Chapter 12 Introduction to Winding Up Flashcards
Who can apply to the court for winding up a company?
- Company
- Creditors
- Contributories (members/shareholders)
- Registrar (with SECP’s approval)
- SECP (Commission)
Under what circumstances can a company be wound up by court?
- By special resolution of the company.
- Failure to hold a statutory meeting or file a statutory report.
- Failure to hold two consecutive AGMs or file financial statements/annual returns.
- Number of members falls below the statutory minimum.
- Company is unable to pay debts.
- Listed company is de-listed or suspends business for a full year.
- License of sole activity is revoked.
- License of an NPO (Non-Profit Organization) is revoked.
- Business is unlawful, fraudulent, or oppressive to minority shareholders.
- Management commits fraud, does not maintain accounts, or refuses to act according to regulations.
- Court considers it just and equitable.
Under what conditions is a company deemed unable to pay its debts?
- A creditor of Rs. 100,000 or more serves a notice at the registered office, and the company fails to pay within 30 days.
- A court order in favor of a creditor remains unsatisfied.
- It is proved to the court that the company is unable to pay debts.
What activities are considered unlawful for winding up?
- Receiving deposits from the public where returns are based on chance or lottery.
- Receiving deposits through referral marketing, multi-level marketing, pyramid, or Ponzi schemes.
- Any other business notified by the SECP as unlawful.
Who appoints the Official Liquidator?
The court
What is the role of a Provisional Manager?
- The court may appoint a Provisional Manager (PM) while the winding-up petition is pending.
- The PM has the same powers as the Official Liquidator unless restricted by the court.
Who maintains the panel of Official Liquidators?
The SECP (Commission) maintains a panel of persons with at least 10 years of experience in accounting, finance, or law.
How many companies can an Official Liquidator handle at one time?
Maximum of three companies.
Can creditors appoint an Official Liquidator from outside the panel?
Yes, if creditors holding at least 60% of the issued capital agree and notify the Registrar.
What must an Official Liquidator do after appointment?
- Deposit security (if required by the court).
- File a declaration of no conflict of interest within 7 days.
- Follow the SECP’s code of conduct and legal requirements.
Can an Official Liquidator resign?
- Resignation is not allowed except in cases of personal disability.
- If resigned, they must continue until a successor is appointed.
How is a casual vacancy in the Official Liquidator’s position filled?
By the Court from the panel of Official Liquidators
Who must submit a Statement of Affairs to the Official Liquidator?
Directors
Chief Executive Officer (CEO)
Chief Financial Officer (CFO)
Company Secretary
What is the deadline for submitting the Statement of Affairs?
- Within 15 days from the date of appointment of Official Liquidator or winding-up order.
- Extension up to 45 days can be granted by the Provisional Manager, Official Liquidator, or Court.
What details must the Statement of Affairs contain?
- Assets and liabilities.
- Cash and bank balance.
- List of secured and unsecured creditors alongwith names and addresses.
- List of receivables with realizable amounts alongwith names and addresses.
- Details of company property in possession of others.
- List of pending legal cases.
- Details of locations where the company conducted business in the last 180 days.
Who else may be required to submit statements?
Any person who was a director, CEO, CFO, or employee within one year before the winding-up order.
When must the Official Liquidator submit a report to the court?
As soon as possible, but within 60 days of the winding-up order.
A certified copy is also to be sent to registrar.
To whom must the Official Liquidator submit the report?
To the Court and the Registrar.
What must the Official Liquidator’s report to the court include?
- Assets and their values.
- Details of intellectual properties (trademarks, patents, etc.).
- Cash and bank balance.
- Authorized and paid-up capital.
- List of secured and unsecured creditors.
- Pending legal cases.
- List of receivables and recoverable amounts.
- Details of holding and subsidiary companies.
- Ongoing contracts and joint ventures.
- Debts due from contributories.
- Any other info required by the court.
- If any fraud was committed during formation.
- How the value of assets be increased for liquidation.
What additional aspects must the Official Liquidator report on?
- Manner of formation, promotion, or management of the company.
- Viability of the business.
- Any other matters as directed by the Court.
Under what circumstances can a company wind up voluntarily?
- By passing a resolution when:
a. A period specified in the Articles of Association expires.
b. An event specified in the Articles occurs. - By passing a special resolution to wind up voluntarily.
When does voluntary winding up commence?
On the passing of the resolution.
What is winding up under court supervision?
When the court supervises voluntary winding up, either on its own motion or upon an application.
What powers does the court have in supervised winding up?
Same powers as in compulsory winding up.
When can a voluntary winding up be converted into a court-ordered winding up?
- If an entitled person applies.
- If the court is satisfied that proper regard is not being given to creditors, contributories, or public interest.
Who has the right to inspect the statement of affairs?
Any creditor or contributory (member/shareholder) after submitting required fee.
What is the penalty for falsely claiming to be a creditor or contributory?
Punishable under Section 182 of the Pakistan Penal Code, 1860.
Who will reimburse the expenses to the persons making statements to OL?
By PM/OL to persons making statement.
Who can get a copy of Statement of Affairs?
- A creditor or contributory.
- Offence if a person untruthfully represented himself a creditor or contributory
How a company can apply for windingup?
File particulars of assets and liabilities and suits.
How creditors apply for winding up of a company?
Establish prima-facia case.
Give security for cost.
How contributories apply for winding up of a company?
- If members below minimum no., and
- Shares of the company were held by applicant for atleast 180 days during last 18 months.
How a registrar can apply for winding up of a company?
- Sanction of SECP obtained.
- Opportunity of hearing given to company by SECP
How a commission applies to court for winding up of a company?
- If an investigation is made and it reveals that:
a. business is unlawful/fraudulent, not authorized, or oppressive to
minority shareholders.
b. management is guilty of fraud or misconduct. - Opportunity of hearing given to company by SECP
When does winding up commence?
At time of presentation of petition for winding up.
How does Winding up under supervision of court happen?
- In voluntary winding up, Court may order (on its own or on
application) to supervise winding up. - Powers of Court = Powers in winding up by Court
How does any winding up convert into winding up by court?
Any Winding up can be converted into winding up by Court if:
1. entitled persons apply.
2. Court is satisfied that due regard not given to interest of
creditors, contributories or to public interest
