Q.25 Explain the different ways of the winding up of Joint Stock Company?
Ans. WINDING UP OF A COMPANY
The company is created by law when the legal existence of a company abolished it is called the winding up of a company. Following are the various methods of winding up the company.
Section 305 of the Companies Ordinance, 1984 provide that a company wound up by the court of:
(1) BY SPECIAL RESOLUTION
If the company has by special resolution, resolved to be wound up the court.
(2) STATUTORY MEETING NOT HELD
If default is made in delivering the statutory report to the registrar or in holding the statutory meeting.
(3) COMMENCEMENT OF BUSINESS
If the company does not commence its business within a year from its incorporation or suspends its business for a whole year.
(4) REDUCTION IN MEMBERSHIP
If the number of members falls below seven (or in case of a private company below two).
(5) FAILURE TO PAY DEBT
If the company is unable to pay its debt.
(6) COURT OPINION
If the court is of opinion that it is just and equitable that the company should be wound up.
VOLUNTARY WINDING UP
The circumstances of such winding up are described below.
(1) EXPIRY OF FIXED PERIOD
Where the period is fixed for the duration of the company by the Articles, it may be winding up on the expiry of period. But the company has to pass ordinary resolution in general meeting to wind up.
(2) HAPPFNING OF EVENT
A company may be wound up on the happening of event on which (under the Articles) the company is to be dissolved.
(3) SPECIAL RESOLUTION
A company may be wound up if the company passes special resolution for this purpose.
(4) HEAVY LIABILITIES
A company may be wound up if the company passes extra – ordinary resolution that it cannot continue its business due to its heavy liabilities.
WINDING UP UNDER THE SUPERVISION OF COURT
The following is the process of the court.
At first the company has to pass special or extra ordinary resolution to wind up voluntary.
(2). PETITION FOR SUBJECT TO SUPERVISION
When there are frauds or irregularities in the voluntary winding up, the petition may be presented by one or more of the competent parties for winding up under the supervision of the court.
(3) SUPER VISION ORDER
The court may, if it thinks for, order that the voluntary winding up shall continue but subject to the supervision of the court on such terms and conditions as the court thinks just.
(4) POWER OF THE COURT
The court has power to appoint an additional liquidation or to remove any liquidator. But generally the liquidator appointed by the company for the voluntary winding up Continues in office subject to his giving of security.
DISSOLUTION OF THE COMPANY
When the supervision order made, the liquidator may exercise all his power in a voluntary winding up. On completion of the winding up, the court will make an order that the company is dissolved.