 |
Introduction
to Business MGT 211
VU
LESSON
11
WINDING UP OF
COMPANY
A
company is created by law
and when the legal
existence of company abolishes or
comes to
an
end it is called winding up of a
company or liquidation of
company.
MODES
OF WINDING UP
A
company can be wound up in
the following three
ways:
Winding
up of Joint Stock
Company
Compulsory
Voluntary
Under
the
Winding
up
Winding
Up
Supervision
by
Court
of
Court
By
Members
By
Creditors
COMPULSORY
WINDING UP BY COURT
According
to Section 305 of Companies
Ordinance, a company may be
wound up by court
under
the following
circumstances:
1.
Special Resolution
If
a special resolution has
been passed by the company
for winding up.
2.
Statutory Meeting
If
the company fails to submit
statutory report to the
Registrar for failure to
hold statutory
meeting
within specified
time.
3.
Commencement of Business
If
a company fails to start its
business within one year
from the date of
incorporation or
postpones
its business for one
year.
4.
Reduction in Members
If
the number of members fall
below seven in case of
public company and below
two in case of
private
company.
5.
Satisfaction of Court
If
the court is not satisfied
with the working, management
and business affairs of the
company
6.
Payment of Loans
If
a company is unable to pay
its debts.
7.
Unlisted
If
a company declares itself
unlisted due to any
reason.
64
Introduction
to Business MGT 211
VU
VOLUNTARY
WIDNIGN UP
A
joint stock company may be
wound up voluntarily in following
two ways:
1.
By Members
According
to section 362 of Companies
Ordinance, 1984, the members
can wind up a
company
voluntarily under following
circumstances:
(i
) Expiry of Period
A
company may be wound up
voluntarily by the members,
after the expiry of period,
by
passing
resolution in the general
meeting.
(ii)
Statutory Declaration
If
majority of directors makes a
statutory declaration to registrar
that the company will be
able
to
pay its debts in full
within one year.
(iii)
Special or Ordinary
Resolution
After
submitting the statutory
declaration to the registrar,
the company, in general
meeting
passes
an ordinary or special resolution to
wind up the company.
(iv)
Appointment of Liquidators
In
general meeting, the company
appoints liquidators to wind up
the company's affairs.
Within
ten
days after the appointment
must be sent to
registrar.
(v)
Final Meeting
After
winding up the affairs of
company, the liquidators
call the general meeting of
the
shareholders.
In this meeting, the
liquidators must submit the
final accounts of
company's
affairs
to the members.
(vi)
Dissolution
Within
one week of general meeting,
liquidators must file a copy
of full accounts to
the
registrar.
At the end of 3 months from
the date of registration of
return, the company shall
be
dissolved
and its name will be
struck off by the Registrar
of Joint Stock
company.
2.
By Creditors
The
Members can wind up a
company voluntarily under
following circumstances:
(i)
Statutory Declaration
In
case of creditors voluntary
winding up, it is not
necessary for the company to
make a
statutory
declaration regarding its
solvency.
(ii)
Special Resolution
A
general meeting of the
company's shareholders is called to
pass an extra ordinary
resolution
for
the dissolution of the
company because it cannot
continue its business due to
heavy
liabilities.
(iii)
Creditors' Meeting
On
the same or next day, a
meeting of creditors must be
called by the company. A
notice of
meeting
must be sent to each
creditor.
(iv)
Statement of Affairs
In
the creditors' meeting, the
directors must submit a
statement of affairs of the
company,
together
with a list of creditors of
the company and estimated
amount of their
claims.
(v)
Intimation to Registrar
The
information regarding the
notice of passed resolution
must be sent to the
registrar within
ten
days after the date of
creditors' meeting.
65
Introduction
to Business MGT 211
VU
(vi)
Appointment of Liquidator
The
creditors and shareholders
nominate the persons to act
as liquidators in their
respective
meetings.
the opinion of the creditors
is preferred.
(vii)
Inspection Committee
The
creditors and shareholders, in
their respective meetings
can appoint eh
inspection
committee
consisting of five persons in
each case.
(viii)
Liquidators' Remuneration, Rights
and Duties
The
inspection committee fixes
the remuneration, rights and
duties of the
liquidators.
(ix)
Final Meeting
In
the final meeting, the
liquidators place before
them the full accounts of
the company's affairs
and
a copy of these accounts is
also sent to registrar
within 7 days.
