Page 330 - DMGT407Corporate and Business Laws

Professional University Unit 14: Winding up and Dissolution of a Company

Unit 14: Winding up and Dissolution of a Company Notes

CONTENTS
Objectives

Introduction
14.1 Provisions as Regards Contributories

14.2 Modes of Winding up (S. 425)
14.2.1 Winding up by the Court
14.2.2 Procedure for Winding up Order

14.2.3 Consequence of Winding up Order
14.2.4 General Powers of the Court
14.2.5 Voluntary Winding up

14.2.6 Types of Voluntary Winding up
14.3 Preferential Payments
14.4 Liquidators

14.5 Dissolution of Companies
14.6 Summary

14.7 Keywords
14.8 Review Questions
14.9 Further Reading

Objectives

After studying this unit, you will be able to:
Recognize the various modes of winding up;

Describe the concept of preferential payments;
Discuss about the liquidators;
Explain the dissolution of a company.

Introduction

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. An administrator, called a ‘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. In simple words, winding up
means applying the assets of a company in the discharge of its liabilities and returning any
surplus to those entitled to it, subject to the cost of doing so. The statutory process by which this
is achieved is called ‘liquidation’. Winding up of a company differs from insolvency of an

LOVELY PROFESSIONAL UNIVERSITY 323