Company Law;

1. Definition and characteristics of a company 2. Kinds of companies 3. Formation and advantages of incorporation of a company 4. Memorandum of Association
5. Doctrine of Ultra Vires

6. Articles of Association 7. Prospects 8. Directors powers and liabilities 9. Kinds of meetings 10. Winding up of a company

Definition and characteristics of a company

The Companies Act, 1956 defines the word company as a company formed and registered under the Act or an existing company formed and registered under any of the previous company laws (Section 3). This definition does not bring out the meaning and nature of the company into a clear perspective. Also Section 12 permits the formation of different types of companies. These may be (i) companies limited by shares, (ii) companies limited by guarantee, and (iii) unlimited companies. The vast majority of companies in India are with limited liability by shares. Therefore, it is advisable to define the term company keeping in mind this type of companies. However, a brief description of other types of companies will be given later.
Chief Characteristics of a Company 1. A company is a separate entity from the members who constitute it. It is not a mere

aggregate of the shareholders.

2. A member may be a creditor of the company also. 3. A company is not an agent or trustee of the members. On the other hand, in a 4.

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particular case, a member may act as agent or trustee or employee for the company. There need not be any equilibrium or equitable distribution of shares amongst the different members of the company. In Salomons case, Mr. Salomon had 20,000 shares, whereas all other members had one share each. Such type of a company is known as one-man company. The shareholder is not part-owner or a co-owner of the company or its property. He is only given certain rights by law, e.g., to attend and vote at the meeting of the shareholders, to receive dividend. Thus, the property of the company belongs to the company and not to the shareholders. A company is an artificial legal person and enjoys almost all the rights and is subjected to the obligations as in the case of a natural person. This is possible because it has a personality, status, name and common seal of its own. The shares in the share capital of the company are transferable. This makes the life of the company independent of the lives of its members and enjoys what is known as perpetual succession. The liability of its shareholders may be made limited to the unpaid value of the shares held by them. A company, being a person, has nationality and a domicile. A company is not a citizen and has no fundamental rights under the Constitution [Tata E. & L. Co. Ltd. vs. State of Bihar (1965) SCJ 605]. A company, being an artificial person, can act only through natural persons. A company can sue, can be sued, can enter into contracts, can open a bank account and can exercise the entire powers incidental to the attainment of its objects given in its Memorandumof Association. There are some distinct situations in which the principle of separate entity of the company as laid down in Salomons case is ignored. Technically, this is known as lifting of the corporate veil.

Kinds of companies
1. Private company 2. Public company

Private Company A private company can be formed by merely two persons by subscribing their names to the Memorandum of Association. Such a company must have a minimum paid-up capital of Rs. 1 lakh, and by its articles must: (1) prohibit an invitation to the public to subscribe to its shares and debentures; (2) restrict the rights of its members to transfer shares; and (3) Limit the number of its members to fifty, excluding its employee-members or past employee-members; provided that where two or more persons hold one or more shares in a company jointly, they shall, for the purpose of this definition, be treated as a single member. However, with reference to former employees, for the benefit of the exemption being available to the company, such employees must have been members while they were in employment and continue as members after ceasing to be in employment of the company. Thus, the exemption cannot be claimed by enrolling a member as an employee. (4) Prohibitany invitation or acceptance of deposits from persons other than its members,directors or their relatives. The Companies (Amendment) Act, 2000 has prohibited private companies to invite/ accept deposits from public. Deposits from members, directors or their relatives are, however, permitted. Effectively, the position in law was no different even before this amendment. The prohibition was earlier contained in Section 43A (now made inoperative) which rendered a private company inviting/accepting deposits from public as a deemed public company. Now, if a private company invites/accepts deposits from public, it will become a public company. Public Company Section 3(I) (iv) of the Companies Act, 1956, as amended by the Companies (Amendment) Act, 2000 defines a public company to mean a company which (1) Is not a private company. (2) has a minimum paid-up capital of 5 lakh rupees or such higher paid-up capital, as may be prescribed; (3) Is a private company, which is a subsidiary of a company, which is not a private company. Minimum number of members required to form a public company are 7. However, there is no limit to the maximum number of members (Sec. 12).

