` HOW TO WIND UP A SICK

COMPANY ???

by :
DR. T.K. JAIN
AFTERSCHO☺OL
centre for social entrepreneurship
sivakamu veterinary hospital road
bikaner 334001 rajasthan, india
FOR – PGPSE PARTICIPANTS
mobile : 91+9414430763
5 DECEMBER 09 www.afterschool.tk 1
 WHAT IS WIND UP ?

As per sec. 425 of companies act, you can

close a company (wind up ) by :
1. court order
2. voluntarily
3. under supervision of court

5 DECEMBER 09 www.afterschool.tk 2
 Wind up by court ????

You can go to court and request the court to

wind up a company, if it is really not
working properly, however, you have to
apply to the court in whose jurisdiction the
company is

5 DECEMBER 09 www.afterschool.tk 3
 Case : NCL Industries Ltd

Orissa High court refused to take application

for winding up of a comapny having
registered office in Hyderabad.

5 DECEMBER 09 www.afterschool.tk 4
 Wind up by court – process (sec.
433)
Convince the court that the company :
1. is unable to pay debt
2. it is just and equitable to wind up the
company
3. special resolution to wind up by court
3. non-submission of statutory report
4. no business for 1 year (any reason).
5 DECEMBER 09 www.afterschool.tk 5
 Can you apply for winding up ?
Sec. 439

If you are any of these :

creditor
shareholder
registrar
representative of government
company itself
5 DECEMBER 09 www.afterschool.tk 6
 Voluntary wind up....
As per sec. 488, a company can on its own
wind up itself : as per :
1. by members
2. by creditors
here the company will set up the process for
winding up.
However, the court can appoint official
5 DECEMBER 09
liquidator.
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Winding up under supervision ....

Liquidator (the person who sells the property

of the company and settles its dues) is
appointed only by court and he has to work
only with the permission of the court. He
gives his report to the court and takes
permission from the court for all the actions
(sale of property is also with permission of
court).
5 DECEMBER 09 www.afterschool.tk 8
 Winding up of unregistered
company (sec. 583)
When there are 7 or more members in a
company / partnership / firm the court may
order for winding up if :
1.it is just and equitable
2. it is unable to pay to creditors
3. it has cesed to work
so sick comapny (which is in huge losses and
has eroded its networth or is not working)
5 DECEMBER 09 can also be wound up.
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 WHAT IS A PRODUCER
COMPANY?
As per Part IX A of companies act 56
(amended in 2002) sec. 583A (k) : producer
means a person who is engaged in primary
production.
10 or more producers or 2 or more institutions
can make a producer company.
Example : 10 carpet makers (workers) can
make a company
5 DECEMBER 09 www.afterschool.tk 10
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