contribute money or money’s worth to a common stock and employ it in some common trade or business and who share the profit or loss arising therefrom. The common stock so contributed is donated in money and is the capital of the company. The persons who contribute it, or to whom it belongs, are members. The proportion of capital to which each member is entitled is his share. Nature of a Company Separate legal entity: A company is in law regarded as an entity separate from its members. It has an independent corporate existence. The company’s properties belong to the company and not to the shareholders. Limited liability: A company may be limited by shares or a company limited by guarantee. In a company limited by shares, the liability of members is limited to the unpaid value of the shares. For example, if the face value of a share in a company is Rs.10 and a member has already paid Rs.7 per share, he can be called upon to pay not more than Rs.3 per share during the lifetime of the company. In a company limited by guarantee, the liability of members is limited to such amount as the members may undertake to contribute to the assets of the company, in the event of its being wound up. Perpetual succession: A company is a juristic person with a perpetual succession. As such it never dies nor does its life depend on the life of its members. Nature of a Company Common seal: Since the company has no physical existence it must act through its agent. The common seal acts as the official signature of the company. Transferability of shares: The capital of the company is divided into parts, called shares. These shares are freely transferable. Separate property: As a company is a legal person distinct from its members it is capable of owing, enjoying and disposing of property in its own name. Capacity to sue: A company can sue and be sued in its corporate name. Formation Of Company Incorporation of Company: Mode of forming incorporated company: Any 7 or more person (2 or more in case of a private company) associated for any law full purpose may form an incorporated company with or without limited liability. A company so formed may be: A company limited by shares. A company limited by guarantee. An unlimited company. Documents to be filed with the registrar Before a company is registered, it is desirable to ascertain from the registrar of companies if the proposed name of the companies is approved. The following documents duly stamped together with the necessary fees : The memorandum of association duly signed by the subscribers. The articles of association if any signed by the subscribers to the memorandum of association. The agreement if any, which the company proposes to enter into with any individual for appointment as manager. A list of directors. A declaration stating that all the requirements of the companies act and other formalities relating to registration have been complied with. Formation Of Company Certificate of incorporation: If the registrar is satisfied as to the compliance of statutory requirements, he retains and registers the memorandum, the articles and other documents filed with him and issues a certificate of incorporation i.e., of the formation of the company. Effects of registration: The company becomes a distinct legal entity. Its life commences from the date mentioned in the certificate of incorporation. The company acquires a perpetual succession. The members may come and go, but it goes on for ever, unless it is wound up. The company’s property is not the property of the shareholders. Promoter A promoter is a person who does the necessary preliminary work incidental to the formation of a company. Functions of a promoter: He decides the name and ascertains that it will be accepted by the Registrar of Companies. He settles the details of the company’s memorandum and articles, the nomination of directors, solicitors, bankers, auditors and secretary and the registered office of the company. He arranges for the printing of the Memorandum and Articles, the registration of the company, the issue of prospectus. Legal status of a promoter Quasi trustee: A promoter is not an agent because there is no principal born by that time and he is not a trustee because there is no cestui que trust in existence. Fiduciary position: Not to make any profit at the expense of the company. To give benefit of negotiation to the company. To make full disclosure of interest or profit. Not to make unfair use of position. Promoter Duty of promoter as regards prospects: The promoter must see, if it is issues: contains the necessary particulars and does not contain any untrue or misleading statements or does not omit any material fact. Remuneration of promoters: He may sell his own property at a profit to the company for cash or fully paid up shares provided he makes a disclosure to this effect. He may be given an option to buy a certain number of shares in the company at par. He may take a commission on the shares sold. He may be paid a lump sum by the company. Memorandum of Association It contains the fundamental conditions upon which alone the