UNIT NO :-2

The Companies Act 2013

Definition & characteristics of a company, , Kinds of
Companies, Provisions relating to incorporation, :
Memorandum of Association, Doctrine of ultra-vires,
Articles of Association, Doctrine of indoor
management & constructive notice, Concept of
Prospectus. Company Meetings, Resolutions Concept
of Prospectus. Role & duties of promoter, transfer and
transmission; Management –Appointment of
Directors, Powers, duties, & liabilities of Directors.
Winding Up of the Company - Types of Winding up.
The origins of Company

▪ The origins and development of Company law

in India is based on the English Company
Law. Whatever Company legislations have
been passed in England from time to time has
been followed by the Indian law with certain
modification. The Companies Act, 2013 is
said to follow the U.K. Companies Act, 1948.
In England, the ‘merchant guilds’ .
History of Company Legislation in India

▪ The Bhabha committee submitted its report in

April 1952 covering almost all aspects of the
Company law. Based on the recommendation
of the Committee Report, a Bill was
introduced in the parliament in 1953 which
later on took the shape of the present
Company Act viz. the Companies Act, 2013.
Company:-

▪ The word ‘company’ has no strict technical or

legal meaning literally the word means a group
of persons associated for some common object
or objects such as business, sports, charity etc.
But, in common parlance, the word ‘company’
is normally reserved for those associated for
economic purposes, i.e. to carry a business for
gain.
Meaning and Definition of a
Company
▪ Section 3(1)(i) of the Companies Act, 2013
defines a company as: “a company formed and
registered under this Act or an existing
Company”.

▪ ‘Existing Company’ means a company formed

and registered under any of the earlier Company
Laws.
Some more Definition of a
Company
▪ “a company is an artificial person created by
law, having separate entity, with perpetual
succession and common seal.”

by Prof. Honey
Cont...

▪ “A company is an association of many persons

who contribute money or monies worth to a
common stock and employed in some trade or
business and who share the profit and loss
arising from there”.

Lord Justice Lindley

Cont.....

▪ “A corporation is an artificial being, invisible,

intangible, existing only in contemplation of
the law is called company”

Chief Justice Marshall

Features of a Company

1. Incorporated Association
2. Separate legal Association
3. Artificial Person
4. Limited Liability
5. Transferability of Shares
6. Perpetual Succession.
7. Common Seal.

Business Law 9
1 Incorporated Association

▪ A company must necessarily be

incorporated or registered under the
Companies Act. Minimum number
required for this purpose is seven in
the case of a ‘Public company’ and
two in case of a 'private company'
(Section 12).
2 Separate legal Association

▪ A company is a legal person having

nationality in accordance with the
country of its incorporation and a
domicile in accordance with the place
or state of its incorporation or
registration, it is not a citizen State
3 Artificial Person

▪ The company, through a justice person,

does not possess the body of a natural
being. It exists only in the eyes of law.
Being an artificial person, it has to depend
upon natural person, namely, the directors,
officers, shareholders, etc.,
4 Limited Liability

▪ One of the important advantages of

formation of a company is that the members
of the company are only liable to contribute
towards payment of its debts to a limited
extent. If the company is limited by shares.
5 Transferability of Shares

▪ The shares of a public company are freely

transferable and members can dispose of
their shares whenever they like without
seeking any permission from the company
or the other members. In a private
company, however, some restriction on the
right to transfer shares is essential in its
articles as per section 3(I) (iii) of the
companies Act, 2013,
6 Perpetual Succession

▪ Since company is an artificial person, it can

not be incapacitated by illness and does not
have an allotted span of life. Being distinct
from the members, the death, insolvency or
retirement of its members does not affect
the Company. Members come and go but
the company can go forever. It continues of
may even if all its human members are
dead.
7 Common Seal.

▪ A company being an artificial person has no

body similar to a natural person. It does not
have a mind or limbs of human being. It acts
through natural person namely, the directors
and other officers and employees of the
company. But it can be held bound by only
those documents which bear its signature.
Common seal is the official signature of a
company.
 Types of Companies

▪ Private Company
▪ Public Company
Private Company [Sec. 2(68)]

▪ A private company means a company

which has a minimum paid up capital of
one lakh rupees or such higher paid-up
capital as may be prescribed and by its
articles :
(a)Restricts the right to transfer its shares,
if any;
(b)limits the number of its members to 50,
not including:
 Private Company …contd.

(i) persons who are in the employment of

the company, and
(ii) persons who, having been formerly in the
employment of the company, were members
of the company while in that employment
and have continued to be members after the
employment ceased;
(c) prohibits invitation to the public to subscribe
for any shares in or debentures of, the
company.
Private Company …contd.

(d) prohibits any invitation or acceptance of

deposits from persons other than its
members, directors or their relatives.
▪ Where two or more persons hold one or
more shares in a company jointly, they shall,
for the purposes of membership, be treated
as a single member.
Public Company Sec. 2(71)

▪ A public company means a company which:

is not a private company or subsidiary to private
company .[In other words, it should not have the
restrictions of Section Sec. 2(71))(iii) in its
articles ];

(b) It has a minimum paid-up capital of five lakh

rupees or such higher paid-up capital, as may be
prescribed;
Some other Types of Companies

