Winding up of companies
A company comes into existence by a legal process and it comes to end through the legal process. “Winding up or liquidation means the end of the life of a company.”
Following are the modes or methods of winding up of a company:
1.Winding up by Court or Compulsory Winding up:
a. Special resolution
b. Default in delivering statutory report
i. Statutory meeting not held
ii. Two consecutive annual general meetings not held
iii. Fail to submit statutory report to the registrar
c. Delay in commencement of business (fails to commence business within one year after the date of incorporation certificate)
d. Members reduced below minimum (less than 7 in public, less than 2 in Pvt.)
e. Failure to pay debt
f. Ceases (stop) to be a listed company
2.Voluntary Winding up:
a. Members voluntary winding up:(directors declare in the meeting of shareholders that company is fit for liquidation)
i. Special resolution
ii. Declaration of solvency
iii. Appointment of liquidation
iv. Notice to registrar
v. Final meeting
vi. Dissolution
b.Creditors voluntary winding up:
i. Meeting of creditors
ii. Notice to registrar
iii. Appointment of liquidator
iv. Appointment of committee of inspection
v. Meetings of members and creditors
vi. Submission of report and account
vii. Dissolution of company
3.
a. Partiality of the liquidator
b. Failure to comply (fulfill) with the rules of winding up
c. Negligence of liquidator in realizing the assets
d. The winding up resolution is obtained through fraud