company is allowed to be incorporated. It is the charter of the company and defines the reason for its existence. It lays down the area of operation of the company. It also regulates the external affairs of the company in relation to outsiders. Purpose of memorandum: The prospective shareholders shall know the field in, or the purpose for, which their money is going to be used by the company and what risk they are undertaking in making investment. The outsiders dealing with the company shall know with certainty as to what the objects of the company are and as to whether the contractual relation into which they contemplate to enter with the company is within the objects of the company. Memorandum of Association Printing and signing of Memorandum: The MOA shall be printed, divided into paragraphs numbered consecutively and signed by 7 (2 in case of a private company) subscribers. Contents of Memorandum: The MOA shall contain the following clauses: 1. Name clause: The name of a company establishes its identity and is the symbol of it s existence. Rules regarding name: Undesirable name to be avoided: Too similar to the name of another company or Misleading i.e., suggesting that the company is connected with a particular business when this not the case. Contents of Memorandum Injunction if identical name adopted: An existing company can apply to the court for an injunction to restrain the new company from adopting the identical name. ‘Limited’ or ‘Private Limited’ must come last of the company name. Prohibition of use of certain names. Use of some key words according to authorized capital. Ex: Corporation Rs 5 crores, International, Industries Rs. 1 crore Contents of Memorandum 2. The registered office clause: Every company shall have a registered office from the day on which it begins to carry on business, or as from the 30th day after the date of its incorporation, whichever is earlier. 3. The objects clause: States the main objects of the company to be pursued by the company on its incorporation and other objects of the company not included in the above clause. 4. The capital clause: The MOA shall state the amount of the share capital with which the company is to be registered and the division thereof into shares of a fixed amount. Contents of Memorandum 5. The liability clause: The memorandum of a company limited by shares and guarantee shall also state that the liability of its members is limited. 6. The association clause: The names, addressed and descriptions of the subscribers and the number of shares taken by each one of them. Each subscriber has to take atleast 1 share. Alteration of Memorandum 1. Change of name: By special resolution: A company may change its name by a special resolution and with the approval of the central government signified in writing. By ordinary resolution: May change its name by ordinary resolution and with the previous approval of central government, shall change its name if the central government so directs within 12 months of its registration. 2. Change of registered office: Change of registered office from one place to another place in the same city, town, Change of registered office from one town to another in the same state. Change of registered office from one state to another. Alteration of Memorandum 3. Alteration of object: The power of alteration of objects is subject to 2 limits namely: Substantive limit: To carry on its business more economically or more efficiently. To attain its main purpose by new or improved means. To enlarge or change the local one of its operations. To carry on some business which may conveniently or advantageously be combined with the objects specified in the memorandum. Procedure of alteration: Special resolution at general meeting. Confirmation by the company law board. Notice to affected parties- creditors. Notice to registrar Power of the company law board to confirm alteration discretionary. Rights and interest of members and creditors to be taken care. Copy of the order of the company law board to be filled with the registrar within 3 months. Alteration of Memorandum 4. Change in liability clause: A company limited by shares or guarantee cannot change its memorandum so as to impose any additional liability on the members or to compel them to buy additional shares of the company, unless all the members agree in writing to such change either before or after the change. 