Formation and advantages of incorporation of a company

The whole process of formation of a company may be roughly divided, for convenience, into three parts. These are: A. Promotion B. Registration C. Floatation

A. PROMOTION Promotion is a term of wide importance denoting the preliminary steps taken for the purpose of registration and floatation of the company. The persons who assume the task of promotion are called promoters. The promoter may be an individual, syndicate, association, partnership or company. B. REGISTRATION (SECTIONS 12, 33) Section 20 states that a company cannot be registered by a name, which in the opinion of the Central Government is undesirable. Therefore, it is advisable that promoters find out the availability of the proposed name of the company from the Registrar of Companies. For the purpose, three names in order of priority should be filed. These names should conform to the guidelines issued by the Department of Company Affairs in this regard. C. FLOATATION/CAPITAL SUBSCRIPTION When a company has been registered and has received its certificate of incorporation, it is ready for floatation, that is to say, it can go ahead with raising capital sufficient to commence business and to carry it on satisfactorily.

MEMORANDUM OF ASSOCIATION
The Memorandum of Association of a company is its charter which contains the fundamental conditions upon which alone the company can be incorporated. It tells us the objects of the companys formation and the utmost possible scope of its operations beyond which its actions cannot go. Thus, it defines as well as confines the powers of the company. If anything is done beyond these powers, that will be ultra vires (beyond powers of) the company and so void. The memorandum serves a two-fold purpose. It enables shareholders, creditors and all those who deal with the company to know what its powers are and what is the range of its activities. Thus, the intending shareholder can find out the field in, or the purpose for which his money is going to be used by the company and what risk he is taking in making the investment. Also, any one dealing with the company, say, a supplier of goods or money will know whether the transaction he intends to make with the company is within the objects of the company and not ultra vires its objects. The Name Clause [Sec. 13(1)(a)] The promoters are free to choose any suitable name for the company provided: (a) The last word in the name of the company, if limited by shares or guarantee is limited unless the company is registered under Sec. 25 as an association not for profit [Sec. 13(l)(a) & Sec. 25]. (b) In the opinion of the Central Government, the name chosen is not undesirable [Sec. 20(1)]. The Registered Office Clause [Sec. 13(1)(b)] This clause states the name of the State in which the registered office of the company will be situated. Every company must have registered office which establishes its domicile, and it is also the address at which companys statutory books must normally be kept and to which notices, and all other communications can be sent. The notice of the exact situation (address) of the registered office may be given to the Registrar of Companies within 30 days from the date of incorporation (Section 146).

The Objects Clause [Sec. 13(1)(d)] The objects clause defines the objects of the company and indicates the sphere of its activities. A company cannot do anything beyond or outside its objects and any act done beyond them will be ultra vires and void, and cannot be ratified even by the assent of the whole body of shareholders. However, a company may do anything which is incidental to and consequential upon the objects specified and such act will not be ultra vires. Thus, a trading company has an implied power to borrow money, draw and accept bills of exchange. Section 13, read along with Tables B, C, D and E, requires the company to divide its objects clause into two parts: (a) Main objects of the company to be pursued by the company on its incorporation and objects incidental or ancillary to the attainment of the main objects; and (b) Other objects of the company not included in (a) above. Liability Clause [Sec. 13(2)] This clause states the nature of liability of the members. In case of a company with limited liability, it must state that liability of members is limited, whether it be by shares or by guarantee. This means that in case of a company limited by shares, a member can be called upon at any time to pay to the company the amount unpaid on the shares held by him. In case of companies limited by guarantee, this clause will state the amount which every member undertakes to contribute to the assets of the company in the event of its winding-up. The Capital Clause [Sec. 13(4)(c)] This clause states the amount of share capital with which the company is registered and the mode of its division into shares of fixed value, i.e., the number of shares into which the capital is divided and the amount of each share. If there are both equity and preference shares, then the division of the capital is to be shown under these two heads. The Association Clause [Sec. 3(4) (c)] At the end of the memorandum of every company there is an association or subscription clause or a declaration of association which reads something like this: We, the several persons whose names and addresses and occupations are subscribed, are desirous of being formed into a company in pursuance of this memorandum of association, and we respectively agree to take the number of shares in the capital of the company set opposite our respective names. Then follow the names, addresses, descriptions, occupations of the subscribers, and the number of shares each subscriber has taken and his signature attested by a witness.

