Annual General Meetings

[AGM]

The 2013 Act states that the First Annual

General Meeting should be held within
nine (9) months from the date of closing of
the first financial year of the company.
[section 96(1) of 2013 Act]

The AGM should be held during defined

business hours i.e. between 9 am and 6 pm.
The AGM cannot be held on a National
Holiday.
[Section 96(2) of 2013
Act].

 In order to call an Annual General Meeting

at shorter notice, the consent of 95% of the
members is required. [section 101(1) of 2013 Act].
The nature of concern or interest of

- every Director, Manager, any other

Key
Managerial Personnel
and - relatives of such director,
manager or any other key managerial
personnel
in each item of special business will need to
be mentioned in the Notice of the Meeting
[section 102 (1) of 2013
Act].

 The threshold of disclosure of

share holding interest in the
company to which the business
relates of every promoter, director,
manager and key managerial
personnel has been reduced from
20% to 2%
[Section 102
(2) of 2013 Act].

Quorum

The quorum will depend on

- Number of Members as on
the Date of Meeting.
The required quorum is as follows:
Five members if number of members is not
more than one thousand
Fifteen members if number of members is more
than one thousand but up to five thousand
Thirty members if number of members is more
than five thousand
[Section 103 (1) of 2013 Act]

Proxy
The 2013 Act has introduced
- a limit on the number of members
which
a proxy can represent.
The Act has introduced - a dual limit in terms of
- number of members, and their
- shares holding which is as follows:
A proxy can represent - 50 members
- shares holding in the
aggregate not more than 10 % of the total share
capital of the company carrying voting rights*
[Section 105 (1) of 2013
Act].

 Private companies cannot impose restrictions on

voting rights of members - other than due to
unpaid calls or sums or lien
[Section 106 (1) of 2013 Act].

Listed companies will be required to file with the

Registrar of Companies [ROC]
i. a Report on each Annual General Meeting as
prescribed; and also
ii. A Confirmation Statement that the Meeting
was
- convened, held and conducted

- as per the provisions of the 2013 Act

and the relevant rules.
[Section 121 of 2013 Act].

Place of keeping registers and returns

As a Rule the Registered Office

shall be the Place for Keeping
Records of the Company.
But, the 2013 Act allows
(1) registers of - members,
- debentureholders,
- any other
security holders

Notice of Meeting & its Contents.

Notice is of two (2) kinds:

1.
General notice
2. Special notice
What a notice should contain, generally?
Notice of a meeting shall specify the
- place
day
- date
and - time of the meeting
Specify a statement of business to be
transacted i.e. Agenda of the Meeting.

Notice of Meeting & its Contents - 2

Place of holding the meeting:

Must be held within the city/town
where the Registered office is located.
Nowhere else.
Time & Date of Meeting:
Must not be held - on a National holiday
During working
hours 9-00 am to 6-00 pm.
NOTE: After notice of the meeting was issued, if
Central Government declares that day as public
holiday even then, the meeting must be held at
appointed day, date, time and the venue.

Notice of Meeting & its Contents - 2

Notice of Meeting:
- Not less than 21days of clear
Notice
shall be given

- In order to call an Annual General

Meeting at shorter notice, the
consent
of 95% of the members is required.
[Section 101(1) of 2013
Act].

such an assent may be obtained

either at the meeting
or before the meeting.

Notice of Meeting & its Contents - 3

Interpretation of 21 days clear

notice:
- It implies notice of meeting must
be
served not less than 21 days
in advance
- Exclude Date of the Meeting
Date of the service of
Notice.
- Notice sent by post - is deemed
to have
reached the addressee on the

Whom to give notice?

Notice must be sent to

- every Member and Director
- every member entitled to shares in
case of
death or insolvency of a member
- the Auditors of the company.
Mode of giving notice:
- by post
- by Regd. Post, if the member prepays
costs
- by an advertisement in local news papers.
Note: Incase the company wants
to transact any

In case of Annual General Meeting.

State specifically :
1. The Notice is for the Annual General Meeting
2. The number of AGM [Ex: 9th Annual General Meeting]
3. Every member is entitled to attend to it and
vote thereat
4. A member is also entitled to appoint a proxy
to attend and vote instead of himself/herself.
5. Such proxy need not be a member.
6. An explanatory statement in respect of Special
Business to be transacted has been annexed with
the Notice.

