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Unit 14: Winding Up of Companies

Members’ Voluntary Winding up: Members’ Voluntary winding up is possible only when the Notes
company is solvent and is able to pay its liabilities in full.
Voluntary Winding up: Winding up by the creditors or members without any intervention of
the court is called ‘voluntary winding up’.
Winding up: Winding up of a company is the process whereby its life is ended and its property
administered for the benefit of its creditors and members.

14.10 Review Questions

1. What is winding up?
2. Define the term ‘contributory.’ Discuss the liability of members of a company in the event
of its being wound up.
3. State the liabilities of contributories as present and past members.
4. Discuss the circumstances in which a company may be wound up by the court.

5. Explain the circumstances in which a company may be wound up by the court on the
ground that the company is unable to pay its debts.
6. What are the circumstances in which a company may be wound up on the ground that it is
just and equitable to wind it up?
7. State the ground on which the registrar may present a petition for winding up of a company.
8. What is the effect of a winding up order passed by the court?

9. Explain the procedure to wind up a company voluntarily.
10. What are the powers of the court to order winding up subject to its supervision? What are
the consequences of such an order?

Answers: Self Assessment

1. Winding up 2. ‘liquidation’

3. within a year 4. debts
5. Wages 6. (b)
7. (c) 8. (d)
9. (c) 10. (d)

11. (c) 12. True
13. False 14. False
15. True 16. False

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