Winding Up of Company

Winding up of the Company: Modes of Winding up Section 297: The winding up of a company may be either,

i.

By the court; or

ii.

Voluntary; or

iii.

Subject to the supervision of the court

Winding up by the Court Section 305: A company may be wound up by the court if:

1) It has passed a special resolution to wound up by the court. 2) Default is made in delivering the statutory report to the registrar or in holding the statutory meeting or any two consecutive annual general meeting.

3) The company does not commence its business within a year from its incorporation or suspend its business for a whole year.

4) If the number of members is reduced in the case of private company below one or in the case of any other company below three.

5) The company is unable to pay its debts. 6) The company is: I.

Carrying unlawful or fraudulent activities. activities.

II.

Carrying on business not authorized by the memorandum.

III.

Conducting its business in a manner oppressive to its members.

IV.

Run and managed by persons who fail to maintain proper and true accounts or commit fraud misfeasance or malfeasance in relation to the company or.

V.

Managed by persons who refuse to act according to the requirements of the memorandum or articles or the provisions of the companies’ ordinance 1984 or fail to carry out the directions or decisions of the court or the registrar or the commission given in the exercise of powers under this o rdinance.

7) It ceases to be a listed company in case of listed company. 8) If the court is of o pinion that it is just and equitable that the company should wound up or. 9) If the company ceases to have a member.

Commencement of Winding up by Court Section 311: A winding up of a company by the court shall be deemed to commence at the time of the presentation of the petition for the winding up.

Stay of Winding up proceeding Section 313: The court may at any time after presentation of the petition for winding up a company under this ordinance and before making an order for its winding up, upon the application of the company itself or of any its creditors or contributories restrain further proceedings in any suit or proceeding against the company, upon such terms as the court thinks fit.

Power of Court on hearing petition Section 314: On hearing a winding up petition the court may

i.

Dismiss it with or without costs, or

ii.

Adjourn the hearing conditionally or unconditionally or

iii.

Make any interim order or

iv.

An order for winding up the company or

v.

Any other order that it deems just

The court shall not 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 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.

Filing of wishing up order section 315: Within fifteen days from the date of the making of the winding up order, the petitioner in the winding up proceedings and the company shall file a certified copy of the order with the registrar.

Penalty: It default is made in complying with the foregoing provision the petitioner or as the case may requires the company and every officer of the company who is in default shall be punishable with fine which may extend to one hundred rupees for each day during which the default continues.

Voluntary winding up section 358: A company may be wound up voluntarily-

A. When the period if any fixed for the duration of the company by the articles expires. B. When the event if any occurs on the occurrence of which the articles provide that the company is to be dissolved and the company in general has passed a resolution to that effect.

C. When the company resolves by special resolution that the company be wound up voluntarily.

Commencement of voluntary winding up section 359: A voluntary winding up shall be deemed to commence at the time of the passing of the resolution for voluntary winding up.

Consequences of voluntary winding up section 360 In the case of voluntary winding up the company shall from the commencement of the winding up cease to carry on its business except so far as may be required for the beneficial winding up thereof. The corporate state and corporate powers of the company shall, notwithstanding anything to the contrary in its articles continue until it is dissolved.

Notice of resolution to wind up voluntarily section 361: Notice of any resolution for winding up a company voluntarily shall be given by the company within ten days of the passing of the same 

By advertisement in the official Gazette and



In an newspaper circulating in the province where the registered office of the company is situate and in the case of a listed company such notice shall also be published at least in one issue of a daily newspaper in the English language and a daily newspaper in the Urdu language having circulation in the province in which the stock exchange on which it is listed is situate.

A copy thereof shall be sent to the registrar immediately thereafter.

Penalty: If a company makes default it shall be liable to a fine not exceeding one hundred rupees for every day during which the default continues and every office of the company who without reasonable excuse authorize or permits the default or is a party to the default shall be liable to a like penalty.

Declaration of solvency section 362: Where it is proposed to wind up a company voluntarily its directors or in case the company has more than three directors the majority of the directors including the chief executive may at a meeting of the board of directors make a declaration verified by an affidavit to the effect that they have made a full inquiry into the affairs of the company and that having done so they have formed the opinion that.

i.

The company has no debts.

ii.

That it will be able to pay all its debts in full within such period not exceeding twelve months from the commencement of the winding up as may be specified in the declaration.

The declaration shall not be effective unless.

a) It is made within five weeks immediately preceding the date of passing of winding up proceeding.

b) It is delivered to the registrar for registration before that date. c)

It is supported by a report of the company’s auditor on the company’s affairs

Appointment of liquidator: In members voluntary winding up a liquidator is appointed in general meeting by company to wind up the affair in case of creditors voluntarily winding up company and creditors appointment.