A company which is limited by shares, and a company limited by guarantee having share capital, is required to hold a " Statutory meeting" of its members, within six months, and after one month, from the date of commencement of it's business. A statutory report of the meeting so held shall also be forwarded to the registrar. [sec 165 (1) & (5)] If the company fails to commence it's business within one year from the date of it's incorporation, or suspends it's business for a whole year.
A company limited by shares, has to obtain a "certificate of commencement" of business from the registrar. Unless it obtains such certificate, it cannot carry on it's business operation. If the number of members, in a public company is reduced to less than seven, and in case of private company less than two. The statutory requirement of minimum number of members in a public company is seven, and in case of private company, it is two (sec 12). If the company is unable to pay its debits; where the financial position of the company is, such, that it has more liabilities than assets, and after disposing off the assets, it is still unable to extinguish it's liabilities, it means that company is unable to pay it's debts. If the court, itself is of the opinion that the company should be wound up.
The court may form such an opinion, if it comes to the knowledge of court that, the company is mismanaged, or financially unsound, or carrying an illegal operations etc.
Relevant Points: Who Can Apply To Court, For Winding Up Petition ? ( Sec. 439) Following persons can apply to the court, for petition for winding up: The company itself, The creditor, Any Contributory, Registrar Any person authorized by central government, in case of oppression or mismanagement (397)
What Orders, The Court May Pass? (Sec 443) The court may pass any one of the following orders on hearing the winding up petition., Dismiss it, with or without costs, Make any interim order, as it thinks fit, or Pass an order for winding up of the company with or without costs. Consequences of court passing an order for winding up : If the court is satisfied, that sufficient reasons exist in the petition for winding up, then it will pass a winding up order. Once the winding up order is passed, following consequences follow : Court will send notice to an official liquidator, to take change of the company. He shall carry out the process of winding up, ( sec. 444) The winding up order, shall be applicable on all the creditors and contributories, whether they have filed the winding up petition or not. The official liquidator is appointed by central Government ( sec. 448) The company shall relevant particulars, relating to, assets, cash in hand, bank balance, liabilities, particulars of creditors etc, to the official liquidator. ( sec. 454) The official liquidator shall within six months, from the date of winding up order, submit a preliminary report to the court regarding : Particulars of Capital, Cash and negotiable securities, Liabilities, Movable and immovable properties, Unpaid calls, and An opinion, whether further inquiry is required or not ( 455) The Central Govt. shall keep a cognizance over the functioning of official liquidator, and may require him to answer any inquiry. (463)
Stay Order: Where, the court has passed a winding up order, it may stay the proceedings of winding up , on an application filed by official liquidator, or creditor or any contributory. (466) Dissolution Of Company (481)
Finally the court will order for dissolution of the company, when : the affairs of the company are completely wound up, or the official liquidator is unable to carry on the winding up procedure for want of funds. Appeal 483: An appeal from the decision of court, will lie before that court, before whom, appeals lie from any order or decision of the former court in cases within it's ordinary jurisdiction. |
Corporate-Law
