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Annual General Meetings [AGM]

The 2013 Act states that the First Annual General Meeting should be held within nine (9) months from the date of closing of the first financial year of the company. [section 96(1) of 2013 Act] The AGM should be held during defined business hours i.e. between 9 am and 6 pm. The AGM cannot be held on a National Holiday. [Section 96(2) of 2013 Act]. In order to call an Annual General Meeting at shorter notice, the consent of 95% of the members is required. [section 101(1) of 2013 Act]. The nature of concern or interest of - every Director, Manager, any other Key Managerial Personnel and - relatives of such director, manager or any other key managerial personnel in each item of special business will need to be mentioned in the Notice of the Meeting [section 102 (1) of 2013 Act].The threshold of disclosure of share holding interest in the company to which the business relates of every promoter, director, manager and key managerial personnel has been reduced from 20% to 2% [Section 102 (2) of 2013 Act].Quorum The quorum will depend on - Number of Members as on the Date of Meeting. The required quorum is as follows: Five members if number of members is not more than one thousand

Fifteen members if number of members is more than one thousand but up to five thousand

Thirty members if number of members is more than five thousand [Section 103 (1) of 2013 Act]

ProxyThe 2013 Act has introduced - a limit on the number of members which a proxy can represent. The Act has introduced - a dual limit in terms of - number of members, and their - shares holding which is as follows: A proxy can represent - 50 members - shares holding in the aggregate not more than 10 % of the total share capital of the company carrying voting rights* [Section 105 (1) of 2013 Act].

Private companies cannot impose restrictions on voting rights of members - other than due to unpaid calls or sums or lien [Section 106 (1) of 2013 Act]. Listed companies will be required to file with the Registrar of Companies [ROC] a Report on each Annual General Meeting as prescribed; and also A Confirmation Statement that the Meeting was - convened, held and conducted - as per the provisions of the 2013 Act and the relevant rules. [Section 121 of 2013 Act].

Place of keeping registers and returnsAs a Rule the Registered Office shall be the Place for Keeping Records of the Company.But, the 2013 Act allows (1) registers of - members, - debenture-holders, - any other security holders (2) copies of - return to be kept at any other place in India in which more than one-tenth of members reside [Section 94(1) of 2013 Act]. Notice of Meeting & its Contents. Notice is of two (2) kinds: 1. General notice 2. Special notice What a notice should contain, generally?Notice of a meeting shall specify the- place - day- date and - time of the meeting Specify a statement of business to be transacted i.e. Agenda of the Meeting.

Notice of Meeting & its Contents - 2Place of holding the meeting:Must be held within the city/town where the Registered office is located. Nowhere else.Time & Date of Meeting:Must not be held - on a National holiday During working hours 9-00 am to 6-00 pm. NOTE: After notice of the meeting was issued, if Central Government declares that day as public holiday even then, the meeting must be held at appointed day, date, time and the venue.

Notice of Meeting & its Contents - 2Notice of Meeting: - Not less than 21days of clear Notice shall be given - In order to call an Annual General Meeting at shorter notice, the consent of 95% of the members is required. [Section 101(1) of 2013 Act]. such an assent may be obtainedeither at the meeting or before the meeting.

Notice of Meeting & its Contents - 3Interpretation of 21 days clear notice:- It implies notice of meeting must be served not less than 21 days in advance- Exclude Date of the Meeting Date of the service of Notice.- Notice sent by post - is deemed to have reached the addressee on the expiration of 48 hours i.e. after 2 days of dispatch.Thus, not less than 21 days may mean 25 days of advance dispatch of Notices to all concerned by post. Dispatch on 1st , if the Meeting is on 25th .

Whom to give notice?

Notice must be sent to - every Member and Director - every member entitled to shares in case of death or insolvency of a member - the Auditors of the company.Mode of giving notice: - by post- by Regd. Post, if the member prepays costs- by an advertisement in local news papers. Note: Incase the company wants to transact any business, other than ordinary business - the Notice of the meeting must clearly specify it.

In case of Annual General Meeting.

