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 for voluntary winding up is to be proposed.
Notice of the meeting have to be sent by post to the creditors simultaneously
with the sending of the notices of the meeting of the company. Notice of the
meeting should also be advertised in the Official Gazette and in two newspapers
circulating in the district of the registered office or principal place of business
of the company.
The Board of Directors must prepare and lay before the
meeting a statement of the position of the company's affairs, together with a
list of its creditors and the estimated amounts of their claims. Violation of
s.500 is punishable with fine which may extend to Rs 1,000.
Notice to registrar.
A copy of any resolution passed at the creditors' meeting must be filed with
the Registrar within 10 days of the passing thereof. If default is made then
the company and every guilty officer shall be punishable with fine which may
extend to Rs 50 for every day of the default (s.501).
Appointment of liquidator (s.502). The creditors and the
members at their respective first meetings may nominate a person to be
liquidator for the purpose of winding up the affairs and distributing the
assets of the company. If the creditor and the members nominate different
persons, the creditor's nominee will as a rule be the liquidator. But any
director, member or creditor may apply to the court for an order that the company's
nominee or the Official Liquid ator or some other person should be appointed.
If no person is nominated by the creditors, the members' nominee shall be the
liquidator. Vacancies in the office
caused by death, resignation or otherwise may be filled by creditors,
except where the liquidator was originally appointed by or by the direction of
the court, when the court will on application fill the vacancy.
Committee of
inspection (s.503).The creditors at their first or any subsequent meeting may,
if they think fit, appoint a committee of inspection of not more than five members.
If such committee is appointed, the company may, either at the meeting at which
the winding up resolution is passed, or at a later meeting, appoint five
persons to serve on the committee. If the creditors object against the persons
appointed by the company, then the
matter will be referred to the court for the final decision. The Powers of such committee are the same,
as those of a Committee of Prospection Appointed
in a compulsory winding up.
Fixing of liquidator's
remuneration (s.504). The remuneration to be paid to the liquidator or
liquidators has to be fixed by the committee of inspection or if there is no
much committee, by the creditors. Where the remuneration is not so fixed, it must
be determined by the court. Any remuneration once fixed shall not be increased
in any circumstances, whatever, whether with or without sanction of the court.
Board's powers to
cease on appointment of liquidator (s.505). On the appointment of liquidator,
all the powers of the Board of Directors shall cease, except in so far as the committee
of inspection, or if there is not such committee, the creditors in general meeting,
may sanction the continuance thereof.
Duty of liquidator to
call meeting of company and of creditors at the end of each year [s.508].In
the event of the winding up continuing for more than one year, the liquidator must call a general meeting
of the company and a meeting of the creditors at the end of the first year, from the commencement of the 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.
Further, he may lay before the meeting an account of his acts and dealings and of the conduct of winding
up during the preceding year together with
a statement in the prescribed form and containing the prescribed particulars with respect to the proceedings and
position of the winding up.
Final meeting and
dissolution (s.509). 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 and a meeting of the
creditors for the purpose of laying the account before the meeting and giving
any explanation thereof .
Each such meeting must be called by advertisement and must
specify the time, place and objects thereof 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 date of the meetings, the
liquidator shall send to the Registrar and the Official Liquidator a copy of
the account and a retum of the meeting held [s.509 (3)].
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