WINDING UP

MEANING OF WINDING UP
- A process where a company is dissolved.
- Where the business is closed down, all assets are sold-off to pay the creditors,
and balance goes to the members.
- Company ceases to exist.
- Also known as liquidation.
- Winding up the company must through legal process because it exists through
same manner.
- There is Shelves Compan! or Dormant Compan!, which means the
company is not actie any more but remain in the existence or still alie.
- !t is cheaper to be bought from the "egister of Company #"$C% and the buyer
can choose such sheles company, which is suit to their business.

"#PES OF WINDING UP
There are $ tpes o% &'n('ng up of the company, namely&
)* +oluntar W'n('ng Up
a. Mem,ers 'oluntary Winding (p #)'W(%
b. Cre('tors 'oluntary Winding (p #C'W(%
$* Compulsor W'n('ng Up
a. Application made to the court by those people listed under Sect'on $)-
.a/ up to .h/ i.e. * types of persons+classes, which has 0ocus Stan('!
.r'ght/ to (o so.
b. The winding up of the company due to circumstances which listed under
Sect'on $)1 .a/ up to .n/*
)* +O0UN"A2# WINDING UP
a* Mem,ers +oluntar W'n('ng Up .M+WU/
#Liquidation of a solvent company%
2elevant sect'ons o% Compan'es Act )345
- Sect'on $56 Circumstances company oluntary w-up ,
- Sect'on $56 . ) / . a / -assed ordinary resolution
- Sect'on $56 . ) / . , / -assed special resolution
- Sect'on $5- .eclaration of /olency
- Sect'on $51 )embers appoint a liquidator
- Sect'on $47 )eeting of creditors
- Sect'on $55 . 4 / . a / -roisional liquidator appointed
before
resolution for w-up was passed.
- Sect'on $51 . 4 / . , / W-up commence after passed
resolution ,
0
- Sect'on $56 up to Sect'on $-4 of CA 0123
(nder Sect'on $56 8 C'rcumstances o% compan voluntar &8up stated that
. ) / A company may be wound up oluntarily4
. a / When the per'o( %'9e( in the )oA or AoA has been e9p're(...5
therefore,,company in general meeting has passe( a resolut'on require
the company to be wound up oluntarily, o
- !n AoA inserted clause for internal matter.
- !n AoA may state within 3 years if the company does not gain
profit up to 066 million the company should winding up.
- 7or instance one company had pro8ect in China where the
pro8ect should be oer within 9 years.
- )eans after 9 years the company will be wound up oluntarily.
. , / Company resole by spec'al resolut'on.
- "esolution will be made by -5 : or ;<6 vot'ng of the
members.
(nder Sect'on $5- - Declarat'on o% solvenc
Solvent
- The members of company makes petition to winding up the
company by members: consent due to solent to the company.
- Terms of solvent being used to carry out meaning that
compan asset are more than the (e,t.
- When company had problems, members passed declaration of
solency.
- Company will hold meeting #A;) < =;)% to pass special
resolution that company in solency.
- Afterward, the directors will prepare declaration of solency of
the company.
Wh'le prepar'ng the solency the ('rectors &'ll %'n(
out e'ther the company is4
a. The company is solvenc
!f solent its come under Sect'on $56 . )
/ . a /
)embers 'oluntarily Winding (p
!t called as consent by the company:s
members through resolution then declared the company is
solent.
b. The company is 'nsolvenc
!f insolent its come under Sect'on $56
.3 ) / . , /
9
!t called as consent by the company:s
members then call creditor for meeting to pass special
resolution to declare the company winding up.
- Then announcement will be made the company meeting under
Sect'on $56 . ) / . a / or . , /.
(nder Sect'on $51 8 Mem,ers appo'nt a l'=u'(ator
- Through this section members gie power to appoint
liquidator.
- >iquidator may appointed from independent accountant, legal
practitioner etc.
- 7or small company they will appoint assignee.
- At this stage all compan assets ,ecome %'9e( #stagnant% and
liquidator will pick-up all the assets.
- >ater, appointed liquidator will distribute the company:s assets
to the particular parties, i.e. secured creditor and fixed charge including
debtors.
(nder Sect'on $47 8 Meet'ng o% cre('tor
- Creditor summoned for meeting for oluntarily winding up.
- )eeting should be held within ? clear day #minus public
holiday%
- !f confirm insolent creditor will appoint liquidator under
Sect'on $4).
(nder Sect'on $55 . 4 / 8 Commencement o% &'n('ng up
- . 4 / A oluntary winding up shall commence&
.a/ At the time of declaration
.Mem,er +WU/
.,/ At the time of passing the
resolution for oluntary winding up .Cre('tor +WU/
Surplus<,alance
- !f there is any balance ordinary member will entitle for any
surplus assets.
O&ner o% compan
- !f there is no any surplus the company:s owner will get
nothing.
,* Cre('tors +oluntar W'n('ng Up .C+WU/
#Liquidation of an insolvent company%
Insolvenc
- @ot initiated by the creditors.
- !nitiated by members but conerted into Creditor 'oluntary Winding (p
#C'W(% because the company is insolent.
A
- Insolvent means company has more debt than the assets.
- )ember conerted into creditor called for meeting due insolency of the
company.
- Creditor will appoint the liquidator.
Pr'or't asset ('str',ut'on