State specifically :1. The Notice is for the Annual General Meeting2. The number of AGM [Ex: 9th Annual General Meeting] 3. Every member is entitled to attend to it and vote thereat4. A member is also entitled to appoint a proxy to attend and vote instead of himself/herself.5. Such proxy need not be a member.6. An explanatory statement in respect of Special Business to be transacted has been annexed with the Notice. 6. Agenda of ordinary business & papers or statements relevant to them

7. Agenda of special business & an explanatory statement in respect of each item on such agenda has been annexed with the notice.

8. The dates of closing & opening of share transfer register.

In case of an Extra-ordinary General Meeting:

1. State it is an Extra-ordinary General Meeting2. The matters for which it is convened (Agenda)3. The matters to be passed with the help of - Ordinary Resolution 4. The matters to be passed with the help of - Special Resolution5. Explanatory statement in respect of each item on such agenda has been annexed with the Notice 6. Every member entitled to attend to it and vote thereat is also entitled to appoint a proxy to attend and vote instead of himself or herself and such proxy need not be a member.

In case of Board meeting:

- the notice need not state the business to be transacted at the meeting, unless the Articles or the Act specifically require so.

SPECIAL NOTICE:

Special notice implies that at least 14 days before the meeting Excluding the date of meeting and the date of serving. The proposer of any resolution shall inform the company about his intention to do so.On receipt of such an intimation, the company shall give a notice thereof to all the members individually at least 7 days before the date of the meeting. Where this not practicable, through an advertisement in a news paper having an appropriate circulation.

2. Special Notice is needed to move the following Resolutions at a Meting:A Resolution appointing an Auditor other than the retiring one A Resolution providing that a retiring Auditor shall not be reappointed [1 & 2 under Sec 225] A Resolution purporting to remove a Director before the expiry of his period of office A Resolution appointing another Director in place of a director removed before the expiry of his/her period of office [3 & 4 under Sec 284]Any other resolution requiring special notice under the Articles of the Company [Ref: Articles]

Note: Resolutions requiring Special Notice are not a different kind of resolutions. It is passed either with the help of an ordinary or special resolution. All this depending upon the requirements of the Companies Act, 2013 or the Articles of the company. For example: The above-stated instances of resolutions requiring special notice are passed with the help of an ordinary resolution under the provisions of the Companies Act, 1956.

Law relating to MeetingsTypes of Meetings: Shareholders Meetings- First General Meeting- Annual General Meeting- Extra-ordinary General MeetingBoard of Directors MeetingsSpecial Group Meetings- Preferential Share-holders Meeting- Debenture-holders Meeting- Creditors MeetingCommittee Meetings.

First and subsequent Annual General Meeting.

It is the meeting of - Members or - Share-holdersHeld once in every yearTo transact - General / Ordinary business of the company- in addition to Special business, if any.

How or why it has Significance for Members? Share-holders get an opportunity1 of discussing & reviewing the working of the company during the financial year to which the meeting relates. 2 of exercising control over the Management by re-electing or refusing to elect each of the rotational directors. 3 of knowing the profitability of their investment as dividends are declared at this meeting.

Annual General Meeting-Legal Provisions First AGM - to be held within Nine (9) months - from the date of closing of the first financial year of the company. [Section 96(1) of 2013 Act] - No extension of time allowed.

Subsequent General meetings shall be held within six (6) months from the date of closing of the financial year. Financial year begins with 1st day of April and ends on 31st day of March that follows.Subsequent AGMs1. Must be held once in every calendar year2.Time lag between two successive AGMs shall not exceed 15 months3. May be extended by the Registrar by three (3) months4. Must be held, even if - the accounts are not ready- the accounts are not complete or - the accounts have been seized by any state authorities.

Note: In a situation such as described under point 4 supra, the company should - convene the AGM in time, - adjourn it and - call it on a date by which the completed accounts are expected to be ready for discussion.

Business transacted at the meeting:- Ordinary/General Business- Special Business In case the company wants to transact any business, other than ordinary business - the notice of the meeting must clearly specify it.

Ordinary business includes:1. Consideration & Adoption of (i) - Accounts and(ii) - the Reports of the - Directors & - Auditors2. Declaration of dividend3. Appointment of Directors in place of those retiring by rotation.4. Appointment of Auditors and fixing their remuneration.

