Page 345 - DMGT407Corporate and Business Laws

Corporate and Business Laws

Notes The money to the dissenting members should be paid before the company is dissolved
and should be raised in such manner as may be determined by special resolution.
6. Duty of liquidator to call creditor’s meeting in case of insolvency (s.495): If the liquidator
is at any time of opinion that the company will not be able to pay its debts in full within
the period stated in the declaration of solvency, or that period has expired without the
debts having been paid in full, he must forthwith summon a meeting of the creditors and
must lay before the meeting a statement of the assets and liabilities of the company. If he
fails to comply with the above requirements, he shall be punishable with fine which may
extend to ` 5,000.

7. Duty of the liquidator to call general meeting at the end of each year (s.496): In case
winding up continues for more than one year the liquidator must: (a) call a general
meeting of the company at the end of the first year from the commencement of winding
up and at the end of each succeeding year, or as soon thereafter as may be convenient
within 3 months from the end of the year or such longer period as the Central Government
may allow; and (b) lay before the meeting an account of his acts and dealing and of the
conduct of the winding up during the preceding year.
8. Final meeting and dissolution [s.497]: As soon as the affairs of the company are fully
wound up, the liquidator must: (a) make up an account of the winding up showing how
the winding up has been conducted and the property of the company has been disposed of;
and (b) call a general meeting of the company for the purpose of laying the account before
it, and giving any explanation thereof.
The meeting must be called by advertisement specifying the time, place and object of the meeting
and must be published at least one month before the meeting in the official gazette and also in
some newspaper circulating in the district where the registered office of the company is situated.
Within one week after the meeting, the liquidator must send to the Registrar and the official
liquidator each, a copy of the account and the return regarding holding of the meeting. In case
quorum was not present at the meeting called, he must report accordingly.

On receipt of the above documents, the Registrar will register them and the official liquidator
shall make a scrutiny of the books and papers of the company and report to the court, the result
of his scrutiny. If the report of the official liquidator shows that the affairs of the company have
not been conducted in a manner prejudicial to the interest of its members or to public interest,
then, from the date of submission of report of the court, the company shall be deemed to be
dissolved. In the case of an unfavourable report, the court shall direct the official liquidator to
make a further investigation of the affairs of the company. On receipt of the report of the official
liquidator on such further investigation, the court may either make an order that the company
stands dissolved with effect from the date specified in the order or make such order as the
circumstances of the case brought out in the report permit.

Creditors’ Voluntary Winding up

The procedure in a creditors’ voluntary winding up is based upon the assumption that the
company is insolvent. From the beginning, meetings of creditors are held in addition to those of
the members. The chief power to appoint the liquidator is in the hands of the creditors and there
is provision for the appointment of a committee of inspection, if desired, to which is left the
fixing of the liquidator’s remuneration. The detailed provisions as enlisted in Ss.500 to 509 are
given below:
Meeting of creditors (s.500): When no statutory declaration of solvency has been made and filed as
required by the Act, the Board of directors, acting on behalf of the company must summon a
meeting of the creditors, for the same day or the next day after the meeting at which the resolution

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