6. Agenda of ordinary business &

papers
or statements relevant to them
7. Agenda of special business & an
explanatory
statement in respect of each item
on such
agenda has been annexed with
the notice.
8. The dates of closing & opening

In case of an Extra-ordinary General Meeting:

1. State it is an Extra-ordinary General Meeting

2. The matters for which it is convened (Agenda)
3. The matters to be passed with the help of
- Ordinary Resolution
4. The matters to be passed with the help of
- Special Resolution
5. Explanatory statement in respect of each item
on
such agenda has been annexed with
the Notice
6. Every member entitled to attend to it and vote
thereat is also entitled to appoint a proxy to
attend and vote instead of himself or herself and
such proxy need not be a member.

In case of Board meeting:

- the notice need not state the

business to
be transacted at the meeting,
unless the
Articles or the Act specifically
require so.

SPECIAL NOTICE:

1. Special notice implies that at least 14

days before the meeting
Excluding the date of meeting and
the date of serving.
.The proposer of any resolution shall
inform the company about his intention
to do so.
.On receipt of such an intimation, the
company shall give a notice thereof to all
the members individually at least 7 days
before the date of the meeting.
.Where this not practicable, through an
advertisement in a news paper having an

2. Special Notice is needed to move the

following
Resolutions at
a Meting:
A Resolution appointing an Auditor other
than the retiring one
A Resolution providing that a retiring
Auditor shall not be reappointed [1 & 2
under Sec 225]

A Resolution purporting to remove a

Director before the expiry of his period of
office
A Resolution appointing another
Director in place of a director removed
before the expiry of his/her period of office
[3 & 4 under Sec 284]

Any other resolution requiring special

Note:
Resolutions requiring Special Notice
are not
a different kind of resolutions.
It is passed either with the help of an
ordinary
or special resolution.
All this depending upon the
requirements of the Companies Act,
2013 or the Articles of the company.
For example: The above-stated
instances of resolutions requiring special
notice are passed with the help of an

Law relating to Meetings

Types of Meetings:
Shareholders Meetings
- First General Meeting
- Annual General Meeting
- Extra-ordinary General Meeting
Board of Directors Meetings
Special Group Meetings
- Preferential Share-holders Meeting
- Debenture-holders Meeting
- Creditors Meeting
Committee Meetings.

First and subsequent Annual General Meeting.

It is the meeting of - Members

or - Shareholders
Held once in every year
To transact
- General / Ordinary business of
the
company
- in addition to Special business,

 How or why it has Significance for

Members?

Share-holders get an opportunity

1 of discussing & reviewing the
working of
the company during the
financial year to
which the meeting relates.
2 of exercising control over the
Management
by re-electing or refusing to elect
each of the
rotational directors.

 Annual General Meeting-Legal Provisions

First AGM - to be held within Nine (9)
months
- from the date of closing of the first
financial year of the company.
[Section 96(1) of 2013
Act]

- No extension of time allowed.

Subsequent General meetings shall be
held within six (6) months from the date of
closing of the financial year.
Financial year begins with 1st day of
April and ends on 31st day of March that
follows.

 Subsequent AGMs
1. Must be held once in every
calendar year
2.Time lag between two successive
AGMs
shall not exceed 15 months
3. May be extended by the
Registrar by
three (3) months
4. Must be held, even if
- the accounts are not ready
- the accounts are not complete

 Note:
In a
situation such as described under
point 4 supra, the
company should
- convene the AGM in time,
- adjourn it
and - call it on a date by which
the completed accounts

 Business transacted at the

meeting:

- Ordinary/General Business
- Special Business

In case the company wants to

transact any business, other than
ordinary business
the notice of the meeting must
clearly
specify it.

 Ordinary business includes:

1. Consideration & Adoption of

(i) - Accounts and
(ii) - the Reports of the Directors
&
- Auditors
2. Declaration of dividend
3. Appointment of Directors in
place of
those retiring by rotation.
4. Appointment of Auditors and

 Special Business means:

1 business other than ordinary business
2 explanatory statement in respect of
Special
Business to be attached to the Notice
3 the statement should state all material
facts concerning each item of special
business including
nature of any interest of any
director
or KMPs, etc. therein.
4 should state - the time and place
where the documents in respect of such
items can be inspected.

