14.

Rules regarding government companies

A government company is a company which not less than 51% of the paid up share capital is
held and controlled by and profit and loss shared with the government.
Rules regarding government companies are given below:
1) In a government company not less than 51% of the paid up share capital is held by the
government.
2) There is a managing director or chief executive officer who is appointed by the
government to control the administration.
3) The Government Company is registered under Companies Act, 1994. The provisions
of Indian companies Act, 1994 are applicable in respect of conduct of meetings, rising
of capital, appointment of directors, auditors, etc. It enjoys the status of a legal entity
and therefore it can use or be sued by others.
4) The annual accounts of a Government Company are placed before the parliament or
state government for review.
5) It is managed by a Board of Directors, most of who are appointed by the government.
6) The Government reserves the right exempt such a company from certain provisions of
the Indian Companies Act.
7) It operates on commercial principles, and as such it aim is to make profit apart from
other objectives.
8) There is growing move to privatize a good number of government Companies so as to
improve their efficiency.
9) Its Capital is contributed by Central/State Governments and public. 51% or more of
its paid up capital is contributed by the government. The public hold minority
shareholding in Government Companies.
10) This type of organization can recruit its own employees and they are not government
servants. Their terms of service are not governed by the civil service rules. However,
the employees of departmental undertakings are Government servants, and are
governed by Civil Service Rules.

15. Modes of winding up of a company

Winding up of a company means the process whereby its life is ended and the assets and
property of the company redistributed.
There are three modes of winding up a company given in section 234 of Company Act-1994.
These are given below:
i) Compulsory winding up of a company: Winding up of a Company by an order
of the court is called the compulsory winding up. It takes place when a company is
directed to be wound up by an order of Tribunal.
a) Resolving special resolution, the company may be wound up by the court.
b) The company may be wounded up by the court by being made default with
registrar or in holding the statutory meeting.
 c) The company does not commence its business within a year from its
incorporation or suspends it for a whole year or it will be wounded up.
d) If the number of members is reduced, in the case of a public company below
seven and in the case of private company below two, it will be wounded up by
court.
e) The company will be wounded up by court, if it is unable to pay its debt.
f) If the court is of the opinion that it is just and equitable that the company
should be wound up.
These are the reason behind compulsory winding up of a company
ii) Voluntary winding up of a company : Voluntary winding up is winding up of a
company that refers winding up by the members themselves without the
intervention of the Tribunal. It occurs without the intervention of the court. Here
the company creditors mutually settle their affairs without going to the court.
a) Creditor’s Voluntary Winding Up: It occurs in the absence of declaration of
solvency i.e., when the company is insolvent. Hence, the Act empowers the creditors
of dominate over the members in this mode of winding up so as to effectively protect
their interest. It requires the company to hold the creditors’ meeting wherein the
Board must make a full statement of the company’s affairs together with a detailed list
of creditors including their estimated claims. Both the members and creditors at their
respective meeting nominate a liquidator and on their disagreement, the creditor’s
nominee is appointed as the liquidator. All the powers of the Board then cease unless
the creditor’s meeting sanctions otherwise.
The liquidator must annually call here not only the members’ meeting but also the
creditors’ meeting to lay an account of his dealings and the conduct of the winding up.
So also, he must call a final general meeting of the members and creditors for the
company’s dissolution as in the case of member’s winding up.

b) Member’s voluntary winding up: This type of winding up occurs only when the
Company is solvent. It requires a declaration of the Company’s solvency at the
meeting of Board of Directors. The declaration must specify the director’s opinion
that the Company has no debt or it will be able to pay its debts in full within three
years of the commencement of the winding up.The company in general meeting must
then appoint a liquidator and fix his remuneration. With his appointment, all the
powers of the Board and the managing director or manager cease unless the company
in general meeting sanctions otherwise.The liquidator must annually call a general
meeting to lay before it an account of his dealings and the conduct of the winding up.

iii) Voluntary winding up under the supervision of the court: Windings up with
the intervention of the court are ordered where the voluntary winding up has
already commenced. As a matter of fact, it is the voluntary winding up but under
the supervision of the court. A court may approve a resolution passed by the
Company for voluntary winding up but the winding up should continue under the
supervision of the court.
 Abstract
The assignment is written about the collecting information about “Company Law”. The
source of this assignment is Arun Kumar Sen and Jitendra Kumar Mitra Book named
“COMMERICAL LAW AND INDUSTRIAL LAW” and Internet..
Major findings: In this assignment, anyone can get information about company law. It will
help to them to gain knowledge about company, differences between company and
partnership, types of company, difference between memorandum of association and articles
of association, its contents, rules regarding Government Company, winding up of a company
etc. It will also help to invest in a company.