Special Business means:1 business other than ordinary business 2 explanatory statement in respect of Special Business to be attached to the Notice3 the statement should state all material facts concerning each item of special business including nature of any interest of any director or KMPs, etc. therein. 4 should state - the time and place where the documents in respect of such items can be inspected.

Pleas pay attention to topics like: Place of holding the meeting Time & Date of Meeting Interpretation of 21 days clear Notice Whom to give Notice? Mode of giving NoticeDistinguish Special from ordinary Notice Agenda for Annual General Meeting Distinguish Special from Ordinary Resolution Distinguish Transfer from transmission of sharesDistinguish Shares from stock

Default in holding AGM:

1. Any member may complain to the Central Government 2. The Government may call the meeting or direct the calling of the meetingand give directions in relation to calling the meetingor conducting the meeting.

3 Officers who make a default in calling the meeting or following the directions of the Government.shall be liable to a fine and a further fine per day of default. [Sec 168]Quorum for the Meeting1. Unless Articles provide for a larger number, Personal presence of - 5 Members in case of Public Company- 2 Members in case of Private Company

2. Articles can provide for a larger number but not a smaller number than the statutory minimum.3. Only the members present in person are to be counted.

32Quorum The quorum will depend on - Number of Members as on the Date of Meeting. The required quorum is as follows: Five members if number of members is not more than one thousand

Fifteen members if number of members is more than one thousand but up to five thousand

Thirty members if number of members is more than five thousand [Section 103 (1) of 2013 Act]

Quorum 2.4. Proxies are excluded for this purpose and articles cannot provide for their inclusion in the counting for the purpose of determining quorum. 5. If the President of India or the Governor of a State hold shares in the company, it shall be deemed to be personally present for the purposes of a quorum. 6. Joint holders of shares are treated as one person for the purpose.

34Quorum 3.7. If within half an hour of the time fixed for the meeting, the quorum is not present, the meeting is adjourned to the same day in the next week at the same time and at the same place. - However, an extraordinary general meeting called upon the requisition of members stands dissolved if the quorum is not present within half-an-hour of the scheduled time. If at the adjourned meeting also, the quorum is not present within half-an-hour of the scheduled time, the members present constitute the quorum.

35Quorum 4.Where the total number of members falls below the quorum fixed by the Articles, the reduced total number of members constitute the quorum.

The quorum shall be - present at the beginning of the meeting - need not be present - throughout the meeting or- at the time of voting.

Quorum 5.Can one person constitute quorum?

One person cannot constitute quorum Provisions of the Law/Act.

The logic behind this provision is that - a meeting implies the coming together of more than one person.

This is also known as the rule laid down in Sharp vs. Dawes.

Sharp vs. Dawes (case): In this case, one shareholder attended the meeting of the company, transacted the business; thereby a call was made on the shareholders. One shareholders D, did not make payment of call money due one his shares. He was sued by the company for recovery of calls in arrears. Ds contention in his defence was that - he was not liable to pay, as the business transacted at the meeting was invalid for, in fact, no meeting did take place as only one member attended it. Consequently, the call made did not give rise to any liability for him. - held, his contention was correct and he could not be asked to pay.

38When can one person constitute a quorum?Five (5) Exceptional Situations / Cases: 1. When all the shares of a particular class are held by a single person, that single person will constitute quorum for the purposes of that particular class meeting.2. When the Central Government directs the calling of an Annual General Meeting it may also direct that one member present in person or by proxy shall constitute the quorum3. When the Company Law Board directs the calling of a General Meeting it may also direct like the Central Government

4. When at the adjourned meeting, a quorum is not present within half-an-hour of the scheduled time, even one person present thereat shall constitute the quorum.5. When the Board of Directors has delegated powers to any committee which consists only of one director, that director alone constitutes the quorum for meeting of the committee. Manner of Conducting the MeetingShareholders of a company take important decisions at the Meeting. For this, - any member or - the chairman of the Meeting - may make a proposal to the meeting.Such proposal is known as motion A motion must be seconded by another member before it is discussed by the members.