DOCTRINE OF ULTRA VIRES

We have mentioned earlier that a company cannot go beyond its objects mentioned in its Memorandum. The companys activities are confined strictly to the objects mentioned in its Memorandum, and if they go beyond these objects, then such acts will be ultra vires. The object of declaring such acts as ultra vires is to protect the interests of shareholders and all others who deal with the company. Some points worth noting as regards doctrine of ultra vires are: (i) A company exists only for the objects which are expressly stated in its objects clause or which are incidental to or consequential upon these specified objects. (ii) Any act done outside the express or implied objects is ultra vires. (iii) The ultra vires acts are null and void ab initio. The company is not bound by these acts; and neither the company nor the other contracting party can sue upon it.

However, in NEPC India Ltd. vs Registrar of Companies [1999] 22 SCL 94, the Madras High Court has held that a complaint alleging that company was indulging in activities not mentioned in the objects clause of the Memorandum of Association had to be filed within 6 months of the date of knowledge.

ARTICLES OF ASSOCIATION
The articles of association of a company and its bye laws are regulations which govern the management of its internal affairs and the conduct of its business. They define the duties, rights, powers and authority of the shareholders and the directors in their respective capacities and of the company, and the mode and form in which the business of the company is to be carried out. Subject Matter of Articles/Contents The articles of a company usually deal with the following matters: 1. The business of the company. 2. The amount of capital issued and the classes of shares into which the capital isdivided; the increase and reduction of share capital. 3. The rights of each class of shareholders and the procedure for variation of their rights. 4. The execution or adoption of a preliminary agreement, if any. 5. The allotment of shares; calls and forfeiture of shares for non-payment of calls. 6. Transfer and transmission of shares. 7. Companys lien on shares. 8. Exercise of borrowing powers including issue of debentures. 9. General meetings, notices, quorum, proxy, poll, voting, resolution, minutes. 10. Number, appointment and powers of directors. 11. Dividendsinterim and finaland general reserves. 12. Accounts and audit. 13. Keeping of booksboth statutory and others. Memorandum and Articles Their Relationship The Articles of association of a company have a contractual force between company and its members as also between the members inter se in relation to their rights as such members (Ramakrishna Industries (P) Ltd. & others vs P.R. Ramakrishna & others)21. They are subordinate to and are controlled by memorandum. Articles cannot supersede the objects as set out in the memorandum of association [Birds Investments Ltd. vs C.I.T. (1965) 35 Comp. Cas. 147 Cal.] The memorandum, as we have seen earlier, lays down the scope and powers of the company, whereas the articles govern the ways in which the objects of the company are to be carried out. Also the alteration of memorandum involves elaborate procedure, whereas the articles can be framed and altered by the members by passing special resolution. The memorandum is the area beyond which the actions of the company cannot go; inside that area the shareholders may make such regulations for their own governance as they think fit. However, the articles must not be inconsistent with the memorandum. Also, as in the case of memorandum, the articles of the company must not contain anything which is against or repugnant to the provisions of the Companies Act (Section 9). Thus, where article 2 of the Articles of a company limited by guarantee without share capital provided as follows: For the purpose of registration, the number of members is 1500. This may be reduced or increased from time to time by the general committee. The article was held to be void. The

articles can be altered only by a special resolution of the general body [Dharam Pal Bhasin vs B.N. Khanna & others].

