When a resolution for the winding up of a company is passed inside the company, the court may make an order for the voluntary winding up to continue.
● However, the court remains in supervision of the winding up.
● The freedom and liberty of the creditors, contributors or others to apply to the court at such times is limited by the court.
● A petition for the winding up must be filed at the court for the supervision of the court over the winding up.
● The winding up of a company by the order of the court is also regarded as a compulsory wind up.
Section 305 of the ordinances justifies the following circumstances where the court may wind up the company based upon a petition submitted to a court.
● If the company decides by a special resolution that the company should be wound up by the court.
● If the company is found to be a defaulter in delivering statutory reports at the registrar’s office or holding statutory meetings or holding two annual general meetings for two consecutive years.
● If the company does not start its business for one year of incorporation or its business in suspended for one year.
● If the number of members is reduced below 2, 3 and 7 for private, public and listed company respectively.
● If the company is found no more able to pay its debts.
● If the company is −
ü Carrying out or complying unlawful and fraudulent activities
ü Carrying out business activities not authorized by its memorandum of association
ü Carrying out business in an oppressive manner towards its members concerned with the promotion of the company
ü Running and is managed by the hands of persons who are in a default in maintaining proper accounts or are involved in fraudulent and dishonest activities
ü Managed by persons who fail to work in sync with the memorandum of association of the company or fail to comply with the registrar and the court of law.
● If the company, being a listed company, does not stand out to act like one.
● If the court’s opinion is to wind up the company or
ü Complete deadlock in the management of the company
ü Failure of company’s main objective
ü Recurring losses
ü Oppressive or aggressive policies of the majority of shareholders
ü Incorporation of a company with intent to fraudulent or illegal purpose
ü Public interest
● If the company ceases to have a member.