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Voluntary winding of the company by members

prakash (Company Secretary) (1352 Points)

18 April 2012

What is time frame for voluntary winding of the company by members, I am expecting practical views of cited subject with procedure.

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(All sections referred to here under, in bracket, are of Companies Act, 1956)

MEMBERS VOLUNTARILY WINDING UP

Directors of the company shall call for a Board of Directors Meeting, and make a declaration of winding up, accompanied by an Affidavit, stating that; The company has no debts to pay, or The company will repay it's debts; if any, within 3 years from the commencement of winding up, as specified in declaration (488)

WHO SHALL CARRY OUT THE WINDING UP PROCEDURE? & WHAT SHALL BE THE PROCEDURE?

The Company shall appoint one or more liquidators, in a general meeting, who shall look after the affair of winding up procedure, and distribution of assets. [490 (1)]

The liquidator so appointed, shall be paid remuneration for his services, which shall also be fixed in general meeting [490 (2)]

The Company shall also give notice of appointment of liquidator to the registrar within ten days of appointment (493)

Once the company has appointed liquidator, the powers of Board of Directors, Managing Director, and Manager, shall cease to exist. (491)

The liquidator is generally given a free hand, to carry out the winding up procedure, in such a manner, as he thinks best in the interest of creditors, and company. In case, the winding up procedure, takes more than one year, then liquidator will have to call a general meeting, at the end of each year, and he shall present, a complete account of the procedure, and position of liquidator (496)

WHEN AFFAIRS OF THE COMPANY ARE FULLY WOUND UP

The liquidator shall take the following steps, when affairs of the company are fully wound up (497) :

1. Call a general meeting of the members of the company, a lay before it, complete picture of accounts, wining up procedure and how the properties of company are disposed of.

2. The meeting shall be called by advertisement, specifying the time, place and object of the meeting.

3. The liquidator shall send to, the Registrar and official Liquidator copy of account, within one week of the meeting.

4. If from the report, official liquidator comes to the conclusion, that affairs of the company are not being carried in manner prejudicial to the interest of it's members, or public, then the company shall be deemed to be dissolved from the date of report to the court.

5. However, if official liquidator comes to a finding, that affair have been carried in a manner prejudicial to interest of member or public, then court may direct the liquidator to investigate furthers.

DISTRIBUTION OF PROPERTY OF COMPANY ON VOLUNTARILY WINDING UP [BOTH MEMBERS AND CREDITORS VOLUNTARILY WINDING UP]

Once the company is fully wound up, and assets of the company sold or distributed, the proceedings collected are utilised to pay off the liabilities. The proceedings so collected shall be utilised to pay off the creditors in equal proportion. Thereafter any money or property left may be distributed among members according to their rights and interests in the company.