PROSPECTUS
A prospectus, as per Sec. 2(36), means any document described or issued as prospectus and includes any notice, circular, advertisement or other document inviting deposits from the public or inviting offers from the public for the subscription or purchase of any shares in or debentures of a body corporate. Thus, a prospectus is not merely an advertisement; it may be a circular or even a notice. A document shall be called a prospectus if it satisfies two things: 1. It invites subscriptions to shares or debentures or invites deposits. 2. The aforesaid invitation is made to the public. Steps which are necessary before the issue of prospectus We have mentioned earlier that a private company is prohibited from inviting public to subscribe to its share capital and it arranges its share capital privately. The shares are subscribed by a small number of persons who are known to the promoters or are related to them by family connections. A public company may also decide not to invite public to subscribe to its share capital and arrange its capital privately as in the case of a private company. Under such circumstances, the public company is required to submit a statement in lieu of prospectus with the Registrar of Companies at least three days before the allotment of shares is made. However, a public company limited by shares, generally issue shares to the public for which it has to issue a prospectus. In that case it has to follow the procedure below. After the certificate of incorporation is obtained, the affairs of the company are taken over by the first directors appointed in accordance with the provisions of law. They will elect one of their members as the chairman of the Board of Directors, if none is named in the articles of association. The Board attends to the following matters: (i) Appointment of various expert agencies such as bankers, auditors, secretary, etc. (ii) Entering into underwriting contract, brokerage contracts. (iii) Making arrangements for the listing of shares on stock exchanges. (iv) Drafting a prospectus for the purpose of issue to the public. The appointment of a banker is necessary as it has to receive the share application along with application moneys.

Directors
A company being an artificial person cannot act by itself. It has neither a mind nor a body of its own. It must act through some human agency. The persons by whom the business of the company is composed of two organs, the general body of shareholders and the board of directors. Only individuals to be directors(section 253). Appointment of directors 1. 2. 3. 4. 5. By the articles as regard first directors(section 254) By the company in general meeting (sections 255 to 257, 263, 264) By the directors (sections 260, 262, 313) By third parties (section 255) By the principle of proportional representation (section 265)

6. By the central government (section 408) Powers The directors powers are normally set out in the articles. The shareholders cannot control the way in which the Board of Directors act provided its actions are within the powers given to the Board. Section 291 of Companies Act, 1956 provides for general powers of the Board of directors. It mandates that the Board is entitled to exercise all such powers and do all such acts and things, subject to the provisions of the Companies Act, as the company is authorized to exercise and do. However, the Board shall not exercise any power and do any act or things which is required whether by the Act or by the memorandum or articles of the company or otherwise to be exercised or done by the company in general meeting. Power of the individual directors . Unless the Act or the articles otherwise provide, the decisions of the Board are required to be the majority decisions only. Individual directors do not have any general powers. They shall have only such powers as are vested in them by the Memorandum and Articles. Section 292(1) of the Companies Act, 1956 provides that the Board of directors of a company shall exercise the following powers on behalf of the company and it shall do so only by means of resolution passed at meeting of the Board: a) the power to make calls on shareholders in respect of money unpaid on their shares; (aa)the power to authorize the buy-back referred to in the first proviso to clause (b) of sub-section (2) of section 77A; b) The power to issue debentures; c) The power to borrow moneys otherwise than on debentures; d) The power to invest funds of the company; and e) The power to make loan. Duties Duties are two types 1. Statutory 2. General 1. Statutory duties: The statutory duties are as follows: (a) To file return of allotment: Section 75 of the Companies Act, 1956 requires a company to file with the Registrar, within a period of 30 days, a return of the allotments stating the specified particulars. Failure to file such return shall make the directors liable as .officer in default.. A fine up to Rs. 5000/- per day till the default continues may be levied. (b) Not to issue irredeemable preference share or shares or share redeemable after 20 years: Section 80, as amended by Amendment Act, 1996, forbids a company to issue irredeemable preference shares or preference shares redeemable beyond 20 years. Directors making any such issue may be held liable as .officer in default. And may be subject to fine up to Rs. 10,000/-. (c) To disclose interest (Section 299-300): In respect of contracts with director, Section 299 casts an obligation on a director to disclose the nature of his concern or interest (direct or indirect), if any, at a meeting of the Board of directors. The said Section provides that in case of a proposed contract or arrangement, the required disclosure shall be made at the meeting of the Board at which the question of entering into the contract or agreement is first taken into consideration. In the case of any other contract or arrangement, the disclosure shall be made at the first meeting of the Board

