with any legal formality
prescribed in the case of deliberate conversion. Again, in
spite of the conversion, such a company may retain the
characteristics of a private company i.e., it can have
restrictions as to transfer of shares, membership and
public subscription. It can continue to have only two
members and two directors.
Deliberate conversion
A private company may, at any time, pass a special
resolution deleting from its articles the- three
compulsory restrictions as to membership, transfer of
shares and public subscription, and then from the date of
alteration it becomes a public-company. Within 30 days
of passing the resolution referred to above, a copy of
special resolution, a copy of altered articles, together
with a copy of ‘prospectus’ or a ‘statement in lieu of
prospectus’ must be filed with the Registrar, The
‘prospectus’ filed must state the matters and set out the-
reports specified in ‘Schedule H” of the Act. In case the
company decides to file a ‘statement in lieu of
prospectus’, it must be in the “form” and contain
particulars set out in “Schedule -IV” to the Companies
Act (Sec. 44).

Upon becoming a public company, the company will have

to increase the number of its members to at least seven
and -that of its directors to at least three, if already their
number was fewer than the aforesaid statutory minimum
required in that connection for a public company. Further
the word ‘Private’ will be deleted from the name of the
company.

Procedure. First of all a Board meeting shall be convened

to finalize the plan of conversion and pass the necessary
resolution. The secretary is then instructed to prepare a
new set of Articles and to inform the members about the
place and date of the extra-ordinary general meeting,
both individually as well as through an announcement in
the newspapers. Separate notices with the text of the
resolutions to be passed at the meeting are sent by post
to all the members of the company. On the appointed
date general meeting will be held and the necessary
resolutions will be passed.

Finally, a copy of special Resolution, a copy of altered

articles, along with a copy of prospectus or statement in
lieu of prospectus shall be filed with the Registrar
together with the scheduled fees. The company becomes
a public company from the date of passing the special
resolution by the members to that effect at the extra-
ordinary general meeting.
accordance with the legal requirements if the existing
number is more than that, and (ii) add the word “private”
in its name. So far as the procedure of convening a public
company into a private company is concerned it will be
almost similar to that discussed under the preceding
heading.

It may be recalled that a private company which has

become a ‘deemed to be public company’ by virtue of
Section 43A also requires the approval of the Central
Government for becoming a pure private company again
[Sec. 43A (4)].

WINDING UP:
Winding up of a company is defined as the condition
when the life of the company is brought to an end. The
properties of the company are administered for the profit
of its members and its creditors.

Steps of Winding Up
The following steps are followed in the case of a company
winding up −
An administrator, usually denoted as a liquidator, is
appointed in the context of liquefaction or winding up of
a company.

The liquidator takes control over the company, assembles

its assets, pays debts of the company and finally
distributes any surplus amongst the members according
to their rights and liabilities.

The company has no assets or liabilities at the end of

liquefaction or winding up.

The dissolution of a company takes place when the assets

and liabilities of a company are completely wound up.

On the context of winding up, the name of the company

is stuck off from the list of companies and its identity as a
separate legal person is lost.
If a company is unable to pay its debts or the debts taken
by the company is worth more than the assets it owns
and no agreements have been made with the creditors,
then the company is considered insolvent and is
subjected to compulsory liquidation or compulsory
winding up.

If an insolvent owes money to a natural person, he may

ask the court of law to make a compulsory winding up
order against the company.

On the issuance of the order, the order is informed by the

court to the official receiver, who eventually becomes the
liquidator.

The official receiver informs the creditors and conducts

interviews with the directors of the company on the
context of the winding up.

If it is believed by the official receiver that the company

has enough assets to pay its creditors, then the official
receiver will seek for the appointment of an insolvency
practitioner as the liquidator.

The appointment of the liquidator is done either by

calling a creditors’ meeting for the creditors to elect a
liquidator by vote or by requesting the Secretary of the
State to appoint one.

If there are no assets left, then the official receiver will

become the liquidator.

A person must be owed a minimum amount of INR 750

without dispute before he can ask for a winding up.

Other business corporations or individuals can request

the order of winding up of a company.

Insolvency Service, an agent of the government, is an

investigating agency, which investigates the winding up of
a company.
The Insolvency Service investigates financial failure and
misconduct of individuals and companies.

The official receiver works for the Insolvency Service.

The official receiver finds out when and why an individual

became bankrupt and finds out the primary cause behind
the liquidation of a company.

The procedure of winding up differs according to the

registration status of the company, i.e., if the company is
registered or if it is an unregistered company.

If the winding up of a company is processed in the court

of law, the liquidator is termed as official liquidator.

The official liquidator acts through a recognized reporting

system under the supervision of the court.