(x)
Dissolution
The
registrar registers the
documents, sent by the
company, After 3 months from
the date of
registration,
the company will be
dissolved.
VOLUNTARY
WINDING UP UNDER THE
SUPERVISION OF COURT
According
to section 396 of Companies
Ordinance, a voluntary winding up of a
company can
also
be carried under the strict
registration of the
court.
1.
Resolution
At
first, company has to pass
special resolution for the
voluntary winding up of the
company.
2.
Supervision Order
Following
are the common grounds on
which the court issues
the supervision
order:
1.
The liquidator performs his
duty in partial
manner.
2.
The winding up resolution is
obtained by fraud.
3.
The liquidator does not
strictly observe the rules
of winding up the
company
3.
Power of the
Court
The
court has the power to
appoint an additional liquidator, or to
remove any
liquidator.
4.
Dissolution
After
the supervision order is
made, the liquidator may
exercise his powers in
winding up of a
company.
On completion of winding up,
the court will make an
order that the company
is
dissolved.
SHARE
CAPITAL
In
simple words, the term
"capital" means the
particular amount of money
with which a
business
is started.
In
company, share capital means
the amount contributed by
the shareholders.
DEFINITION
1.
According
to alan Issacs,
Share
capital is that part of the
capital of a company that
arises from the issue
of
shares.
66
Introduction
to Business MGT 211
VU
2.
L.
B. Curzon says,
Share
capital is the total amount
which a company's shareholders
have contributed or
are
liable to contribute as payment
for their shares.
KINDS
OF SHARE CAPITAL
According
to Companies Ordinance, 1984,
the following are the
kinds of share
capital:
1.
Authorized Capital
This
is maximum amount of capital
with which a company is
registered or authorized to
issue.
It
is divided into shares of
small value.
For
example, the authorized
capital of the company Rs.
10,00,000 divided
into
1,00,000
shares of Rs. 10
each.
2.
Issued Capital
It
is a part of authorized capital
which is offered to the
general public for
sale.
For
example, a company has an
authorized capital of Rs.
10,00,000 dividend into
1,00,000
shares
of Rs. 10 each. It offers
20,000 shares of Rs. 10 each
to general public. So it
means
issued
capital is Rs.
2,00,000.
3.
Un-Issued Capital
It
is a part of authorized capital
which is not offered to the
general public for
sale.
For
example, a company has an
authorized capital of Rs.
10,00,000 divided into
1,00,000
shares
of Rs. 10 each. It offers
20,000 shares of Rs. 10 each
to general public. So it
means
un-issued
capital is Rs. 8,00,000
consisting of 80,000 shares of
Rs. 10 each.
4.
Subscribed Capital
That
part of issued capital for
which application are sent
by the public and which
are accepted
is
called subscribed
capital.
For
example, out of 20,000
shares offered by the
company, the general public
takes up only
10,000
shares. So subscribed capital, is
Rs. 1,00,000.
5.
Called up Capital
A
company may require payment
of the par value either in
installments or in lump sum.
So
amount
of shares demanded by company is
known as "called up
capital".
For
example, out of 10,000
shares taken by public,
company requires a payment of 6
per
share.
So "called up" capital of
the company is Rs. 60,000
(10,000 share @ Rs.
6).
6.
Un-Called up Capital
A
company may require payment
of the par value either in
installments or in lump sum.
So
amount
of shares not demanded by
company is known as "un-called up
capital".
For
example, out of 10,000 share
taken by public, the company
requires a payment of 6
per
share.
So "un-called up" capital of
the company is rs. 40,000
(10,000 shares @ Rs.
4).
7.
Paid up Capital
It
is that part of called up
capital which is actually
received by the company. If
some
shareholders
could not pay all
the money of called up
capital, such money is
called as "calls in
arrears"
or "calls unpaid".
67
Introduction
to Business MGT 211
VU
8.
Reserve Capital
The
capital which is reserved
for unexpected events or for
future needs is called
reserve
capital.
Company decides not to call
up some part of uncalled up
capital until winding up. It
is
normally
kept for the payment of
debts at the time of winding
up.
9.