Pleas pay attention to topics like:

Place of holding the meeting
Time & Date of Meeting
Interpretation of 21 days clear Notice
Whom to give Notice?
Mode of giving Notice
Distinguish Special from ordinary Notice
Agenda for Annual General Meeting
Distinguish Special from Ordinary
Resolution
Distinguish Transfer from transmission
of shares
Distinguish Shares from stock

Default in holding AGM:

1. Any member may complain to the

Central Government
2. The Government may
call the meeting
or direct the calling of the
meeting
and give directions in relation to
calling the
meeting or conducting the meeting.

3 Officers who make a default

in
calling the meeting
or following the directions of the
Government.
shall be liable to a fine and a
further
fine per day of default. [Sec
168]

Quorum for the Meeting

1. Unless Articles provide for a larger

number, Personal presence of
- 5 Members in case of Public
Company
- 2 Members in case of Private
Company
2. Articles can provide for a larger
number
but not a smaller number than the
statutory
minimum.

Quorum

The quorum will depend on

- Number of Members as on
the Date of Meeting.
The required quorum is as follows:
Five members if number of members is not
more than one thousand
Fifteen members if number of members is more
than one thousand but up to five thousand
Thirty members if number of members is more
than five thousand
[Section 103 (1) of 2013 Act]

Quorum 2.

4. Proxies are excluded for this

purpose
and articles cannot provide
for their
inclusion in the counting for
the
purpose of determining
quorum.
5. If the President of India or the
Governor
of a State hold shares in the
company, it

Quorum 3.

7. If within half an hour of the time fixed for

the meeting, the quorum is not present,
the meeting is adjourned to the same
day in the next week at the same time
and at the same place.
- However, an
extraordinary general meeting
called upon the requisition of members stands
dissolved if the quorum is not present within
half-an-hour of the scheduled time.
If at the adjourned meeting also, the quorum is
not present within half-an-hour of the scheduled
time, the members present constitute the
quorum.

Quorum 4.
Where the total number of members falls
below the quorum fixed by the Articles,
the reduced total number of members
constitute the quorum.
The quorum shall be
- present at the beginning of
the
meeting
- need not be present
- throughout the meeting
or- at the time of voting.

Quorum 5.

Can one person constitute

quorum?
One person cannot constitute
quorum
Provisions of the Law/Act.

The logic behind this provision is that

- a meeting implies the coming

together
of more than one person.

 Sharp vs. Dawes (case):

In this case, one shareholder attended the
meeting of the company, transacted the
business; thereby a call was made on the
shareholders. One shareholders D, did not make
payment of call money due one his shares. He
was sued by the company for recovery of calls in
arrears. Ds contention in his defence was that
- he was not liable to pay, as the business
transacted at
the meeting was invalid for, in fact, no
meeting did take
place as only one member attended it.
Consequently, the call made did not give
rise to any
liability for him.

When can one person constitute a

quorum?

Five (5) Exceptional Situations / Cases:

1. When all the shares of a particular class are

held by a single person, that single person
will constitute quorum for the purposes of that
particular class meeting.
2. When the Central Government directs the
calling of an Annual General Meeting it may
also direct that one member present in person or
by proxy shall constitute the quorum
3. When the Company Law Board directs the
calling of a General Meeting it may also direct like
the Central Government

 4. When at the adjourned meeting, a

quorum is
not present within half-an-hour of
the scheduled
time, even one person present thereat
shall
constitute the quorum.

5. When the Board of Directors has

delegated
powers to any committee which consists
only
of one director, that director alone

Manner of Conducting the Meeting

Shareholders of a company take

important decisions at the Meeting.
For this, - any member or
- the chairman of the
Meeting
- may
make a proposal to the meeting.
Such proposal is known as motion
A motion must be seconded by
another member before it is
discussed by the members.

After discussion, the motion is put to

vote

- by show of hands in the first

instance; and
or - by poll, if demand is made for
it.
The chairman of the meeting resorts
to voting
- in order to ascertain the wishes of
the members present at the
meeting.