Powers of a Liquidator
An administrator, usually denoted as a liquidator, is
appointed in the context of liquefaction or winding up of
a company. The liquidator takes control over the
company, assembles its assets, pays debts of the
company and finally distributes any surplus amongst the
members according to their rights and liabilities.

The following are the general powers of a liquidator −

Illustrating or defending any action, suit, prosecution or

any legal proceedings on behalf of the company

Carrying out the business of the company as far as it is

beneficial for the company

Paying the creditors

Making any compromise or arrangements with the

creditors
Compromising all the calls, debts and liabilities, which
may result in further debts on the company

Selling all the mobile and immobile assets of the

company by conducting public auctions or by private
contracts, with power to transfer the assets to a single
person or to various persons in parcels

Performing all the acts and deeds needed for the winding
up with receipts and documents using the company’s seal
and name

Drawing, accepting, making and endorsing any bill of

exchange or promissory note in the name and on behalf
of the company

Raising the security of the properties and money of the

company

Compulsory Winding Up
Compulsory winding up takes place when a creditor of an
insolvent company asks the court for a wind up. If the
company goes into liquidation, the court of law appoints
a liquidator for the liquidation.

The primary objective of the liquidator is to raise as much

funds as needed to pay the creditors.

The company will then be dissolved and its name will be

struck off from the list of companies in the registrar’s
office.

Any surplus money left will be distributed amongst the

shareholders of the company.

This legal process ends with the company’s name struck

off from the list of companies in the registrar’s office.

After the name is struck off, the company ceases to exist

anymore.
Winding up involves the following −

Every contract of the company, including individual

contracts are completed, transferred or ended. The
company is no more able to do business.

Any outstanding legal disputes are settled.

All the assets of the company are sold.

Money owed to the company, if any, is collected.

Funds raised are distributed to the creditors.

Surplus funds left after all the transactions are distributed

amongst shareholders.

Consequences of Winding Up
The most important consequences of the winding up of a
company are as follows −
As Regards the Company Itself
Winding up doesn’t take away the existence of the
company completely.
The company continues to exist as a corporate entity till
its dissolution.
All the ongoing business of the company is administered
by the liquidator during the phase of liquidation.
As Regards the Shareholders
Contributors − a new statutory liability comes into
existence.
Every transaction of share during the liquefaction done
without the approval of the liquidator is termed void.
As Regards the Creditors
The creditors cannot file a case against the company
except with the consent of the court.
If the creditors already have decrees, they cannot
proceed with the execution.
They must explain their claims and justify their claims to
the liquidator.
As Regards the Management
With the appointment of the liquidator, all the powers of
the directors, chief executives and other officers tend to
cease.

Only the powers to give notice of resolution and the

power of appointment of the liquidator upon winding up
of the company are given to the members.

As Regards the Disposition of the Company’s Property

All the dispositions of the company’s properties are void
if the dispositions are not approved by the court or the
liquidator.

Circumstances in which a Company May Be Wound Up

A company may be wound up by a tribunal where the
petition has been filed under the following circumstances
−

A special resolution is passed by the company that the

company shall be wound up by the tribunal.
Failure of the company in reporting a statutory report at
the registrar’s office.
Non-commencement of the company in business within
one year of incorporation.
Number of members has reduced below 7 for a public
company or 2 for a private company respectively.
The debts of the company are unpayable by the
company.
The tribunal is just equitable to wound up the company.
The company is unable to file its balance sheet or annual
return for five financial years consecutively.
The company has acted against the sovereignty and
integrity of the country.
Application of Winding Up
An application of winding up must be filed with the
petition of winding up by the following entities −

The company
Any creditor or creditors of the company
Any of the contributory company
Any person authorized by the central government
The state government or the central government
According to the procedures mentioned in section 439-
481 of the Companies Act, the tribunal will move on
upon the receipt of the petition.

Winding Up of the Company by Tribunal

When a resolution for the winding up of a company is
passed inside the company, the court may make an order
for the voluntary winding up to continue.

However, the court remains in supervision of the winding

up.

The freedom and liberty of the creditors, contributors or

others to apply to the court at such times is limited by
the court.

A petition for the winding up must be filed at the court

for the supervision of the court over the winding up.
The winding up of a company by the order of the court is
also regarded as a compulsory wind up.

Section 305 of the ordinances justifies the following

circumstances where the court may wind up the
company based upon a petition submitted to a court.

If the company decides by a special resolution that the

company should be wound up by the court.

If the company is found to be a defaulter in delivering

statutory reports at the registrar’s office or holding
statutory meetings or holding two annual general
meetings for two consecutive years.