After discussion, the motion is put to vote- by show of hands in the first instance; and or- by poll, if demand is made for it.The chairman of the meeting resorts to voting- in order to ascertain the wishes of the members present at the meeting.Voting may take place - by show of hands- by poll

Under the system of : voting by show of hands- Every member has only one vote- Proxies are excluded for this purposeUnder the system of : voting by poll - Each member has votes in proportion to his/her share of the paid up share capital - Proxies are also recognisedA resolution put to the vote of the meting shall be decided on a show of hands in the first instance.

Demand for a Poll

Where the members of a meeting are dissatisfied about the result of voting by show of hands a poll can be demanded. Because, a member may have more than one vote under the system of voting by poll.The demand for poll is governed by the provisions of Company Act and Rules framed there under: When a Poll can be demanded? A poll can be demanded before or on the declaration of the results of the voting on a show of hands.

44 By whom a Poll can be demanded? A poll can be demanded by any one of the following: 1- by Chairman on his own motion 2- In case of a Public company at least by 5 members having the right to vote on the resolution and present in person or by proxy.

3- In case of a Private company If 7 or less than 7 members are personally present- by one member having the right to vote on the resolution and present in person or by proxy If more than 7 members are personally present- by two members present in person or by proxy [Clarity on this issue under Act of 2013 is required]4- By any member present in person or by proxy and having not less than 1/10th of the total voting power in respect of the resolution. 5- By any member (s) present in person or by proxy and holding shares whose paid-up value is not less than 1/10th of the total paid-up value of all the shares conferring rights to vote on the resolution.

Withdrawal of Demand for Poll.

When the demand for poll can be withdrawn and by whom?

The demand for poll may be withdrawn - at any time - by the person who made the demand.

If the motion is favoured by a required majority, it is converted into Resolution. Thus, a Resolution implies a motion which has been passed by the required majority at the meeting. Kinds of Resolutions which may be passed at a meeting:- Ordinary Resolutions - Special Resolutions

Ordinary ResolutionIt is passed by a simple majority [51% Plus]Passed at a duly convened meeting. The following business is transacted by ordinary resolution:1. Adoption of Directors Report 2. Passing of Final Accounts 3. Election of Directors4. Appointment of Auditors and fixating their remuneration. 5. Declaration of Dividends6. Issue of shares at a discount etc

Special Resolution

- It is passed with 3/4th (75% plus) majority- Passed at a duly convened meeting- Notice of the Meeting expressly stated that the resolution shall be passed as a special resolution.

- Explanatory statement sent along with the Notice as required.

Business is transacted by Special Resolution:In case of Memorandum of Association- Alteration of Objects Clause- Shifting Registered Office from one State to another- Changing the Name of the Company 2. For alteration of Article of the company 3. For determining the remuneration payable to a Director, if Articles provide for it. 4. For variation of shareholders rights

5. For paying interest out of capital6. For commencing a new business7. For permitting a Director to hold a place of profit in the company or its subsidiary8. For getting the company wound up by the court or voluntarily 9. For making arrangement between the Company and its creditors so as to bind the company and its members.10. For determining the manner of disposal of books and papers of a company in case of its voluntary winding up when it is about to be dissolved etc.

Minutes of the Meeting

Every company shall cause minutes of all proceedings of every General Meeting and of all proceedings of every meeting of its Board of Directors to be kept by it.

The minutes shall be recorded in a book kept for this purpose within 30 days of the conclusion of the meetings as specified in the Rules prescribed.

The pages of every minute book shall be consecutively numbered. Each page of every minute book shall be initialed or signed and the last page of the record of the proceedings of each Meeting shall be dated and signed- In case of Minutes of a Board meeting or its Committee by the Chairman- of that meeting or- of the next succeeding meeting In case of Minutes of a General Meeting by the Chairman of the Meeting or by a Director duly authorized by the Board for this purpose, If the Chairman of the meeting dies, or is otherwise unable to do so within the period of 30 days. The Minutes of each Meeting shall contain a fair and correct summary of the proceedings thereat

All appointments made at the Meeting shall be included in the Minutes

In case of a Meeting of the BOD or a Committee thereof, the Minutes shall also contain- the name of the Directors present In case of each Resolution passed at the meeting - the name(s) of the director(s) if any - dissenting from or `- not concurring in the resolution.

The Minutes need not include any matter, which in the opinion of the Chairman is (or) could reasonably be regarded as - defamatory of any person,or is - irrelevant or is - immaterial to the proceedings or is - detrimental to the interests of the company.