5. Change in capital clause: Involves increase, reduction of share capital. Doctrine of Ultra Vires A company has the power to do all such things as are: Authorized to be done by the companies act. Essential to the attainment of its objects specified in the Memorandum. Reasonably and fairly incidental to its objects. Everything else is ultra vires the company. ‘Ultra’ means ‘beyond’ and ‘vires’ means ‘ powers’. The term ultra vires for a company means that the doing of the act is beyond the legal power and authority of the company. The purpose of these restrictions is to protect: Investors in the company so that they may know the objects in which their money is to be employed and Creditors by ensuring that the company’s funds are not wasted in unauthorized activities. Articles of Association The AOA are the rules, regulations and bye-laws for the internal management of the affairs of a company. They are framed with the object of carrying out the aims and objects as set out in the MOA. Contents of Articles of Association Share capital: including sub-division, rights of various shareholders, the relationship of these rights, payment of commission, share certificates. Lien of shares: Lien of shares means to retain possession of shares incase the member is unable to pay his debt to the company. Calls on shares: Calls on shares include the whole or part remaining unpaid on each share which has to be paid by the shareholders on the company’s demand. Transfer of shares: The articles of association include the procedure for the transfer of shares by the shareholder to the transferee. Transmission of shares: Transmission includes devolution of title by death, succession, marriage, insolvency, etc. It is not voluntary but is in fact brought about by operation of law. Forfeiture of shares: The articles of association provide for the forfeiture of shares if the purchase requirements such as paying any allotment or call money, are not met with. Contents of Articles of Association Surrender of shares: Surrender of shares is when the shareholders voluntary return the shares they own to the company. Conversion of shares in stock: In consonance with the articles of association, the company can convert the shares into stock by an ordinary resolution in a general meeting. Share warrant: A share warrant is a bearer document relating to the title of shares and cannot be issued by private companies; only public limited companies can issue a share warrant. Alteration of capital: Increase, decrease or rearrangement of capital must be done as the articles of association provide. General meetings and proceedings: All the provisions relating to the general meetings and the manner in which they are to be conducted are to be contained in the articles of association. Voting rights of members, voting by poll, proxies: The members right to vote on certain company matters and the manner in which voting can be done is provided in the articles of association. Contents of Articles of Association Directors, their appointment, remuneration, qualifications, powers and proceedings of the boards of directors meetings. Dividends and reserves: The articles of association of a company also provide for the distribution of dividend to the shareholders. Accounts and Audits: The auditing of a company shall be done subject to the provisions of the articles of association of the company. Borrowing powers: Every company has powers to However, this must be done according to the articles of association of the company. Winding up: Provisions relating to the winding up of the company finds mention in articles of association of the company and must be done accordingly. Alteration of Articles Companies have been given very wide powers to alter their Articles. Procedure of Alteration: A company may, by passing a special resolution, alter its Articles any time. A copy of every special resolution altering the Articles shall be filed with the Registrar within 30 days of its passing and attached to every copy of the Articles issued thereafter. Any alteration so made in the Articles shall be as valid as if originally contained in the Articles. Limitations to alteration Must not be inconsistent with the act. Must not conflict with the Memorandum. Must not sanction anything illegal. Must be for the benefit of the company. Must not increase liability of members. Alteration by special resolution only. Approval of Central Government when a public company is converted into a private company. Breach of contract. Must not result in expulsion of a member. No power of the Tribunal to amend Articles. Alternation may be with retrospective effect. Constructive notice of Memorandum and Articles Every outsider dealing with a company is deemed to have notice of the contents of the Memorandum and the Articles of Association. These documents, on registration with the /registrar, assume the character of public documents. This is known as constructive notice of Memorandum and Articles. Doctrine of indoor management: The outsiders dealing with the company are entitled to assume that as far as the internal proceedings of the company are concerned, everything has been regularly done. The doctrine of constructive notice protects the company against outsiders, the doctrine of indoor management seeks to protect outsiders against the company. Prospectus “Any document described or issued as a 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”. Any document inviting deposits from the public or inviting offers from the public for the subscription of shares or debentures of a company is a prospectus. Prospectus Prospectus to be in writing: A prospectus must be in writing. An oral invitation to subscribe for shares in, or debentures of, a company, or deposits is not a prospectus. An advertisement in television or