Procedure For Creditors Voluntary Winding Up


Section 306(3) provides that where two-thirds in value of creditors of the company are of the opinion that the company may not be able to pay for its debts in full from the proceeds of assets sold in voluntary winding up and pass a resolution that it shall be in the interest of all parties if the company is wound up by the Tribunal, the company shall within fourteen days thereafter file an application before the Tribunal.

Procedure For Creditors Voluntary Winding Up

1.      Meeting of creditors : The meeting of creditors is called on the same or on the next day in which the meeting of members has been called regarding the winding up of the company. Information of the meeting must be given through official gazette and also in a newspaper which is in circulation in the district where the registered office or the principal office of the company is situate. [Sections 306(3) and 307(1)]

2.   Filing a copy of the resolution with the Registrar : A copy of the resolution for winding up of the company must be filed with the Registrar within 10 days. [Section 306(4)]

3.   Appointment of liquidator and committee of inspection : The members and the creditors while passing resolution for winding up of the company also appoint the liquidator. If the liquidator appointed by the creditors and that by the members are different persons then the liquidator appointed by the creditors shall be the Company liquidator (Section 310). The creditors, in the same meeting also appoint a committee of inspection consisting of members but not more than five in number. The powers of such committee are the same as of the committee appointed in case of compulsory winding up. [Section 315]

4.      Fixing a liquidator’s fee : The fee of the liquidator is fixed either by the committee of inspection or by creditors. If it is not fixed by both, then it is to be decided by the court itself. [Section 310(3)]

5.  Board’s powers to cease on the appointment of liquidator : Just after the appointment of liquidator all the powers of board ceases.
6.     To fill the casual vacancy in the office of liquidator : If the vacancy exists due to death, resignation or otherwise, such vacancy is filled by the creditors in the general meeting of the company.

7.      Restriction on the liquidator to accept shares : The liquidator cannot take shares of any other company as a consideration for the transfer without the permission of the court or the committee of inspection.

8.   Final meeting and dissolution : When all the affairs of the company are wound up, the liquidator calls the final meeting of the members and creditors. The entire Books of Accounts are presented there in the meeting. The information must be made by giving an advertisement in the leading newspaper and in official Gazette also. Lastly, the liquidator files the copy of last meeting proceeding with the Registrar and the Registrar on receipt of the copy enters it in his register. The company in this way is wound up.
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