If the company does not start its business for one year of
incorporation or its business in suspended for one year.

If the number of members is reduced below 2, 3 and 7

for private, public and listed company respectively.
If the company is found no more able to pay its debts.

If the company is −

Carrying out or complying unlawful and fraudulent

activities

Carrying out business activities not authorized by its

memorandum of association

Carrying out business in an oppressive manner towards

its members concerned with the promotion of the
company

Running and is managed by the hands of persons who

are in a default in maintaining proper accounts or are
involved in fraudulent and dishonest activities

Managed by persons who fail to work in sync with the

memorandum of association of the company or fail to
comply with the registrar and the court of law.
If the company, being a listed company, does not stand
out to act like one.

If the court’s opinion is to wind up the company or

Complete deadlock in the management of the company

Failure of company’s main objective

Recurring losses

Oppressive or aggressive policies of the majority of

shareholders

Incorporation of a company with intent to fraudulent or

illegal purpose

Public interest
If the company ceases to have a member.

Procedure for Winding Up of a Company

A special resolution must be passed in the company in
the context of winding up and the consent of 3/4th of its
members is required for the winding up to be carried out
by the court.

A list of the total assets must be prepared in order to

confirm that the company is no more able to pay its
debts.

A list of the creditors must be prepared.

In the context of any defaults in payments, the creditors

of a company are required to make a decision for filing a
petition in the court of law.

Advocates must be engaged to prepare and file the

petition.
Voluntary Winding Up
A company may be wound up voluntarily under the
following circumstances −

An ordinary resolution is passed in the general meeting

of the company on the context of winding up −

If the period pre-fixed by the articles of association of the

company has been expired.

In case of an event according to the articles of association

of the company, under which the company needs to be
dissolved.

If a special resolution is passed by the members of the

company for the voluntary liquidation of the company.

A minimum notice of 21 clear days must be given in order

to convene a general meeting.
However, with the consent of the members, a general
meeting can be convened with a shorter notice.

A voluntary winding up is commenced just after the

above mentioned resolution has been passed.

The notice for the beginning of the winding up of a

company must be made in an official gazette, i.e., by
applying to the registrar of companies within 14 days of
commencement of the liquidation.

Again, the notice of the winding up of the company must

be published in a newspaper in the place where the
registered office of the company is situated.

The company becomes unable to conduct any

commercial business activities after the commencement
of the winding up.
However, business can be conducted for the benefit of
the company’s winding up process, i.e., paying debts to
the company’s creditors, etc.

The corporate state and its corporate power continue to

remain in existence until the company is finally dissolved.

Further, there two kinds of voluntary winding up −

Members voluntary winding up

Creditors voluntary winding up
The rules for both kinds of winding up are the same.
The Companies Act however provides some specific
criteria for these two types of winding up.
Members’ Voluntary Winding Up
This type of winding up is carried out when the company
is solvent and is able to pay its liabilities totally. The
important aspects of members’ voluntary winding up are
as follows −
Declaration of Solvency
For the winding up of a company, it is needed for the
directors to conduct a meeting, where the majority of the
directors make a declaration approved by an affidavit
that they have made a full assessment of the company
and the company is able to pay all its debts within three
years of the winding up of the company.

It is necessary for such a declaration to be made at least

5 weeks before the resolution to become effective.

It should be necessarily delivered to the registrar’s office.

Appointment and Remuneration of Liquidators

The company, in a general meeting, must exercise the
following things &minsu;

Appointment of liquidators for the purpose of winding up

of the company as and when the company is about to be
wound up and for the distribution of the assets of the
company
Fixing an adequate remuneration to be paid to the
liquidators. This fixed remuneration cannot be changed in
any circumstances. The liquidator does not take charge of
his office unless the remuneration is fixed.

Board’s Power to Cease

During the course of liquidation, all the powers of the
directors and managers are ceased.

However, the power to give notices and the power to

make appointments to the registrar is not ceased.

However, the powers of the directors may continue to

exist upon the sanction of their powers by the
shareholders or the liquidator.

Notice of Appointment of the Liquidator Is Given to the

Registrar
Power of Liquidator to Accept Shares as Consideration as
Sale of Property of the Company −
The liquidator can accept shares, policies or take interests
to consider the sale of the company’s belongings to
another company.

He may do so with an aim to distribute the same amount

of members of the transferor company, provided −

A special resolution is passed in the company for this act

to be effective.

He buys the interest of any dissenting member at a price

to be determined by an agreement or arbitrarily.s

Duty of Liquidator to Call Creditors’ Meeting in Case of

Insolvency
If the liquidator, for any reason, realizes that the
company is on the verge of insolvency, i.e., thinks that
the company will be unable to pay its debts and liabilities
within the limited time as specified by the declaration of
insolvency, he must summon a meeting of the creditors
where the statement of all the assets and liabilities is laid
before them.