a film is not treated to be a prospectus. Invitation to public: A document is not a prospectus unless it is invitation to the public to subscribe for shares in, or debentures of, a company. Offer to the public i.e., public issue. Dating of prospectus: A prospectus issued by or in relation to an intended company must be dated and that date is, unless the contrary is proved, taken as the date of publication of the prospectus. Signing of prospectus: It has to be signed by the proposed directors of the company or by their agents authorized in writing. Registration of prospectus: Can be issued by or on behalf of a company only when a copy thereof has been delivered to the Registrar for registration. The registration must be made on or before the date of publication thereof. The prospectus must be issued within 90 days of the date on which a copy thereof is delivered for registration and signed by directors. Penalty for non-registration of prospectus is Rs.50,000. Contents of Prospectus Part I of Schedule II: I. General Information Name and address of registered office of the company. Name of regional stock exchange where application is made for listing of present issue. Declaration about refund of the issue if minimum subscription of 90% is not received within 90days from closure of the issue. Name and address of trustee under debenture trust. Date of opening of the issue. II. Capital Structure of the Company: Authorized, issued, subscribed and paid-up capital. Size of present issue giving separately reservation for preferential allotment to promises and others. Paid-up Capital. Contents of Prospectus III. Terms of the Present Issues: Terms of payment. Rights of the instruments holders. How to apply- availability of forms. Any special tax benefits for company. IV. Particulars of the Issue: Object. Project cost. Means of financing. V. Company, Management and project: History and main objects of the company. Promoters. Location of project. Infrastructure facilities. Nature of product. Contents of Prospectus VI. Particulars in regard to the company and other listed companies under the same management: Which made any capital issue during the last 3 years. Name of the company. Year of the issue. Type of the issue. Amount. Date of Closure. VII. Outstanding litigation pertaining to: Matters likely to affect operation. Particulars of default, if any in meeting statutory dues and institutional dues. VII. Management perception of risk factors: Ex. Sensitivity to foreign exchange rate fluctuations, difficulty in availability of raw materials or in marketing of products, cost/time over-run, etc., Contents of Prospectus Part II of Schedule II: A. General information: Content of directors, auditors, solicitors, managers to issue, registrar of issue, bankers to the Company, Bankers to the issue and Experts. Experts opinion obtained, if any. Change, if any, in directors and auditors during the last 3 years, and reasons thereof. Authority for the issue and details of resolution passed for the issue. Procedure and time schedule for allotment and issue of certificates. Names and addressed of the Company Secretary, Legal adviser, Auditors, Bankers to the Company. Bankers to the issue and Brokers to the issue. Contents of Prospectus B. Financial Information: 1. Report by the auditors: Profits and losses and assets and liabilities and the rates of dividends paid by the company during the preceding 5 financial years. 2. Reports by the accountants: The report by the accountants on the profit and losses of business for the preceding 5 financial years on a date which shall not be more than 120 days from the date of issue of prospectus. A similar report to be submit to the acquiring company. Principal terms of loans and asset charged as security. Contents of Prospectus C. Statutory and other information: Minimum subscription. Expenses of the issue giving separately fees payable to advisers, registrars to the issue, managers to the issue, trustees for the debenture holders. Underwriting commission and brokerage. Previous issues for cash. Previous public or rights issue, if any. Commission or brokerage on previous issue. Issue of shares otherwise than for cash. Debentures and redeemable preference shares and other instruments issued by the company outstanding. Option to subscribe. Details of purchase of property. Details of directors, proposed directors, whole-time directors, their remuneration. Rights of members regarding voting Restrictions if any, on transfer and transmission of shares/debentures. Revaluation of assets, if any. Material contracts and inspection of documents. Contents of Prospectus Part III of Schedule II: A vendor has entered into contract to sell the product. Reasonable time and place at which copies of all balance sheet on which the report may be inspected. Term year whenever used here in earlier means financial year. Misstatements in prospectus and their consequences If there is any misstatements of a material fact, there may arise- Civil liability. Criminal liability. 