Page 338 - DMGT407Corporate and Business Laws

Unit 14: Winding up and Dissolution of a Company

14.2.2 Procedure for Winding up Order Notes

1. The winding up petition must be presented to the court.
2. After the presentation of the petition but before the hearing, application may be made to
the court by either the company, creditor or contributories: to appoint a provisional
liquidator to safeguard the assets pending the hearing. Before making such appointment,
however, the court must give notice to the company so as to enable it to make its
representation in the matter unless, for reasons to be recorded in writing, it thinks fit to
dispense with such notice. The powers of the provisional liquidator are the same as those
of a liquidator unless limited by the court (s.450).
3. On hearing a winding up petition, the court may [s.443(1)]: (i) dismiss it, with or without
costs; or (ii) adjourn the hearing conditionally or unconditionally; or (iii) make any
interim order that it thinks fit; or (iv) make an order for winding up the company with or
without costs, or any other order that it thinks fit.
The court cannot, however, refuse to make a winding up order on the ground only that, the
assets of the company have been mortgaged to an amount equal to or in excess of those assets or
that the company has no assets. “Where the petition is presented on the ground that, it is just and
equitable that the company should be wound up, the court may refuse to make an order of
winding up if it is of the opinion that, some other remedy is available to the petitioners and that
they are acting unreasonably in seeking to have the company wound up instead of pursuing that
other remedy.” [s.443 (2)].
Where the petition is presented on the ground of default in delivering the statutory report to the
Registrar or in holding the statutory meeting, the court may: (a) instead of making a winding up
order, direct that the statutory report shall be delivered or that a meeting shall be held; and (b)
order the costs to be paid by persons who, in the opinion of the Court, are responsible for the
default [s.443 (3)].
In all matters relating to the winding up of a company, the court may have regard to the wishes
of creditors or contributories of the company as proved to it by any sufficient evidence and for
the purpose may direct that their meetings may be held or conducted as directed by the Court
(s.557).

14.2.3 Consequence of Winding up Order

The consequence of the winding up order by the court are as follows:

1. The court must, as soon as the winding up order is made, cause intimation thereof to be
sent to the official liquidator and the Registrar (s.444).
2. The petitioner and the company must also file with the Registrar within 30 days a certified
copy of the order [s.445(1)]. The Registrar should file with himself a certified copy of the
winding up order of the court when he himself is a petitioner under s.439. If default is
made in filing the certified copy of the order, the petitioner, or the company and every
officer of the company who is in default, shall be punishable with fine upto ` 1,000 for
every day during which the default continues (s.445).
3. The Registrar should then make a minute of the order in his books relating to the company
and notify in the official gazette that such an order has been made [s.445(2)].

4. The order for winding up is deemed to be a notice of discharge to the officers and employees
of the company, except when the business of the company is continued [s.445(3)].

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