Under the system of : voting by

show of hands
- Every member has only one
vote
- Proxies are excluded for this
purpose
Under the system of : voting by poll
- Each member has votes in
proportion to
his/her share of the paid up
share capital

Demand for a Poll

Where the members of a meeting are

dissatisfied about the result of voting by
show of hands
a poll can be
demanded.
Because,
a member may have more than one vote
under the system of voting by poll.
The demand for poll is governed by the
provisions of Company Act and Rules framed
there under:
When a Poll can be demanded?
A poll can be demanded before or on the
declaration of the results of the voting on a
show of hands.

 By whom a Poll can be

demanded?
A poll can be demanded by any
one of the
following:

1- by Chairman on his own

motion
2- In case of a Public
company
at least by 5 members having

3- In case of a Private company

If 7 or less than 7 members are personally
present
- by one member having the right to vote
on the resolution and present in person
or by proxy
If more than 7 members are personally
present
- by two members present in person
or by proxy
[Clarity on this issue under Act
of 2013 is required]

4- By any member present in

person or by
proxy and having not less than
1/10th of
the total voting power in respect
of the
resolution.
5- By any member (s) present in
person or
by proxy and holding shares
whose
paid-up value is not less than

Withdrawal of Demand for

Poll.
When the demand for poll can be
withdrawn and by whom?
The demand for poll may be withdrawn
- at any time
- by the person who made the
demand.

If the motion is favoured by a required

majority, it is converted into
Resolution.

Thus, a Resolution implies a motion

which has been passed by the
required majority at the meeting.

Kinds of Resolutions which may be

passed at a meeting:
- Ordinary Resolutions
- Special Resolutions

Ordinary Resolution
It is passed by a simple majority [51%
Plus]
Passed at a duly convened meeting.
The following business is transacted by
ordinary resolution:
1. Adoption of Directors Report
2. Passing of Final Accounts
3. Election of Directors
4. Appointment of Auditors and
fixating their remuneration.
5. Declaration of Dividends
6. Issue of shares at a discount etc

Special Resolution

- It is passed with 3/4th (75% plus)

majority
- Passed at a duly convened
meeting
- Notice of the Meeting expressly
stated
that the resolution shall be passed as
a
special resolution.

Business is transacted by Special

Resolution:

1. In case of Memorandum of
Association
- Alteration of Objects Clause
- Shifting Registered Office
from one
State to another
- Changing the Name of the
Company
2. For alteration of Article of the
company

5. For paying interest out of capital

6. For commencing a new business
7. For permitting a Director to hold a place
of profit in the company or its subsidiary
8. For getting the company wound up by
the court or voluntarily
9. For making arrangement between the
Company and its creditors so as to bind
the company and its members.
10. For determining the manner of disposal
of books and papers of a company in
case of its voluntary winding up when it
is about to be dissolved etc.

Minutes of the Meeting

Every company shall cause minutes of all

proceedings of every General Meeting and of
all proceedings of every meeting of its Board
of Directors to be kept by it.
The minutes shall be recorded in a book
kept for this purpose within 30 days of the
conclusion of the meetings as specified in
the Rules prescribed.
The pages of every minute book shall be
consecutively numbered.

 Each page of every minute book

shall be initialed or signed and the
last page of the record of the
proceedings of each Meeting shall
be dated and signed

- In case of Minutes of a Board

meeting
or its Committee by the
Chairman
- of that meeting or

 In case of Minutes of a General Meeting

by the Chairman of the
Meeting
or by a Director duly authorized by the
Board for this purpose,

If the Chairman of the meeting

dies,
or is otherwise
unable to do so
within the period of 30 days.
The Minutes of each Meeting shall contain
a fair and correct summary of the
proceedings thereat

 All appointments made at the

Meeting shall be included in the
Minutes
In case of a Meeting of the BOD or a
Committee thereof, the Minutes shall
also contain
- the name of the Directors
present
In case of each Resolution passed at
the meeting

 The Minutes need not include any

matter, which in the opinion of the
Chairman is (or) could reasonably be
regarded
as defamatory of any person,or
is - irrelevant or
is immaterial to the proceedings
or
is - detrimental to the interests of
the

Can Minutes be attached to the Minute Book by Pasting etc.?

