VOLUNTARY WINDING UP

Creditors voluntary winding up:

Voluntary winding up: a voluntary wining up is a self-imposed wind up or liquidation of a

company by the consent of all the shareholders of the company. This decision becomes effective
when the company’s leaders or directors decide to no longer manage the business or determine
that there is no longer a need to continue operating it. A court does not order the corporation to
be wound up. Voluntary winding up is also termed as voluntary liquidation.

Voluntary winding up by creditors: the companies act allows for the voluntary winding up of
debtors under sections 500 to 509. The creditors are involved in this winding up process, in fact,
they control the procedures and provide assistance to them. When a business cannot pay its debts
and the board of directors is unable to determine the precise amount of the company's obligation
to its creditors, the winding-up procedure is initiated. It is specified in the member's voluntary
winding up that the directors must declare their financial stability no later than five weeks from
the date of the general meeting at which the winding up resolution is to be approved. In the event
that the directors are unable to give a declaration of solvency within the allotted period, the
winding-up process will be referred to as the creditor's voluntary wind-up, and the guidelines
established for that reason should be followed. In order to initiate the voluntarily wind-up
process for a private limited company, a winding-up meeting must be held and a resolution must
be voted to initiate the wind-up procedure. On the days designated for the general meeting or the
day after, the creditors winding up meeting shall be convened.

Provisions for voluntary winding up:

1. Appointment of liquidators: There should be one or two Liquidators appointed at the
member and creditor meetings. There won't be any issues if they designate the same
individual to be the liquidator. However, only the individual named by creditors has the
authority to serve as liquidator in cases where creditors and members appoint separate
liquidators. The liquidator shall, within 30 days after his appointment publish in the
official Gazette and deliver to the registrar for registration a notice of his appointment.

2. Power of board to cease on appointment of liquidator: The appointment of a liquidator

gives the Board of Directors the authority to terminate. But they will be required to give
notice to registrar of the appointment of liquidator. However, the court may approve the
Board's continuation in a general meeting if there is an inspection committee or if one
does not exist.

3. Vacancy in the office of liquidator: In case of vacancy in the office of a liquidator, it shall
be filled by the company in the general meeting. The general meeting may be convened
 by any contributor of the company. A liquidator can also call the general meeting. The
meeting shall be held in the manner provided by the act or articles or in such other
manners as determined by the court.

4. Notice of appointment of liquidator to be given to registrar:

a. Appointment if liquidator made by the company
b. Every vacancy occurring in the office of liquidator
c. Every person appointed to fill a vacancy in the office of liquidator
All the notices must be given within 10 days of occurrence of the events.

5. Notice to income tax officers: a notice regarding appointment of the liquidator shall be
given to then income tax officer within 30 days of his appointment. Thereafter, within 3
months, the income tax offers shall intimate the liquidator regarding the estimated
amount to meet the tax liability.

6. Duty of liquidator to call creditors meeting in the case of insolvency: if the liquidator at
any time is of the opinion that the company will not be able to pay its debts within the
period specifies in the declaration of solvency of the period specified in the declaration of
solvency has expired without the debts having been pain in full, he shall forthwith
summon a meeting of the creditors. The liquidators shall lay before the meeting a
statement of assets and liabilities of the company. He shall then proceed as if it was a
creditor winding up.

7. Duty of liquidator to call annual meeting: the general meeting must be held where the
winding up proceedings continue for more than 1 year. It shall be held within 3 months of
the end of the first year. Also, every subsequent year a general meeting shall be held
within 3 months of the end of then year until the winding up is concluded.

8. Dissolution and final meetings:

a. When the affairs and operations of the company are totally wound up, the
liquidator has to prepare the accounts of winding up. The account shall
contain all the information relating to winding up that has been conducted by
the company and how the property of the company has been disposed of.
b. After that liquidator shall call for a meeting of the members and also the
creditors of the company. Each of these meetings shall be called by an
advertisement in the official gazette and also in the newspaper.
c. The statement of affairs and operations shall be submitted in each of the
meetings organized for the winding up.
d. After every meeting within a week after that date of meetings, liquidation has
to send the copy of each and every above along with the return to each of the
meetings to the Registrar and official liquidator.
e. Whenever a quorum is not present at any of such meetings, the liquidator
should make a return that the meeting was duly called and that no quorum was
instead of the return specified in point three above present thereat.
 f. The Registrar shall register on receipt of the account and return mentioned in
point three above or the return mentioned in point four immediately.
g. A copy of the same shall be sent to the official Liquidator and the Liquidator
should submit a report therein to the national company law tribunal.

Distinction between creditors and members voluntary winding up:

The voluntary winding up procedure for members is simpler than the voluntary winding up
procedure for creditors. The liquidator in a creditors' voluntary winding up will need to look into
the assets and liabilities of the company in greater detail.

The company's solvency is one of the main distinctions between a voluntary winding up by
members and one by creditors. The corporation may only choose to wind up voluntarily by its
members if it is financially stable. In the event that the business becomes insolvent, it must be
wound up via an insolvency procedure or a creditors' voluntary winding up.

Another distinction is that, because the business is still able to pay its creditors in full, creditors
are typically not involved in a members' voluntary winding up. On the other hand, a voluntary
winding up of creditors includes both creditors and members.

Members voluntary winding up required the calling of a meeting of members only. Creditors
voluntary winding up required the calling of separate meetings of members and creditors.

In member voluntary winding up, the liquidator is appointed by the members of the company. In
creditors voluntary winding up, the liquidator is nominated by the members as well as the
creditors. If the members and creditors nominate two different persons as a liquidator, the
nominee of the creditor is appointed as a liquidator.

The remuneration of liquidator is fixed by the members in case of members voluntary winding
up. But, in case of creditors voluntary winding up, the remuneration of liquidator is fixed by the
committee of inspection or the creditors.

NAME: THANMAYI. V
CLASS: BMS 2
SUBJECT: COMPANY LAW