WINDING UP OF A COMPANY
WINDING UP OF A COMPANY
Perpetual
succession is one of the distinguishing characteristics of a company: s 16(5).
This means that a company continues to exist even though its members may die
and its membership may alter from time to time.
A
company continues to exist until its registration is cancelled and it is
dissolved. Cancellation
of registration or dissolution of a company usually occurs after the process of
liquidation or winding up is completed. The terms "winding up" and
"liquidation" have the same meaning.
A
winding up involves an insolvency practitioner (liquidator) selling off a
company’s assets and distributing the proceeds among the company’s creditors
and members (if any fund left over). The end result is that the company’s existence
will come to an end – will be deregistered
A
company may be wound up either by court (compulsorily) or voluntarily. The
difference between a winding up by a court and voluntary winding up (VWU) lies
in the manner in which the winding up is initiated. To initiate a VWU, a resolution of the
members must be passed (even in the case of creditors VWU). A winding up by the
court is initiated by the presentation of a petition to the court by a party
who is entitled to do so, based upon one of the grounds set out in the Act.
WINDING UP OF A COMPANY
Reviewed by Kamaruddin Mahmood
on
10:57:00 PTG
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