In no case the Minutes of proceedings

of a Meeting shall be attached to any
Minute Book by pasting or otherwise.
Thus, Minutes cannot be attached to the
Minutes Book by pasting or stapling.
The logic behind enacting such a
provision is
- to
eliminate the chances of committing
fraud
etc. by removing the Original
Minutes and
replacing it by

Winding-up of a Company
Basics:
- A company is an artificial person
- It is created by law
- It cannot die a natural death
- It is put to an end by the process of law only.
The 3 ways by which a company may be put to
an end:

Through a Scheme of - Reconstruction

- Amalgamation
Removal of its name from the Register of
Companies by the Registrar
By winding up

or

Compromise or Arrangement
A company may be - unable to meet the normal obligations
and - liabilities on account of Trade Losses.
It may be unable to pay
The bills of the Creditors or Suppliers
Interest to Debenture-holders
Dividends to Share-holders
Even it may find difficult to provide for Depreciation.
In such a situation, to save the company from winding up or
liquidation, the Companies Act provides a Scheme of
Compromise & Arrangement..
It explains - the step-by-step process
- indicates the powers of the Court, and
- specifies the duties, liabilities & penalties
attracting on the company and its officers.

The term Compromise means:

an amicable settlement of matters in dispute between:
the company, its members and creditors
by mutual concessions by and between them
The term Arrangement has a wider connotation and
includes:
reorganization of share capital by way of:
consolidation or sub-division of shares or both
Variation of special rights attached to the shares.
The company, any member or creditor may approach
the Court for such compromise or arrangement.
If the Company is already in the process of winding-up
the Liquidator may also apply to the court.
The Court then directs the Company to Call the Meeting
of creditors or members or both staying winding-up .

Reconstruction & Amalgamation

The term Reconstruction means:

- the formation of a new company
- to take-over the assets and liabilities
of an existing company
so that substantially
- the same business can be carried on
- by the same persons
- in an altered form.
The term Amalgamation means:
- the combination of two or more companies
into another company
- absorption of one company by another.

 The Legal Procedure for Reconstruction &

Amalgamation is one and the same.
The Scheme of Reconstruction or
Amalgamation can be carried out
- Either as per Sec 394 and 395 of 1956 Act
- or as per Sec 494 and 507 of 1956 Act
Under Sec 394 and 395 of 1956 Act, there are
provisions
- for Reconstruction or Amalgamation
- involving a Compromise or Arrangement
- with creditors and members
- without going through the process of
winding-up.

 Under Sec 494 and 507 of 1956 Act, there are

provisions
- for Reconstruction or Amalgamation
- by winding-up the company voluntarily.
Reconstruction vs. Reorganization:
Reorganization means
Rearrangement of capital structure
without winding-up or dissolving the company.
While the company maintains its legal existence
Its arrangement of capital is altered.
The rights and privileges of members and
creditors - are altered..

Reconstruction involves:
Winding-up or dissolution of the
company
Purchase of its business by a new
company formed for the purpose.
The new company carries on
substantially the same business as the
old company, but
Legally it is not the same company.
The Central Government may order
amalgamation of two or more companies
in National Interest.

1. Legal Winding-up.
Winding up of a company is the process
whereby - its life is being put to an end
- its property administered for the
benefits
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

Winding-up Vs.
Dissolution.

Winding-up and dissolution are mistaken

for each other; but they are not the same.
Winding up proceeds its dissolution.
The company continues to have its legal
entity/existence even after the process
of winding-up beings.
A company loses its legal entity and
ceases to exist on its dissolution.