held after the director become interested in the contract or arrangement. Every director who fails to comply with the aforesaid requirements as to disclosure of concern or interest shall be punishable with fine, which may extend to Rs. 50,000/-. (d) To disclose receipt from transfer of property (sec. 319): Any money received by the directors from the transferee in connection with the transfer of the companys property or undertaking must be disclosed to the members of the company and approved by the company in general meeting. Otherwise, the amount shall be held by the directors in trust for the company. This money may be in the nature of compensation for loss of office but in essence may be on account of transfer of control of the company. But if it is bona fide payment of damages for the breach ofcontract, then it is protected by sec. 321(3). Even no director other than the managing director or whole time director can receive any such payment from the company itself. (e) To disclose receipt of compensation from transferee of shares (Sec.320): If the loss of office results from the transfer (under certain conditions) of all or any of the shares of the company, its directors would not receive any compensation from the transferee unless the same has been approved by the company in general meeting before the transfer takes place. If the approval is not sought or the proposal is not approved, any money received by the directors shall be held in trust for the shareholders, who have sold their shares. Any such director, who fails to take reasonable steps as aforesaid, shall be punishable with fine, which may extend up to Rs. 2500/-. (f) Duty to attend Board meetings: A number of powers of the company are exercised by the Board of directors in their meetings held from time to time. Although a director may not be able to attend all the meetings but if he fails to attend three consecutive meetings or all meetings for a period of three months whichever is longer, without permission of the Board, his office shall automatically fall vacant [Section 283(1)(g)]. (g) To convene statutory, Annual General meeting (AGM) and also extraordinary general meetings [ Section 165,166 &169] (h) To prepare and place at the AGM along with the balance sheet and profit & loss account a report on the company.s affairs including the report of the Board of Directors (Section 173, 210 & 217). (i) To authenticate and approve annual financial statement (Section 215). (j) To appoint first auditor of the company (Section 224). (k) To appoint cost auditor of the company (Section 233B). (l) To make a declaration of solvency in the case of Members. voluntary winding up (Section 488). 2. General duties: The general duties are as follows:
(a) Duty of good faith: The directors must act in the best interest of the company. Interest of the company implies the interest of the present and future members of the company on the footing that company would be continued as going concern. (b) Duty of care: A director must display care in performance of work assigned to him. He is, however, not expected to display an extraordinary care but that much care which a man of ordinary prudence would take in his own case. Any provision in the company.s Articles or in any agreement that excludes the liability of the directors for negligence, default, misfeasance, breach of duty or breach of trust, is void. The company cannot even indemnify the directors against such liability. (c) Duty not to delegate: Director being an agent is bound by the maxim .delegatus non potest delegare. Which means a delegatee can not further delegate. Thus, a director must perform his functions personally. However, he may delegate his in certain conditions.

Kinds of meetings As per company law in India, three types of meetings of the members are required to be held by a company: 1 Statutory meeting 2. Annual general meeting 3. Extra ordinary general meetings 1. Statutory meetings: The meeting is known as Statutory Meeting. The Board must, at least twenty-one days before the day of the meeting, forward to every member a report called the Statutory Report along with the notice of the meeting. If the meeting is not held, every director or other officer who is in default shall be punishable with a fine up to Rs. 500. Moreover, the Court may, on application of the Registrar or a contributory, order the winding up of the company or direct the meeting be held. The Statutory Report must stat the following: (a) the number of shares allotted distinguishing those allotted as fully or partly paid up otherwise than in cash, the extent to which they are partly paid up, the consideration for the shares allotted and the total amount received in cash: (b) an abstract of the receipts and payments under distinctive heads made up to a date within seven days of the date of the report (c) an account of the total amount of cash received by the company in respect of all the shares allotted (d) an account or estimate of the preliminary expenses including commission and discount paid, or payable, on the issue or sale of shares and debentures (e) names, address and occupations of the directors and auditors, and also of its manager and secretary, if any, and any change that may have occurred since the date of incorporation (f) if any contract is to be modified, the particulars of such contract with those of the proposed modification or the actual modification which is to be submitted for approval at the meeting (g) the extent to which underwriting contracts, if any, have not been carried out and the reasons therefore (h) the arrears, if any, due on calls from directors and manager (i) the particulars of any commission, or brokerage paid or to be paid, in connection with the issue or sale of shares or debentures to any of the persons employed in the management of the company.