1. Civil Liability: A person who has been induced to subscribe for shares (or debentures) on the faith of a misleading prospectus has remedies against the company, and the directors, promoters and experts. 1. Remedies against the company: If there is a misstatement or withholding of a material information in a prospectus, and if it has induced any shareholder to purchase shares, he can- Rescind the contract and Claim damages from the company whether the statement is fraudulent or an innocent one. Misstatements in prospectus and their consequences 2. Remedies against the directors, promoters and experts: (i). Liability for damages for misstatement in prospectus: Every director, promoter and every person who authorizes the issue of the prospectus is liable to pay compensation to the aggrieved party for loss. Defenses of directors, promoters etc shall not be liable if he puts up the following defenses: Withdrawal of consent. Absence of consent. Ignorance of untrue statement. Reasonable ground for belief. Statement of expert. (ii). Liability for damages for non-compliance with. (iii). Liability under the general law. Misstatements in prospectus and their consequences 2. Criminal Liability: Where a prospectus contains any untrue statement, every person who authorized the issue of the prospectus is punishable with imprisonment which may extend to 2 years, or with fine which may extend to Rs. 50,000 or with both. He is not liable if he proves either: That the statement was immaterial, or That he had reasonable ground to believe that the statement was true. Statement in Lieu of prospectus Where a public company does not invite public to subscribe for its shares, but arrange to get money from private sources, it need not issue a prospectus to the public. In such a case the promoters are required to prepare a draft prospectus known as a ‘statement in lieu of prospectus’, which should contain the information required to be disclosed by the Act. Commencement of Business: A private company can commence business immediately after its incorporation. A public company can do so only after it obtains a ‘certificate of commencement of business’. Directors Directors include any person occupying the position of director, by whatever name called. He may be defined as a person having control over the direction, conduct, management or superintendence of the affairs of a company. Only individuals can be directors. Number of directors: Every public company shall have at least three directors and every other company shall have at least two directors. Power of directors 1. General powers of the Board: The BOD of a company is entitled to exercise all such powers and to do all such acts and things as the company is authorized to exercise and do. 2. Powers to be exercised at Board meetings: Make calls on shareholders in respect of money unpaid on their shares. Issue debentures. Borrow moneys Invest the funds of the company and Make loans.’ Power of directors 3. Other powers: To fill vacancies. To sanction for certain contracts. To receive notice of disclosure of directors interest in any contract. Appoint of a MD . 4. Powers to be exercised with the approval of companies in the general meeting: To sell, lease or otherwise dispose of the whole of the undertaking of the company. To remit or give time for repayment of any debt due to the company by a director. To invest the amount of compensation received by the company. To borrow moneys where the moneys to be borrowed one more than the paid up capital to the company. Duties of directors 1. Fiduciary duties: The directors must: Exercise their powers honestly and bonafide for the benefit of the company as a whole and Not place themselves in a position in which there is a conflict between their duties to the company ands their personal interests. They must not make any secret profit out of their position. The fiduciary duties of directors are owned to the company and not to the individual shareholders. Duties of directors 2. Duties of care, skill and diligence: The standard of care, skill, and diligence depends upon the nature of the company’s business. There are various standards of the care depending upon: The type and nature of work, Division of powers between directors and other officers. General usages and customs in that type of business and Whether directors work gratuitously or remuneratively. 3. Other duties of directors: To attend board meetings. Not to delegate his functions except to the extent authorized by the Act. To disclose his interest. Liabilities of directors 1. Liability to third parties: (i) Under the Act: Liability of directors to third party may arise in connection with the issue of prospectus which does not contain the particulars required by the Companies Act, or which contains material misrepresentations. Directors may also incur personal liability: On their failure to repay application money if minimum subscription has not been subscribed. On an irregular allotment of shares to an allottee if loss or damage is sustained. On failure by the company to pay a bill of exchange, promissory note, cheque or order for money or goods wherein the name of the company is not mentioned in legible characters. Liabilities of directors (ii) Independently of the Act: Directors as agents of a company, are not personally liable on contracts entered into as agents on behalf of the company. 