Modes of Winding-up
Two modes of winding up process

1. Compulsory Winding up
[Sec 433 (a f) and
Sec 439 of 1956 Act]

2. Voluntary Winding up
- by members [Sec 489 to 498 of
1956 Act]

- by creditors [Sec 499 to 502 of 1956

Act]
- under Courts
supervision [Sec-522]

1. Compulsory Winding up.

It is also called Winding up by the

Court
[ Sec 433]

Grounds for Court interference:

a) Shareholders Special
Resolution
b) Default in holding Statutory
Meeting
c) Failure to Commence
Business
d) Reduction of Membership

a) Shareholders Special
Resolution:
- The power of the Court is
discretionary
- If the court finds that the winding
up is
opposed to public interest
or interest of the
company
it may not permit winding up
Note: This type of winding up is not

b) Default in holding Statutory Meeting:

[No such provision in New Act of
2013]

If the company
fails to hold a statutory meeting, or
fails to file statutory report with RC after expiry
of 14 days after the last day on which the
statutory meeting was to be held, the registrar
or a contributory may approach the court
seeking winding-up.
The court has power to extend the time for
holding the statutory meeting, or
filing the statutory report.
after penalizing the officers in default.

c) Failure to Commence Business:

The court may order for winding-up if
a
company which
- fails to commence its business
within
one year from its incorporation,
or - suspends its business for a whole
year.
The court may, however, not order for
winding up - if it finds that there are

d) Reduction of Membership:
The court may order for winding up, if
at
any time - the number of members
falls
below the statutory
minimum i.e.
7 in case of public company
2 in case of private company.
If the company carries on its business
for
more than 6 months after the number
of

e) Inability to pay its Debts:

The court may order for the winding
up of
a company, if it is established that
1. it is unable to pay its debts; and
2. it is commercially insolvent.
A company is deemed to be unable to
pay
its debts in the following cases:
- if it fails to pay a debt exceeding
Rs.500/-

- if it fails to satisfy a court decree in

favour
of a creditor of the company, however,
small the amount of the degree may
be.
A company is supposed to be
commercially insolvent if it is not able
to meet its current liabilities.
Note: 1. It does not necessarily mean
that
the companys assets are less
than
its liabilities.

f) Just & Equitable Grounds:

What is just & equitable ground
depends
upon the facts of the individual case.
On the basis of the past judicial
decisions,
the following may be summed up as
just &
equitable grounds:
Where the main object of the company
has
failed or its substratum is lost
Where there is a complete deadlock in

 Where the majority shareholders have

adopted a policy oppressing the
interests
of minority
When the company was found to
carry on a
fraudulent or illegal business or
When the business of a company
becomes
illegal

Who may petition?

[Sec 439]

The following persons can apply to

the Court for compulsory winding up:
- The Company
- Any Creditor
- Any Contributor
- The Registrar
or - any person at the instance of
Central Government.

2. Voluntary Winding up

[Sec- 484]

Winding up without interference of

the
Court:
- Winding up by Members or
Creditors
of the company.
- Members and Creditors are left to
settle their affairs without going
to the
Court.

 Ways or Modes of Voluntary

Winding up:
1. Resolutions
- by passing an Ordinary Resolution.
- by passing Special Resolution
2. Interest Group - Members winding up
- Creditors winding up
Passing Ordinary Resolution:
1. the period if any fixed for the company as
mentioned in its Articles, expired, or
2. the event, on the happening of which the
Articles provide that the company is to be
dissolved, has happened.

 Passing Special Resolution:

A decision to wind up the company may be
taken - At any time
- Without any reason
by passing a Special Resolution to that effect.
Note: The Resolution whether special or
ordinary should be advertised in
- the Official Gazette
- in some newspaper which is in
circulation in the district in which the
registered office of the company is
situated.
[Sec - 485 (1)]

 It should be done within 14 days from

the
date of passing of the resolution. For
every
day delay, fine is levied u/s - 485 (2)
Members Voluntary Winding up is
possible
- when the company is solvent
- makes a declaration to the effect
[Sec - 489 to 498]

Creditors Voluntary Winding up is

possible
- when a declaration of solvency is

Legal Rule Governing

Voluntary Winding- up
1. by Members:
Declaration of Solvency must be made
by a majority of the Directors at a Board
meeting, stating that the company has no
debts

or
it will be able to pay al its debts
in full within three years from
the
date of commencement of
winding up.

The declaration must be made within

five weeks immediately preceding the
date of passing the resolution for
winding up
The declaration is delivered to the
Registrar.
The declaration should be accompanied
by
- a copy of the report of the auditors
on the profit and loss account of the
company
- made out for a period commencing
on

- also on the balance sheet made out

on the last mentioned showing the
statement of the assets and liabilities
as on that date.

