meaning of winding up appointment and powers of liquidator

2. • ‘‘Winding up of a company is the process whereby its
life is ended and its property administered for the
benefit of its creditors and members.
• An administrator called a liquidator is appointed and
he takes control of the company, collects its assets,
pays its debts and finally distributes any surplus among
the members in accordance with their rights.’’
• Thus winding up is the last stage in the life of a
company. It means a proceeding by which a company
is dissolved.

4. The circumstances in which a company may be wound up
by the NCLT are given in Section 271 of Companies Act,
2013. They are as follows:
• Special resolution of the company
• Where company has acted against national interest
• Winding up of Sick Companies
• Winding up on application made by registrar
• Not to commence business in time or suspend business
• Inability to pay debts
• Just and equitable

5. An application to the NCLT for the winding up of a
company is made by a petition. A petition may be
presented by any of the following:
• by the company
• by any creditor
• by any contributories
• by any registrar
• by the central government

6. An official liquidator is a person who realises the
assets of the company and makes payment to the
creditors and contributories of the company out of the
proceeds of realised assets.

7. Subject to directions by the Tribunal, if any, in this regard,
the Company Liquidator, in a winding up of a company by
the Tribunal, shall have the power:
• to carry on the business of the company so far as may be
necessary for the beneficial winding up of the company
• to sell the immovable and movable property and actionable
claims with power to transfer the whole or sell the same in
parcels
• to appoint an agent to do any business which he is unable
to do himself

8. • to sell the whole of the undertaking of the company as a
going concern;
• to raise money on the security of the company’s assets.
• to do all acts and to execute documents and deeds on
behalf of the company under its seal
• to institute or defend any suit, prosecution or other legal
proceeding, civil or criminal, in the name and on behalf of
the company
• To draw, accept, make and endorse any negotiable
instruments including bill of exchange, promissory note
on behalf of the company in the course of its business;

9. Winding up by the members or creditors without any
intervention of the court is called voluntary winding up
of the company.
According to section 304, a company may be wound up
voluntarily:
• By passing an ordinary resolution
• By passing a special resolution

10. A voluntary winding up may be of two types:
• Members’voluntary winding up
• Creditors’ voluntary windingup.

11. A members’ voluntary winding up is possible only when
the company is solvent and is able to pay its debts in full.
In this case, it is not necessary for the members to consult
the creditors or to call their meeting. A declaration of
solvency should be made by the directors.

12. • The declaration of Solvency is an important document in the
members’ voluntary winding up. The declaration must be
made in the meeting of the Board of Directors. It should be
made by a majority of the directors and certified by an
affidavit.
• The declaration must be accompanied by a statement of assets
and liabilities up to the date of declaration. A copy of the
Auditor’s Report on the Profit and Loss Account and on the
Balance Sheet from the last accounting date to a date ending
with the latest practicable date immediately before the date of
making the declaration also attached to it.

13. • The declaration should be made and filed with the
Registrar at least 5 weeks immediately before the date
on which it is proposed to pass the resolution relating
to the winding up. Otherwise, the declaration will not
be effective.

14. • Appointment and Remuneration of Liquidators.
• Notice of appointment of Company Liquidator to be
given to registrar
• Board’s Powers to cease on appointment of Liquidator
• Powers and duties of company liquidator
• Appointment of committees
• Company liquidator to submit report on progress of
winding up
• Report of company liquidator to tribunal for examination
of persons
• Final meeting and dissolution

15. • Voluntary Winding up by creditors takes place
when a company becomes insolvent and is
unable to discharge its liabilities.

16. • Meetings of members and creditors.
• Appointment of Company Liquidators.
• Committee of inspection
• Meeting of the company and creditors
• Final meeting and dissolution of company