- -ay or distribute first to secured creditor and fixed charge.
- (nsecured and floating charge will leae without any payment.
Cla'm , unsecure( cre('tor
- Corporate lawyer will find the director and try claim from them due to
breach of duty by the director, i.e. statutory duty, fiduciary duty B skill, care
and diligence.
- !f they incurred loss of profit to the company, they will be liable to the
unsecured creditor.
2elevant sect'ons o% Compan'es Act )345
- Sect'on $47 , a company:s members in general meeting pass a special
resolution
- Sect'on $47 .6/ , a meeting of the company:s creditors the same day or the
following day #of the members meeting%
C+WU occurs '%>
- @o declaration of solency #means the company is insolent%
$"
- !f at anytime the liquidator iewed that the company is insolent
Other matters
- Sect'on $54 , 7rom the commencement of the winding up the company
cease business but the corporate state and corporate power continues until it
is dissoled
- When the winding up is completed, the company is normally deregistered
$* COMPU0SO2# WINDING UP
2elevant sect'ons o% Compan'es Act )345
- Sect'on $)- ? "hose people &ho can appl to court %or &'n('ng up*
- Sect'on $)1 ? Groun(s o% compan compulsor &'n('ng up*
- Those persons listed in Sect'on $)- with alid cause of action can pass
resolution and make application to the court to winding up the company.
C
- Application made to the court by those people listed under Sect'on $)- .a/ up
to .h/ i.e. * types of persons+classes, which has 0ocus Stan('! .r'ght/ to (o
so.
- The court may order winding up if the circumstances of the company is within
those listed in Sect'on $)1 .a/ to .n/
- Example of compulsory winding up.
o Sect'on $)- . ) / . , / 8 Pet't'on , cre('tor
Sect'on $)-, D Appl'cat'on for winding up.
Su,8Sect'on . ) /@ D Company ma &oun( up un(er an or(er
o% the Court on the position of,
Su, su,8Sect'on . , / An ('rectors, including a contingent or
prospectie creditor, of the company.
A B C
o Sect'on $)1 . ) / . e /
Sect'on $)1, C'rcumstances in which company may wound up.
Su,8Sect'on . ) /, the Court ma or(er &'n('ng up if.
Su, su,8Sect'on . e /, the compan 's una,le to pa 'ts (e,ts.
A B C
o Sect'on $)1 . $ / . a / D
Sect'on $)1@ (e%'n't'on o% 'na,'l't to pa (e,ts.
Su,8Sect'on .$/@ A compan shall ,e (eeme( to be una,le to
pay its debts if,
Su, su,8Sect'on .a/@ A cre('tor , ass'gnment < otherwise to
whom the company is 'n(e,te( in a sum e9cee('ng 2M 577*77 DE
>iquidator will be appointed by the court.
Sect'on $)1 . ) / . e / 8?Una,le to pa 'ts (e,ts
Sect'on $)1 .$/ 8 Fa'ls to compl &'th a statutor (eman(
- An execution issued on a 8udgment of any court in faour of a creditor returned
unsatisfied.
- Court taking into consideration company:s liabilities, satisfied that it was not
able to pay its debts.
3
Sect'on $)1 .$/ .a/ 8 2M 577<E 'n(e,te(
Sect'on $)1 . ) / . % / - D'rectors acte( 'n the'r o&n 'nterests or 'n a
manner 's un%a'r to mem,ers*
Re National iscounts Ltd
F& !f directors act in the interests of another company, which they control, they
can be said to be acting in their own interest
Sect'on $)1 . ' / 8 Court 's o% op'n'on 't 's Fust an( e=u'ta,le compan to ,e
&oun( up*
'/ Dea(locG
Re !enid"e #o$acco %o ltd
F& $rder winding up, though company made profit
Re &emantan Estate Ltd
C$A& "efused to order winding up. The company could still be carried on and
there was a reasonable hope of reconciliation.
''/ Frau( or m'scon(uct
Loch v 'ohn (lac)wood Ltd
7& .irectors failed to proide the minority members with financial reports as
required by the law.
F& Allowed the petitioned
'''/ O,Fect o% the compan cannot ,e ach'eve(
Re *erman ate %offee %o
7& the company was formed to manufacture a coffee substitute out of dates.
7ailed to acquire the patent for that purpose.
F& The Company was wound up because it was set up for a specific purpose and
that purpose failed to be achieed.
Re #ivoli +reeholds Ltd
F& Company was wound up on the ground of 8ust and equitable.
'v/ Pet't'oner has ,een e9clu(e( %rom the management 'n contravent'on o%
an un(erstan('ng*
2
E$rahimi v ,est$ourne *alleries Ltd
Note> Sect'on &'ll ,e teste( 'n the )
st
"est*
.'/ Sect'on $)1 . ) / . % / 8 D'rectors acte( 'n the'r o&n 'nterests or
'n a manner 's un%a'r to mem,ers*
.''/ Sect'on $)1 . ) / . ' / 8 Court 's o% op'n'on 't 's Fust an( e=u'ta,le
compan to ,e &oun( up*
EFFEC" OF WINDING UP
'/ Cre('tors
- Cannot enforce any 8udgment or order obtained after the commencement of
winding up
''/ Compan
- Cannot carry on business except for the purpose of winding it up
- All document issued hae the words G in liquidation:
- .irectors lose power to manage B members lose rights to transfer shares
'''/ Compan Emploees
- -ublication of winding up might sere as a notice of dismissal
'v/ 2ece'ves
- "estrict their powers
+OIDAH0E "2ANSAC"ION
- Transactions entered in the period leading to company winding up
- Sect'on $3;4 transfer, mortgage
- >iquidator may apply to Gaoid: the transaction and this will increased the
company:s fund

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