Can Minutes be attached to the Minute Book by Pasting etc.?

In no case the Minutes of proceedings of a Meeting shall be attached to any Minute Book by pasting or otherwise. Thus, Minutes cannot be attached to the Minutes Book by pasting or stapling.The logic behind enacting such a provision is - to eliminate the chances of committing fraud etc. by removing the Original Minutes and replacing it by Spurious Minutes because the minutes of meeting are the evidence of the proceedings thereat.

Winding-up of a CompanyBasics:- A company is an artificial person- It is created by law- It cannot die a natural death- It is put to an end by the process of law only.

The 3 ways by which a company may be put to an end:Through a Scheme of - Reconstruction or - AmalgamationRemoval of its name from the Register of Companies by the RegistrarBy winding up

60Compromise or ArrangementA company may be - unable to meet the normal obligations and - liabilities on account of Trade Losses.It may be unable to payThe bills of the Creditors or Suppliers Interest to Debenture-holders Dividends to Share-holders Even it may find difficult to provide for Depreciation. In such a situation, to save the company from winding up or liquidation, the Companies Act provides a Scheme of Compromise & Arrangement.. It explains - the step-by-step process - indicates the powers of the Court, and - specifies the duties, liabilities & penalties attracting on the company and its officers.The term Compromise means: an amicable settlement of matters in dispute between:the company, its members and creditorsby mutual concessions by and between them The term Arrangement has a wider connotation and includes: reorganization of share capital by way of:consolidation or sub-division of shares or bothVariation of special rights attached to the shares.The company, any member or creditor may approach the Court for such compromise or arrangement.If the Company is already in the process of winding-up the Liquidator may also apply to the court.The Court then directs the Company to Call the Meeting of creditors or members or both staying winding-up.

Reconstruction & Amalgamation The term Reconstruction means: - the formation of a new company - to take-over the assets and liabilities of an existing company so that substantially - the same business can be carried on- by the same persons - in an altered form.The term Amalgamation means:- the combination of two or more companies into another company- absorption of one company by another.

The Legal Procedure for Reconstruction & Amalgamation is one and the same.The Scheme of Reconstruction or Amalgamation can be carried out- Either as per Sec 394 and 395 of 1956 Act- or as per Sec 494 and 507 of 1956 ActUnder Sec 394 and 395 of 1956 Act, there are provisions- for Reconstruction or Amalgamation - involving a Compromise or Arrangement- with creditors and members- without going through the process of winding-up. Under Sec 494 and 507 of 1956 Act, there are provisions - for Reconstruction or Amalgamation- by winding-up the company voluntarily.Reconstruction vs. Reorganization:Reorganization meansRearrangement of capital structure without winding-up or dissolving the company.While the company maintains its legal existenceIts arrangement of capital is altered.The rights and privileges of members and creditors - are altered..

Reconstruction involves:Winding-up or dissolution of the companyPurchase of its business by a new company formed for the purpose.The new company carries on substantially the same business as the old company, butLegally it is not the same company.

The Central Government may order amalgamation of two or more companies in National Interest. 1. Legal Winding-up.Winding up of a company is the processwhereby - its life is being put to an end - its property administered for the benefits of its creditors and members; An administrator, called 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. - Prof: Gower. Thus, winding up also means Liquidation.

Winding-up Vs. Dissolution.Winding-up and dissolution are mistaken for each other; but they are not the same. Winding up proceeds its dissolution. The company continues to have its legal entity/existence even after the process of winding-up beings.A company loses its legal entity and ceases to exist on its dissolution.