2. Liability to the company: (i) Ultra vires acts: Directors are personally liable to the company in respect of ultra vires acts and it is not necessary to prove fraud in such cases. (ii) Negligence: A director may incur liability for the negligence in the exercise of his duties. (iii) Breach of trust: Hold the position of trustees as regards its money and property which comes into their hands and of the powers entrusted to them by the Articles. (iv) Misconduct: They are responsible for willful misconduct for which they may be sued in a Law Court. Liabilities of directors 3. Liability for breach of statutory duties: They are maintenance of proper accounts, filing of returns or observance of certain statutory formalities. 4. Liabilities for the acts of his co-directors: A director is not liable for the acts of his co-directors provided he has no knowledge and he is not a party. Winding up Winding up of a company is a process whereby its life is ended and its property administered for the benefit of its creditors and members. An administrator, called liquidator, is appointed and he takes control of the company, collects its assets, pays its debts and finally distributes any surplus among the members in accordance with their rights. Modes of Winding Up There are three modes of winding up of a company, viz., 1. Winding up by the Court, i.e., Compulsory winding up. 2. Voluntary winding up. This may be: Members voluntary winding up or Creditors voluntary winding up 3. Winding up subject to supervision of Court. Winding up by the Court Winding up of a company under the order of a Court is also known as ‘compulsory winding up’: Grounds for compulsory winding up: A company may be wound by the Court in the following cases: 1. Special resolution of the company: Members of a company prefer to wind up the company voluntarily for in such a case they shall have a voice in its winding up. It is far cheaper and speedier than a winding up by the Court. Winding up by the Court 2. Default in delivering the statutory report to the Registrar or in holding statutory meeting: A petition for winding up can be filed only after the expiry of 14 days from the days of statutory meeting. The Court may order the cost to be paid by any persons who are responsible for the default. 3. Failure to commence, or suspension of, business: The tribunal exercise power in the case only if the company has no intention of carrying on its business. In case of suspension it has to begin within the year, the tribunal will not wind it up if: There are reasonable prospectus of the company starting business within a reasonable time, and There are good reasons for the delay, i.e., the suspension of business is satisfactorily accounted for and appears to be due to temporary causes. Winding up by the Court 4. Reduction in membership: If at any time, the number of members of a company is reduced in the case of a public company, below 7 or in the case of a private company, below 2, the company may be ordered to be wound up by the Court. 5. Inability to pay its debts: A company may be wound up by the Court if it is unable to pay its debts. The test is whether the company has reached a stage where it is commercially insolvent. Winding up by the Court 6. Just and equitable: The court may order winding up under the following cases: When the substratum of a company is gone. When the management is carried on in such a way that the minority is disregarded or oppressed. Where there is a deadlock in the management of the company. Where public interest is likely to be prejudiced. When the company was formed to carry out fradulent or illegal business or when the business of the company becomes illegal. When the company is a mere bubble and does not carry on any business or does not have any property. Commencement of winding up The winding up of a company by the court is deemed to commence at the time of presentation of the petition for winding up. If before the presentation of the petition a resolution has been passed by the company for voluntary winding up shall be deemed to have commencement up the time of passage of resolution. Procedure of winding up by the court Official liquidator: For the purpose of winding up of the companies by the court there shall be attached to each High Court on Official Liquidator appointed by the Central Government. Duties of liquidator: Proceedings in winding up. To prepare preliminary report. Custody of company’s property. Exercise and control of liquidator’s powers. Meeting of creditors and contributories. Direction from the court. Proper books. Audit of accounts. Appointment of committee of inspection. Pending liquidation. Powers of liquidator 1. Power exercisable with the sanction of the court: To institute or defend suits and other legal proceedings, in the name and on behalf of the company. To carry on the business of the company so far as may be necessary for the beneficial winding up of the company. To sell the movable and immovable property by public auction or private contract. To raise money on the security of the company’s assets. 