What are the reasons and procedures behind the compulsory winding up of a company?

What are reason of compulsory winding up a company?

Winding-up could become necessary when a business is no longer making profit; when competition is wearing down a business; the owner is no longer interested in operating the business; or arising from the business’ inability to pay its debts, etc.

What are the two most important reasons for compulsory winding up?

The circumstances in which that might occur are discussed below, but generally include where there is a special resolution by the organisation to do so, there is a breakdown or failure in management of the organisation, or where the organisation has become defunct, or never started operating.

What are the grounds of compulsory winding up of a company when is it considered just and equitable to wind up a company?

if the number of members is reduced, in the case of a public company, below seven, and in the case of a private company, below two; if the company is unable to pay its debts; if the court is of opinion that it is just and equitable that the company should be wound up.

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What is the procedure of compulsory winding up?

Compulsory winding up takes place when a creditor of an insolvent company asks the court for a wind up. If the company goes into liquidation, the court of law appoints a liquidator for the liquidation. The primary objective of the liquidator is to raise as much funds as needed to pay the creditors.

Which of the following reasons would be the basis for winding up of a company by the tribunal?

In case the company does not pay the debts, the debt of the creditor exceeding Rs 1 lakhs is due and unpaid by the company within 21 days from the due date, or any execution decree is passed in favour of the creditor or tribunal has a reason that company will not pay off any debts then company would be liable for …

Which mode of the winding up the companies will be called compulsory winding up?

Compulsory Winding Up by the Court: Winding up of a Company by an order of the court is called the compulsory winding up. Section 433 of the Companies Act lays down the circumstances under which a Company may be compulsorily wound up.

What is a compulsory winding up order?

A winding up order is a court order that forces an insolvent company into compulsory liquidation – a process in which the court appoints an Official Receiver (OR) to liquidate all of the company’s assets in order to repay creditors.

Who may petition for compulsory winding up?

Any creditor or creditors of the company may present a petition to the Court for winding up, alleging that the company is unable to pay the debts of the creditor in the manner specified in section 433 or 434.

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