Duty of the Liquidator to Inform the Income Tax Officer

Upon the appointment of a liquidator, the income tax
office must be informed of the appointment of the
liquidator.

This must be done within 30 days of the appointment of

the liquidator.

The tax assessment of the company is to be carried out.

Duty of the Liquidator to Call General Meeting at the End

of Each Year
In case the process of winding up takes more than one
year, the liquidator must call for general meetings at the
end of each year.
The meetings should be held within three months from
the end of each year or as specified by the central
government of India.

The liquidator must present a brief account of his actions

and the matters he is dealing with and the progress of
the winding up at the general meeting before all the
other members of the company.

Final Meeting and Dissolution

When the affairs of the company are fully finished, the
liquidator must do the following things −

Make a report on how the process of winding up

progressed, ensuring all the property of the company has
been disposed.

Conduct a general meeting of the company for laying the

report before the company and provide justification of
the steps he has taken for the successful winding up of
the company.
Send a copy of the report to the registrar’s office and
meet the registrar to return the report within one week
and make a report to the tribunal about the conduct of
the winding up to ensure that that the liquidation went
as per the members of the company’s interest.

Dissolution of the Company

Bringing an end to the life of a company is termed as
dissolution.

No property can be held by a dissolved company.

The company cannot be sued by the court after

liquidation.

If any property of the company still remains after the

dissolution of the company, the property will be taken
over by the government immediately.

Creditors’ Voluntary Winding Up

Creditors’ voluntary liquidation is a procedure in which
the company's directors choose to voluntarily bring the
business to an end by appointing a liquidator (who must
be a licensed insolvency practitioner) to liquidate all its
assets. The important provisions of the creditors’
voluntary winding up are as follows −

Meeting of the Creditors

A creditors’ meeting must be called up within two days of
the day when the resolution for winding up of the
company, as proposed by the creditors, is passed.

A notice of the creditors’ meeting along with the notice

of the general meeting of the company must be delivered
to all the creditors of the company.

A full-fledged report on the company’s affairs, the list of

the creditors of the company and the estimated amount
of claims made by the creditors should be presented by
the directors before the creditors of the company.

Notice of Resolution to Be Given to the Registrar −

When a resolution of winding up of a company, as
proposed by the creditors, is passed, a notice of the
resolution must be delivered at the registrar’s office
within 10 days from the day when the resolution is
passed.

Appointment of the Liquidator

A liquidator for the purpose of the winding up of the
company may be nominated by the creditors of a
company at the creditors’ meeting.

However, if there are different persons nominated at the

general meetings of the company and the creditors
meeting of the company, then the person nominated by
the creditors is appointed as the liquidator of the
company.

Appointment of the Inspection Committee

If the creditors wish, they may appoint an inspection
committee for watching over the entire process of
winding up of the company.
Remuneration of the Liquidator
The creditors fix the remuneration of the liquidator.

If the creditors fail to fix the remuneration of the

liquidator, the remuneration shall be fixed by the
tribunal.

No liquidator shall join unless a respectable

remuneration is fixed.

Once fixed, the remuneration cannot be changed.

Power of the Liquidator

The liquidator enjoys all the powers as vested on a
director.

Further the liquidator enjoys all the powers as vested on

a liquidator in case of members’ voluntary winding up
according to section 494 of the Companies Act, 1956.
Duty of the Liquidator to Call General Meeting at the End
of Each Year
In case the process of winding up takes more than a year,
the liquidator must call for general meetings and
creditors’ meetings at the end of each year.

The meetings should be held within three months from

the end of each year or as specified by the Central
Government of India.

The liquidator must present a brief account of his actions

and the matters he is dealing with and the progress of
the winding up at the general meeting before all the
other members of the company.

Final Meeting and Dissolution

When the affairs of the company are fully finished, the
liquidator must do the following things −
Make a report on how the process of winding up went,
ensuring all the property of the company has been
disposed.

Conduct a general meeting of the company for laying the

report before the company and give certain explanation
about the justification of the steps he has taken for the
successful winding up of the company.

Send a copy of the report to the registrar’s office and

meet the registrar to make a return of the report within
one week and make a report to the tribunal about the
conduct of the winding up to ensure that the liquidation
went as per the members of the company’s interest.

Dissolution of the Company

Bringing an end to the life of a company is termed as
dissolution.

No property can be held by a dissolved company.

The company cannot be sued by the court after
liquidation.

If any property of the company still remains after the

dissolution of the company, the property will be taken
over by the government immediately.