VOLUNTARY WINDING UP;
A joint stock company may be wound up voluntarily in following two ways:
1. By Members
According to section 362 of Companies Ordinance, 1984, the members can wind up a company voluntarily under following circumstances:
(i) Expiry of Period
A company may be wound up voluntarily by the members, after the expiry of period, by passing resolution in the general meeting.
(ii) Statutory Declaration
If majority of directors makes a statutory declaration to registrar that the company will be able to pay its debts in full within one year.
(iii) Special or Ordinary Resolution
After submitting the statutory declaration to the registrar, the company, in general meeting passes an ordinary or special resolution to wind up the company.
(iv) Appointment of Liquidators
In general meeting, the company appoints liquidators to wind up the company’s affairs. Within ten days after the appointment must be sent to registrar.
(v) Final Meeting
After winding up the affairs of company, the liquidators call the general meeting of the shareholders. In this meeting, the liquidators must submit the final accounts of company’s affairs to the members.
(vi) Dissolution
Within one week of general meeting, liquidators must file a copy of full accounts to the registrar. At the end of 3 months from the date of registration of return, the company shall be dissolved and its name will be struck off by the Registrar of Joint Stock company.
2. By Creditors
The Members can wind up a company voluntarily under following circumstances:
(i) Statutory Declaration
In case of creditors voluntary winding up, it is not necessary for the company to make a statutory declaration regarding its solvency.
(ii) Special Resolution
A general meeting of the company’s shareholders is called to pass an extra ordinary resolution for the dissolution of the company because it cannot continue its business due to heavy liabilities.
(iii) Creditors’ Meeting
On the same or next day, a meeting of creditors must be called by the company. A notice of
meeting must be sent to each creditor.
(iv) Statement of Affairs
In the creditors’ meeting, the directors must submit a statement of affairs of the company, together with a list of creditors of the company and estimated amount of their claims.
(v) Intimation to Registrar
The information regarding the notice of passed resolution must be sent to the registrar within ten days after the date of creditors’ meeting.
(vi) Appointment of Liquidator
The creditors and shareholders nominate the persons to act as liquidators in their respective meetings. the opinion of the creditors is preferred.
(vii) Inspection Committee
The creditors and shareholders, in their respective meetings can appoint eh inspection committee consisting of five persons in each case.
(viii) Liquidators’ Remuneration, Rights and Duties
The inspection committee fixes the remuneration, rights and duties of the liquidators.
(ix) Final Meeting
In the final meeting, the liquidators place before them the full accounts of the company’s affairs and a copy of these accounts is also sent to registrar within 7 days.
(x) Dissolution
The registrar registers the documents, sent by the company, after 3 months from the date of registration, the company will be dissolved.
In a voluntary winding up the company is allowed to go out of business, sell all its assets, and distribute the proceeds to its creditors. This is not the same as a compulsory liquidation, a legal process where all debts must be paid off before the company is closed down
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