(v) make any compromise or arrangement with creditors or persons claiming to be creditors or having or alleging themselves to have any claim, present or future, certain or contingent, ascertained or sounding only in damages against the company, whereby the company may be rendered liable; and
(vi) compromise all calls and liabilities to calls, debts and liabilities capable of resulting in debts, and all claims, present or future, certain or contingent, ascertained or sounding only in damages, subsisting or supposed to subsist between the company and a contributory or alleged contributory or other debtor or person apprehending liability to the company, and all questions in any way relating to or affecting the assets or the winding up of the company, on such terms as may be agreed, and take any security for the discharge of any such call, debt, liability or claim and give a complete discharge in respect thereof.
The liquidator in a winding up by the court shall have the power to:
(i) sell the real and personal property in action of the company by public auction or private contract, with power to transfer the whole thereof to any person or company or to sell the same in parcels;
(ii) do all acts and to execute, in the name and on behalf of the company, all deeds, receipts and other documents, and for that purpose to use, when necessary the company’s seal;
(iii) prove, rank and claim in the bankruptcy, insolvency or sequestration of any contributory for any balance against his estate, and to receive dividends in the bankruptcy, insolvency or sequestration in respect of that balance, as a separate debt due from the bankrupt or insolvent, and ratably with the other separate creditors;
(iv) draw, accept, make and endorse any bill of exchange or promissory note in the name and on behalf of the company, with the same effect with respect to the liability of the company as if the bill or note had been drawn, accepted, made or endorsed by or on behalf of the company in the course of its business;
(v) raise on the security of the assets of the company any money requisite;
(vi) take out in his official name letters of administration to any deceased contributory, and to do in his official name any other act necessary for obtaining payment of any money due from a contributory or his estate which cannot be
conveniently done in the name of the company, and in all such cases the money due shall, for the purpose of enabling the liquidator to take out the letters of administration or recover the money, be deemed to be due to the liquidator himself;
(vii) appoint an agent to do any business which the liquidator is unable to do himself; and
(viii) do all such other things as may be necessary for winding up the affairs of the company and distributing its assets.
The Act provides a liquidator, in the case of a winding up by the court, extensive powers to investigating into the affairs of the company, and especially the conduct of persons involved in the company affairs. When affairs of the company have been completely wound up, the court, if the liquidator makes an application in that regard, shall make an order that the company be dissolved from the date of the order, and the company shall be dissolved accordingly.
A copy of the order shall, within 14 days from the date thereof, be forwarded by the liquidator to the registrar of companies who shall make in his books a note of the dissolution of the Company (Art. 260).
Voluntary winding up According to the Act (Section 261) a company may be wound up voluntarily in the following circumstances:
(i) when the period, if any, fixed for the duration of the company by the articles expires, or the event, if any, occurs, on the occurrence of which the articles provide that the company is to be dissolved, and the company in a general meeting has passed a resolution requiring the company to be wound up voluntarily;
(ii) if the company resolves by special resolution that the company be wound up voluntarily; or
(iii) if the company resolves by extraordinary resolution to the effect that it cannot, by reason of its liabilities, continue its business, and that it is advisable to wind up.
When such a resolution for voluntary winding up has been passed, then the company shall, within 14 days after the passing of the resolution, give notice of the resolution by advertisement in the official gazette. The commencement of the voluntary winding up is deemed to be at the time of the passing of the resolution for voluntary winding up.
In the case of a voluntary winding up, the company shall, from the commencement of the winding up, cease
to carry on its business, except so far as may be required for the beneficial winding up thereof, provided that the corporate state and corporate powers of the company shall, not withstanding anything to the contrary in its articles, continue until it is dissolved (Art. 264).
Any transfer of shares, not being a transfer made to or with the sanction of the liquidator, and any alteration in the status of the members of the company, made after the commencement of a voluntary winding up shall be void (Art.265). Where a voluntary winding up is proposed, the company directors make a statutory declaration to
the effect that they have made a full inquiry into the affairs of the company and that to this effect they have formed the opinion that the company will be able to pay its debts in full within such period not exceeding 12 months from the commencement of the winding up as may be specified in the declaration.
The declaration takes full effect for the purposes of the Act only if:
(i) it is made within five weeks immediately preceding the date of the passing of the resolution for winding up the company and is delivered to the registrar of companies for registration before that date; and
(ii) it embodies a statement of the company’s assets and liabilities as at the latest practicable date before the making of the declaration.
Members’ voluntary winding up A members’ voluntary winding up is applied in cases where an existing solvent company is no longer required by the members as it has fulfilled its purpose. This procedure will facilitate distributing any assets among the members and repaying any liabilities thereof. This procedure is used often during group reorganisations. A company in general meeting shall appoint one or more liquidators for the purpose of winding up the affairs and distributing the assets of the company.
Upon such appointment all the powers of the directors shall cease except so far as the company in general meeting or the liquidator sanctions the continuance thereof (Art. 268). In the event that after the commencement of the
voluntary winding up the liquidator is at any time of the opinion that the company will not be able to pay
its debts in full within the period specified in the declaration under Article 266, he shall immediately call
a creditors meeting and lay before such meeting a statement of the assets and liabilities of the company
(Art.271). The liquidator has the obligation to call such general meeting at the end of each year, and lay
before the meeting an account of his acts and dealings and of the conduct of the winding up during the
preceding year (Art.272).