Section 396A requires that the books and papers
of a company, which has been amalgamated with or whose shares have been
acquired by another company, must not be disposed of without the prior
permission of the Central Government. The Central Government, before granting
such permission, may appoint a person to examine the books and papers for the
purpose of ascertaining whether they contain any evidence of the commission of
an offence in connection with the promotion or formation, or the management of
the affairs, of the first mentioned company or its amalgamation or the
acquisition of its shares.
WINDINC UP OF COMPANIES
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
individual inasmuch as a company cannot be made insolvent under the insolvency
law. Besides, even a solvent company may be wound up.
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