It should be noted that a company cannot alter the terms of any contract referred to in the Prospectus before the statutory meeting. At least two directors (one of them being the manging director, if there if one) must certify the report. The auditors of the company must also certify the report in so far as it relates to the shares allotted by the company, each received, in respect thereof, and the receipts an payments account. A copy of the report, duly certified must be filed with the Registrar. A list of members showing the number of shares held by each one of them has to be produced at the meeting and kept open accessible to the members while the statutory meeting continues. Members can raise any matter relating to the formation of the company or arising out of the statutory report. No notice is necessary for discussion, but a resolution cannot be passed unless proper notice has been given. The statutory meeting can be adjourned from time and a resolution can be passed t an adjourned meeting if proper notice has been given in the meantime.

2. Annual general meetings The Companies Act requires every company without exception to hold every year a general meeting of its members. Such a meeting is in addition to any other that may be necessary. The first annual general meeting has to be held within 18 months of the date of incorporation and if it is so held, it shall not be necessary, for the company to hold annual general meeting in the year of incorporation and in the next year. In the following year, it must be held within 15 months of the preceding annual general meeting. In case of subsequent meetings, an extension up to three months may be granted by the Registrar The meeting must be held during business hours and must not be held on public holiday. It can be held only in the city, town or village, where the registered officer is situated. A notice of 21 days is necessary for the holding of the meeting. If any default is made in holding the meeting, the Central Government has the power, on the application of a member of the Company, to call the meeting or direct that the meeting be called. The usual business of the meeting is as follows: (a) Consideration and adoption of the annual accounts, i.e., the balance sheet an the profit an loss account and the report of the directors and auditors thereon (b) Election of directors in place of those who retire (c) Appointment of auditors (d) Declaration of dividend If any business other than those enumerated above is to be transacted, it is known a a special business and can be transacted by giving its notice along with the notice of the annual general meeting.

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Extra ordinary general meetings

Every general meeting (i.e. meeting of members of the company) other than the statutory meeting and the annual general meeting or any adjournment thereof, is an extraordinary general meeting. Such meeting is usually called by the Board of Directors for some urgent business which cannot wait to be decided till the next AGM. Every business transacted at such a meeting is special business. An explanatory statement of the special business must also accompany the notice calling the meeting. The notice must should also give the nature and extent of the interest of the directors or manager in the special business, as also the extent of the shareholding interest in the company of every such person. In case approval of any document has to be done by the members at the meeting, the notice must also state that the document would be available for inspection at the Registered Office of the company during the specified dates and timings. The Articles of Association of a Company may contain provisions for convening an extraordinary general meeting. Eg. It may provide that "the board may, whenever it thinks fit, call an extraordinary general meeting" or it may provide that "if at any time there are not within India, directors capable of acting who are sufficient in number to form a quorum, any director or any two members of the company may call an extraordinary general meeting".

Winding up of a company
Winding up of a company is the stage, where by the company takes its last breath. It is a process by which business of the company is wound up, and the company ceases to exist anymore. All the assets of the company are sold, and the proceedings collected are used to discharge the liabilities on a priority basis.
MODES OF WINDING UP:

There are three ways, in which a company may be wound up. They are: A.Winding up by the court B.Voluntary winding up: Members Voluntary winding up. Creditors Voluntary winding up. C.Winding up subject to supervision of the court.0 A.WINDING UP BY THE COURT: A company may be wound up by the court in following situations. Here, the court means "High Court". 1. If the company itself, has passed a special resolution in the general meeting to wound up its affairs. Special resolution means, resolution passed by three-fourth (3/4") of the members present. 2. If there is a default, in holding the statutory meeting or in delivering the statutory report to the Registrar.

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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 its business within one year from the date of it's incorporation, or suspends its 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 its 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.

B. Voluntary winding up A company may, voluntary wind up its affairs, if it is unable to carry on its business, or if it was formed only for a limited purpose, or if it is unable to meet its financial obligation, and etc. A company may voluntary wind up itself, under any of the two modes: Members voluntarily winding up. Creditors voluntarily winding up. A company may voluntarily wind up itself, either by passing: An ordinary resolution, where the purpose for which the company was formed has completed, or the time limit for which the company was formed, has expired. Or By way of special resolution Both types of resolution shall e passed in the general meeting of the company. (484) Once the resolution of voluntarily winding up is passed, and then the company may be wound up, either through: Members voluntarily winding up, or Creditors voluntarily winding up The only difference between the abate two, is that in case of members voluntarily winding up, Board of Directors have to make a declaration to the effect, that company has no debts. (488)