Redeemable Capital
A
company can obtain
redeemable capital by issue
of:
(a)
Participation
Term Certificates
(b)
Musharika
Certificate
(c)
Term
Finance Certificate
68
Table of Contents:
- INTRODUCTION:CONCEPT OF BUSINESS, KINDS OF INDSTRY, TYPES OF TRADE
- ORGANIZATIONAL BOUNDARIES AND ENVIRONMENTS:THE ECONOMIC ENVIRONMENT
- BUSINESS ORGANIZATION:Sole Proprietorship, Joint Stock Company, Combination
- SOLE PROPRIETORSHIP AND ITS CHARACTERISTICS:ADVANTAGES OF SOLE PROPRIETORSHIP
- PARTNERSHIP AND ITS CHARACTERISTICS:ADVANTAGES AND DISADVANTAGES OF PARTNERSHIP
- PARTNERSHIP (Continued):KINDS OF PARTNERS, PARTNERSHIP AT WILL
- PARTNERSHIP (Continued):PARTNESHIP AGREEMENT, CONCLUSION, DUTIES OF PARTNERS
- ORGANIZATIONAL BOUNDARIES AND ENVIRONMENTS:ETHICS IN THE WORKPLACE, SOCIAL RESPONSIBILITY
- JOINT STOCK COMPANY:PRIVATE COMPANY, PROMOTION STAGE, INCORPORATION STAGE
- LEGAL DOCUMENTS ISSUED BY A COMPANY:MEMORANDUM OF ASSOCIATION, CONTENTS OF ARTICLES
- WINDING UP OF COMPANY:VOLUNTARY WIDNIGN UP, KINDS OF SHARE CAPITAL
- COOPERATIVE SOCIETY:ADVANTAGES OF COOPERATIVE SOCIETY
- WHO ARE MANAGERS?:THE MANAGEMENT PROCESS, BASIC MANAGEMENT SKILLS
- HUMAN RESOURCE MANAGEMENT:Human Resource Planning
- STAFFING:STAFFING THE ORGANIZATION
- STAFF TRAINING & DEVELOPMENT:Typical Topics of Employee Training, Training Methods
- BUSINESS MANAGER’S RESPONSIBILITY PROFILE:Accountability, Specific responsibilities
- COMPENSATION AND BENEFITS:THE LEGAL CONTEXT OF HR MANAGEMENT, DEALING WITH ORGANIZED LABOR
- COMPENSATION AND BENEFITS (Continued):MOTIVATION IN THE WORKPLACE
- STRATEGIES FOR ENHANCING JOB SATISFACTION AND MORALE
- MANAGERIAL STYLES AND LEADERSHIP:Changing Patterns of Leadership
- MARKETING:What Is Marketing?, Marketing: Providing Value and Satisfaction
- THE MARKETING ENVIRONMENT:THE MARKETING MIX, Product differentiation
- MARKET RESEARCH:Market information, Market Segmentation, Market Trends
- MARKET RESEARCH PROCESS:Select the research design, Collecting and analyzing data
- MARKETING RESEARCH:Data Warehousing and Data Mining
- LEARNING EXPERIENCES OF STUDENTS EARNING LOWER LEVEL CREDIT:Discussion Topics, Market Segmentation
- UNDERSTANDING CONSUMER BEHAVIOR:The Consumer Buying Process
- THE DISTRIBUTION MIX:Intermediaries and Distribution Channels, Distribution of Business Products
- PHYSICAL DISTRIBUTION:Transportation Operations, Distribution as a Marketing Strategy
- PROMOTION:Information and Exchange Values, Promotional Strategies
- ADVERTISING PROMOTION:Advertising Strategies, Advertising Media
- PERSONAL SELLING:Personal Selling Situations, The Personal Selling Process
- SALES PROMOTIONS:Publicity and Public Relations, Promotional Practices in Small Business
- THE PRODUCTIVITY:Responding to the Productivity Challenge, Domestic Productivity
- THE PLANNING PROCESS:Strengths, Weaknesses, Threats
- TOTAL QUALITY MANAGEMENT:Planning for Quality, Controlling for Quality
- TOTAL QUALITY MANAGEMENT (continued):Tools for Total Quality Management
- TOTAL QUALITY MANAGEMENT (continued):Process Re-engineering, Emphasizing Quality of Work Life
- BUSINESS IN DIGITAL AGE:Types of Information Systems, Telecommunications and Networks
- NON-VERBAL COMMUNICATION MODES:Body Movement, Facial Expressions
- BUSINESS ORGANIZATIONS:Organization as a System
- ACCOUNTING:Accounting Information System, Financial versus Managerial Accounting
- TOOLS OF THE ACCOUNTING TRADE:Double-Entry Accounting, Assets
- FINANCIAL MANAGEMENT:The Role of the Financial Manager, Short-Term (Operating) Expenditures