2. Powers exercisable without the sanction of the court: To do all acts and to execute documents and deeds on behalf of the company under its seal. To inspect the records and returns of the company. To prove rank and claim in the insolvency of any contributory. To draw, accept and endorse any bill of exchange. To appoint agents whenever necessary. Powers of liquidator 3. Powers exercisable in case of onerous contract: The term ‘onerous’ means a right to property, e.g., a lease, in which the obligations attaching to it exceed the advantage to be derived from it. The liquidator may, with the leave of the Court, disclaim onerous contracts, and properties. This shall be done within 12 months after the commencement of the winding up, unless the Court extends time. Dissolution of company Dissolution puts an end to the existence of a company. A Company which has been dissolved no longer exists as a separate entity capable of holding property or of being sued in the Court. Ground for dissolution: The Court shall make an order for the dissolution of a company: When the affairs of the company have been completely wound up, or When the Court is of opinion that the liquidator cannot proceed with the winding up for want of funds and assets, or, For any other reason. Voluntary winding up Voluntary winding up means winding up by the members or creditors of a company without interference by the Court. The object of a voluntary winding up is that the company, i.e., the members as well as the directors, are left free to settle their affairs without going to the Court. Circumstances in which a company may be wound up voluntarily: (i) By passing an ordinary resolution: When the period, if any, fixed for the duration of a company by the Articles has been expired, the company in general meeting may pass an ordinary resolution for its voluntary winding up. (ii) By passing a special resolution: A company may at any time pass a special resolution that it be wound up voluntarily. No reasons need be given where the members pass a special resolution for the voluntary winding up of the company. Voluntary winding up Commencement of voluntary winding up: A voluntary winding up shall be deemed to commence at the time when the resolution for its voluntary winding up is passed. Advertisement of resolution: Within 14 days of the passing of the resolution, the company shall give notice of the resolution by advertisement in the Official Gazette and also in some newspapers circulating in the district of the registered office of the company. Types of voluntary winding up: 1. Members voluntary winding up or 2. Creditors voluntary winding up. Members Voluntary Winding Up Declaration of solvency: The declaration shall be made by a majority of the directors at a meeting of the Board that the company has no debts or that it will be able to pay its debts in full within 3 years from the commencement of the winding up. The declaration shall made be verified by an affidavit. Provisions applicable to a members voluntary winding up: 1. Appointment and remuneration of liquidators. 2. Board’s powers to cease on appointment of a liquidator. 3. Power to fill vacancy in office of liquidator. 4. Notice of appointment of liquidator to be given to Registrar. 5. Power of liquidator to accept shares, etc., 6. Duty of liquidator to call creditors meeting in case of insolvency. 7. Duty to call general meeting at the end of each year. 8. Final meeting and dissolution. 9. Provisions as to annual and final meeting in case of insolvency. Creditors voluntary winding up A voluntary winding up of a company in which a declaration of its solvency is not made is referred to as a creditors voluntary winding up. Provisions applicable to creditors voluntary winding up: 1. Meeting of creditors. 2. Notice of resolution to be given to Registrar. 3. Appointment of liquidator. 4. Appointment of committee of inspection. 5. Liquidator’s remuneration. 6. Board’s power to cease on appointment of liquidator. 7. Power to fill vacancy in office of liquidator. 8. Power of liquidator to accept shares etc., as consideration for sale of property. 9. Duty of liquidator to call meeting at the end of each year. 10. Final meeting and dissolution. Consequences of winding up 1. Consequences as to shareholders/members: In a company limited by shares, a shareholder is liable to pay the full amount up to the face value of the shares held by him. In a company limited by guarantee, the members are liable to contribute up to the amount guaranteed by them. 2. Consequences as to creditors: Where the company is solvent: Where a company is being wound up, all debts payable on a contingency and all claims against the company, present or future, certain or contingent, ascertained or sounding only in damages, shall be admissible to proof against the company. Where a solvent company is wound up, all the claims of creditors , when proved , are fully met.