2. By Creditors:
When declaration of solvency has
not been filed with the Registrar, it is
called Creditors voluntary wining.
In this type of voluntary winding up the
creditors will have a dominating control
over the proceedings of the winding up.

Distinction between Members Voluntary

winding up and Creditors Voluntary
Winding:
1. Members voluntary winding up is chosen by
solvent companies and the Declaration of
solvency has to be filed in this case

Creditors winding up is chosen by insolvent

companies and as such no declaration of
solvency is required to be filed
2. In members voluntary winding up, the General
Meeting of members only is required to be
called.
In creditors winding up, a meeting of Creditors
must also be called after the meeting of the
members

3. In members voluntary winding up, the

liquidator is appointed by the
members
In creditors winding up, the liquidator
is
appointed in a different way.
4. No committee of inspection is
appointed in
case of members voluntary winding up,
whereas such committee may be
appointed

 5. In members voluntary winding up, the liquidator

can exercise certain powers with the sanction of
the company in the form of Special Resolution.

But, such powers in case of creditors winding-up

can be exercised by the liquidator
- with the sanction of the court; or
- the committee of inspection; or
- of a meeting of creditors.
6. In members voluntary winding up, the members
have a dominating control over the proceedings
of winding up
In case of creditors winding up, the creditors will
have more control over the proceedings of
winding up

Voluntary Winding up under the supervision of the Court.

When & Who can apply to the Court?

While the Voluntary winding up is in progress
any creditor
any contributory
or the liquidator himself - can apply.
Application must indicate the grounds for
supervision by the court which may include
- the liquidator is negligent or partial
- rules relating to winding up are not followed
properly, or
- the majority is playing a fraud on the minority...
.

 When the court is satisfied with the reasons

shown by the petitioner, it may make an
order that the voluntary winding up shall
continue under the supervision of the court.
The court, in such a case, gets the same
powers as it has in the case of compulsory
winding up under the order of the court.
The court may appoint one or more
liquidators
The court also has the power to remove any
liquidator and fill up such vacancy
The court may - if it thinks necessary in the
interest of creditors or members - put certain
restrictions on the powers of the Liquidator

Commencement of Winding
up:

In case of compulsory winding up

by the court - the date of petition to
the court is the date of
commencement. [Sec 441(2)]
In voluntary winding up, the
winding up shall be deemed to
commence
not from the date of petition
but from the date of passing

Position with regard to Defunct

Companies:
A Company which
- has never started business
- has stopped business and
- has no assets to
divide
is called as Defunct Company.
Such company can be dissolved by
the court without going through the
process of winding up.

Procedure for Dissolving a

Defunct Company:
Registrar should send a Notice inquiring

- whether the company is carrying on the

business or not?
- whether it is in operation or not?
[Sec-560(1)]

If the Registrar does not receive any reply within

one month
- a reminder must be sent to the company
- within in 14 days
- by registered post
- referring to the first notice, and

stating that,
if no answer is received to this
second notice
within one month thereof
a notice will be published in the
official gazette
striking the name of the
company from register
[Sec 560 (2)]

If the Registrar
- receives no reply to the second notice
or - receives a reply that the company
is not carrying on the
business
he, shall
- publish in the Official Gazette and
- also intimate the company that
after the expiry of three month from the date
of publication of such notice in the official
Gazette the name of the company shall be
struck of the register and
- the company will be dissolved, unless
cause is shown to the contrary. [Sec 560
(3)]

After the expiry of 3 months, if no cause is

shown by the company
the Registrar strikes of the name of the
company from the register, and
and publishes the fact in the Gazette and
the company stands dissolved. [Sec560 (4)]
The court may order to restore the name of
the company in the register any time within 20
years of publication of the notice in the
Gazette,
if - the
company; or
[Sec 560 (6)]
- any member; or
- any creditor of the company
- aggrieved by the striking of the name of the
company makes an application to the court.

THANK YOU.
Prof. Dr. KSN Sarma
Advocate
High Court of Judicature
Andhra Pradesh

Visiting Professor - IBS

Hyderabad.
Mobile: 88864 22446