Company law. winding up
V.Satya venkatarao
(Querist) 09 June 2014
This query is : Resolved
It is requested that experts may respond on the following issue
A company goes into liquidation. On disposal of the assets of the company in liquidation , the distribution of sale proceeds is done in accordance with the companies Act and the rules contained there under
Members are requested to comment on
1 how are the shareholders paid in the event of winding up
2 Will they be entitled to the face value of the shares on the date of winding up,or on any other basis
3 In the event of surplus remaining after the claims are paid in accordance with Act , where will such surplus be deposited
Kind attention is invited to Rule 283 of the company court rules
V Satya venkatarao
malipeddi jaggarao
(Expert) 10 June 2014
Section 283 of Companies Act deals with the vacation of Office of the Directors.
Winding up of a company is the process whereby its life is ended and its property is administered for the benefit of its creditors and members. The court appoints an administrator,called a ‘liquidator’, who takes control of the company, takes possession of its assets and finally distributes any surplus among the shareholders in accordance with their respective rights. The objective behind the winding up of a company is to realise the assets, pay off the liabilities and distribute the surplus as expeditiously as possible.
Winding up of a company is the process whereby its life is ended and its property is administered for the benefit of its creditors and members. The court appoints an administrator,called a ‘liquidator’, who takes control of the company, takes possession of its assets and finally distributes any surplus among the shareholders in accordance with their respective rights. The objective behind the winding up of a company is to realise the assets, pay off the liabilities and distribute the surplus as expeditiously as possible.
Under section 425 of the Act, a company may be wound up in any one of the following three ways:1
(a) by the court2 making a winding-up order (compulsory
winding up);
(b) by passing of an appropriate resolution for voluntary
winding up at a general meeting of members (voluntary winding up); and
(c) voluntary winding up subject to supervision of the court.
Voluntary winding up
In the case of voluntary winding up, the entire process is done without court supervision. When the winding up is complete, the relevant documents are filed before the court for obtaining the order of dissolution. A voluntary winding up may be done by the members or the creditors.
You have not mentioned how the particular company goes into liquidation.
To your specific queries based on the above:
1. Share holders do not have any right on the assets of the company. Only the residual amount will be paid in accordance with their rights and number of hsares.
2. They are not entitled for any thing except for the residual amount after liquidation process is complete and all other liabilities are paid out of the assets.
3. Surplus will be distributed among the share holders as per their rights.
You should come with specific case instead of asking the queries in general.
V.Satya venkatarao
(Querist) 10 June 2014
I think there was a confusion between Section 283 of the Companies Act and rule 283 of the company Court Rules. My reference was to Rule 283 and not S 283
With the above rule members may respond
Rao
Sankaranarayanan
(Expert) 10 June 2014
Dear Sathya Venketrao , how you related this query ?
V.Satya venkatarao
(Querist) 10 June 2014
For a proper appreciation of the law involved , the above issue has been raised. Would appreciate if the members express their views
R.K Nanda
(Expert) 13 June 2014
consult local lawyer.
T. Kalaiselvan, Advocate
(Expert) 13 June 2014