Modes of Winding-up Two modes of winding up process 1. Compulsory Winding up [Sec 433 (a f) and Sec 439 of 1956 Act]2. Voluntary Winding up - by members [Sec 489 to 498 of 1956 Act] - by creditors [Sec 499 to 502 of 1956 Act] - under Courts supervision [Sec-522]

1. Compulsory Winding up.It is also called Winding up by the Court [ Sec 433]Grounds for Court interference: a) Shareholders Special Resolutionb) Default in holding Statutory Meetingc) Failure to Commence Businessd) Reduction of Membershipe) Inability to pay its Debtsf) Just & Equitable Grounds

a) Shareholders Special Resolution:- The power of the Court is discretionary- If the court finds that the winding up is opposed to public interest or interest of the company it may not permit winding up

Note: This type of winding up is not popular because members would prefer for Voluntary Winding up as they have a voice in that process of winding up.

b) Default in holding Statutory Meeting: [No such provision in New Act of 2013]If the company fails to hold a statutory meeting, or fails to file statutory report with RC after expiry of 14 days after the last day on which the statutory meeting was to be held, the registrar or a contributory may approach the court seeking winding-up. The court has power to extend the time for holding the statutory meeting, or filing the statutory report. after penalizing the officers in default.

c) Failure to Commence Business: The court may order for winding-up if a company which - fails to commence its business within one year from its incorporation, or - suspends its business for a whole year. The court may, however, not order for winding up - if it finds that there are sufficient reasons - for the delay in commencing the business - for suspension of the business for a whole year.

d) Reduction of Membership: The court may order for winding up, if at any time - the number of members falls below the statutory minimum i.e. 7 in case of public company 2 in case of private company. If the company carries on its business for more than 6 months after the number of members is so reduced, - every member who knows this fact, is jointly and severally liable for the debts contracted after date.

e) Inability to pay its Debts: The court may order for the winding up of a company, if it is established that 1. it is unable to pay its debts; and2. it is commercially insolvent.

A company is deemed to be unable to pay its debts in the following cases: - if it fails to pay a debt exceeding Rs.500/- within three weeks from the date of receipt of statutory notice of demand for payment.

- if it fails to satisfy a court decree in favour of a creditor of the company, however, small the amount of the degree may be. A company is supposed to be commercially insolvent if it is not able to meet its current liabilities. Note: 1. It does not necessarily mean that the companys assets are less than its liabilities. 2. The company may have sufficient assets but they may not be presently realizable to meet its current liabilities.

76 f) Just & Equitable Grounds: What is just & equitable ground depends upon the facts of the individual case. On the basis of the past judicial decisions, the following may be summed up as just & equitable grounds: Where the main object of the company has failed or its substratum is lost Where there is a complete deadlock in the management of a company and it is impossible to carry on its business

Where the majority shareholders have adopted a policy oppressing the interests of minority When the company was found to carry on a fraudulent or illegal business or When the business of a company becomes illegal When the company is in more trouble and it does not carry on any business or does not have any property.

Who may petition? [Sec 439]The following persons can apply to the Court for compulsory winding up:- The Company- Any Creditor- Any Contributor- The Registrar or - any person at the instance of Central Government.

2. Voluntary Winding up [Sec- 484]

Winding up without interference of the Court: - Winding up by Members or Creditors of the company. - Members and Creditors are left to settle their affairs without going to the Court.- They may apply to the Court for any directions, if necessary.

Ways or Modes of Voluntary Winding up:Resolutions - by passing an Ordinary Resolution.- by passing Special Resolution2.Interest Group - Members winding up - Creditors winding upPassing Ordinary Resolution:1. the period if any fixed for the company as mentioned in its Articles, expired, or 2. the event, on the happening of which the Articles provide that the company is to be dissolved, has happened.

Passing Special Resolution: A decision to wind up the company may be taken - At any time - Without any reason by passing a Special Resolution to that effect.

Note: The Resolution whether special or ordinary should be advertised in - the Official Gazette - in some newspaper which is in circulation in the district in which the registered office of the company is situated. [Sec - 485 (1)]

It should be done within 14 days from the date of passing of the resolution. For every day delay, fine is levied u/s - 485 (2) Members Voluntary Winding up is possible- when the company is solvent- makes a declaration to the effect[Sec - 489 to 498] Creditors Voluntary Winding up is possible- when a declaration of solvency is not filed wit the Registrar. [Sec - 499 to 502] Declaration of solvency should be made in accordance with the provisions of Section 488.

Legal Rule Governing Voluntary Winding- up 1. by Members:Declaration of Solvency must be made by a majority of the Directors at a Board meeting, stating that the company has no debts or it will be able to pay al its debts in full within three years from the date of commencement of winding up.

The declaration must be made within five weeks immediately preceding the date of passing the resolution for winding up The declaration is delivered to the Registrar.The declaration should be accompanied by - a copy of the report of the auditors on the profit and loss account of the company - made out for a period commencing on the date upto which the last account was prepared; and - ending on a date immediately preceding the date of declaration; and 85- also on the balance sheet made out on the last mentioned showing the statement of the assets and liabilities as on that date.2. By Creditors:When declaration of solvency has not been filed with the Registrar, it is called Creditors voluntary wining. In this type of voluntary winding up the creditors will have a dominating control over the proceedings of the winding up.

Distinction between Members Voluntary winding up and Creditors Voluntary Winding:1. Members voluntary winding up is chosen by solvent companies and the Declaration of solvency has to be filed in this case Creditors winding up is chosen by insolvent companies and as such no declaration of solvency is required to be filed2. In members voluntary winding up, the General Meeting of members only is required to be called. In creditors winding up, a meeting of Creditors must also be called after the meeting of the members

3. In members voluntary winding up, the liquidator is appointed by the members In creditors winding up, the liquidator is appointed in a different way.

4. No committee of inspection is appointed in case of members voluntary winding up, whereas such committee may be appointed in case of creditors winding up if the creditors so wish

5. In members voluntary winding up, the liquidator can exercise certain powers with the sanction of the company in the form of Special Resolution. But, such powers in case of creditors winding-up can be exercised by the liquidator - with the sanction of the court; or - the committee of inspection; or - of a meeting of creditors.

6. In members voluntary winding up, the members have a dominating control over the proceedings of winding up In case of creditors winding up, the creditors will have more control over the proceedings of winding up

Voluntary Winding up under the supervision of the Court.

When & Who can apply to the Court?While the Voluntary winding up is in progress any creditor any contributory or the liquidator himself - can apply.

Application must indicate the grounds for supervision by the court which may include- the liquidator is negligent or partial- rules relating to winding up are not followed properly, or- the majority is playing a fraud on the minority... .

When the court is satisfied with the reasons shown by the petitioner, it may make an order that the voluntary winding up shall continue under the supervision of the court. The court, in such a case, gets the same powers as it has in the case of compulsory winding up under the order of the court. The court may appoint one or more liquidatorsThe court also has the power to remove any liquidator and fill up such vacancyThe court may - if it thinks necessary in the interest of creditors or members - put certain restrictions on the powers of the Liquidator (s).

91 Commencement of Winding up:

In case of compulsory winding up by the court - the date of petition to the court is the date of commencement. [Sec 441(2)]

In voluntary winding up, the winding up shall be deemed to commence not from the date of petition but from the date of passing resolution for such winding up [Sec 486]

Position with regard to Defunct Companies: A Company which - has never started business- has stopped business and - has no assets to divide is called as Defunct Company.Such company can be dissolved by the court without going through the process of winding up.

Procedure for Dissolving a Defunct Company: Registrar should send a Notice inquiring - whether the company is carrying on the business or not? - whether it is in operation or not? [Sec-560(1)]If the Registrar does not receive any reply within one month- a reminder must be sent to the company - within in 14 days - by registered post - referring to the first notice, and stating that, if no answer is received to this second notice within one month thereof a notice will be published in the official gazette striking the name of the company from register [Sec 560 (2)] If the Registrar- receives no reply to the second notice or - receives a reply that the company is not carrying on the business he, shall - publish in the Official Gazette and - also intimate the company that after the expiry of three month from the date of publication of such notice in the official Gazette the name of the company shall be struck of the register and - the company will be dissolved, unless cause is shown to the contrary. [Sec 560 (3)]

After the expiry of 3 months, if no cause is shown by the company the Registrar strikes of the name of the company from the register, and and publishes the fact in the Gazette and the company stands dissolved. [Sec560 (4)]The court may order to restore the name of the company in the register any time within 20 years of publication of the notice in the Gazette, if - the company; or [Sec 560 (6)] - any member; or - any creditor of the company - aggrieved by the striking of the name of the company makes an application to the court.

THANK YOU.

Prof. Dr. KSN SarmaAdvocateHigh Court of JudicatureAndhra Pradesh Visiting Professor - IBSHyderabad.Mobile: 88864 22446