▪ Royal Charter or Chartered Companies: Treated as

foreign companies.
▪ Statutory Companies: Formed under Special
Statutory Act of Parliament or State Legislature. For
e.g., RBI, SBI, IFCI, etc.
▪ Registered Companies: Are registered under the
Companies Act. These companies have MoA and
AoA for internal & external regulations.
▪ Under the Act the companies are either (i) Companies
limited by shares, (ii) Companies limited by
guarantee, or (iii) Unlimited Companies.
Under the Act the companies are
either
▪ (i) Companies limited by shares,
▪ (ii) Companies limited by guarantee,
▪ (iii) Unlimited Companies.
Companies limited by shares: (sec 12 (2)
a )
▪ Such a company is company is called company
limited by shares. A company limited by shares
may be a public limited company or a private
limited company.
▪ The former has a minimum paid-up capital of Rs. 5
lac. Members minimum 7, maximum unlimited to
form a company. The latter has a minimum paid-up
capital of Rs. 1 lac. Members limited Minimum
two. For private & public company resp...
▪ During the existence of the company or in the
event of winding up, a member can be called up
to pay the amount remaining unpaid on the shares
subscribed by him.
Companies limited by guarantee:(sec 12
(2) b )

▪ Companies may or may not have share capital.

▪ Each member promises to pay a fixed sum of
money specified in the Memorandum in the event
of liquidation of the company for payment of
debts and liabilities of the company.
▪ The amount promised is called ‘guarantee’.
▪ Depend on entrance and subscription fees for their
existence.
▪ The amount guaranteed by each member is in the
nature of reserve capital. Cannot be called upon
except in the event of winding up of company.
Unlimited Companies: (sec 12 (2) c)

▪ Liability of the members is unlimited like an

ordinary partnership firm.
▪ A company not having any limit on the
liability of its members is called an ‘unlimited
company.’
▪ The articles of such a company shall state the
number of members with which the company
is to be registered.
▪ Section 12 gives choice to promoters to form a
company with or w/o limited liability.
 How to form a company?
▪ The whole process of formation of a
company may be divided into four stages,
namely:
(i) Promotion
(ii) Registration
(iii) Raising of Capital.
(iv) Commencement of Business.
 1) Promotion
▪ Who is a Promoter? (sec- 2(69).
▪ Bowen, L.J.
The term promoter is “a term not of law but of
business”, usefully summing up, in a single word—
promotion,
“ A Person who perform number of business operations
familiar to the commercial world by which a
company is brought into existence”.
However, the persons assisting the promoters by
acting in a professional capacity do not thereby
become promoters themselves.
 Legal Position of a Promoter
▪ Promoter stands in a fiduciary position towards
the company.
▪ In other words, he is not allowed to make
secret profits.
▪ Promoter has its liability,in case of secret
profits.
2) Registration/Incorporation

▪ Private Company
Minimum Number of Members
required – 2.(max under the act.)

▪ Public Company
Minimum Number of Members
required – 7.(max under the act.)
 Steps

1. Application for availability of name:

Three names in order of priority conforming to
the provisions of the Act and the Guidelines
issued by Department of Company Affairs in this
regard:
■ Name to end with the word(s) ‘Limited’ or
‘Private Limited’, as the case may be
■ except:
(i) Section 25 Companies
(ii) Govt. Companies (need not use Pvt. Ltd.)
(iii) Producer Companies.
Steps …contd.

Name should not be identical or too similar to

the name of an already existing company.
Should not include the name of a registered
trade mark.
2. Preparation of Memorandum and
Articles of Association
Memorandum (sec 2(56) & 4)defines the
limits & scope of activities of a company.
Articles (sec 2(5) & Sec 5) defines and
structure of a company.
Steps
…contd.
3. Preparation of other documents
A Statutory Declaration(sec 33(2)).
Consent of Directors (in case of a Public
Company) (sec 266(1)).
Particulars of Directors, Manager,
Secretary, etc. in the prescribed form.
Notice of registered address To be supplied
within 30 days of incorporation.(sec 146).
Power of Attorney in favour of a professional
to effect registration.
3) Raising of Capital

▪ A company may raise capital through

Private placement
Issue of Prospectus
▪ Private placement means raising of
capital from friends, relatives and
through brokers as a members.
Issue of Issue of Prospectus
Prospectus
▪ a company cannot commence business or
exercise borrowing powers unless:
(a) shares up to the amount of the minimum
subscription have been allotted by the
company;(under SEBI act 1992. )
(b) every director of the company has paid to the
company, on each of the shares taken or
contracted to be taken by him and for which he
is liable to pay in cash.(as per MOA)
Cont...

the same proportion as is payable on application

and allotment on the shares, offered for public
subscription;
Cont...

▪ (c) there has been filed with the Registrar

MCA a duly verified declaration by one of the
directors or the secretary or, where the
company has not appointed a secretary, a
secretary in whole time practice in the
prescribed form that clauses (a), (b) and
(mentioned above) have been complied with.
▪ Commencement of Business.
Memorandum of
Association(MOA).
The first step in the registration of a company
is to prepare memorandum of association.
This is also known as constitution of the
company.
What is Memorandum of Association of a
company?

▪ No company can be registered under the Companies

Act, 2013 without the memorandum of association.

▪ Under Section 2 & 4(56) of the Companies Act, 2013

the “The memorandum of association of the
company as originally framed or as altered from time
to time in pursuance with any of the previous
companies law or the Companies Act, 2013.”

40
Some defination of MOA

▪ “Is the constitution or charter of the

company and contains the powers of the
company.”- Lord cairns.
▪ “The purpose of the MOA is to enable the
sharholder ,crediators, and those who deal
with the company, to know what is its
permitted range of enterprise.” – Lord
Macmillan
 CONTENTS OF MEMORANDUM OF
ASSOCIATION

Six Clauses

Name Registered
Objects
office

Association
Liability Capital or subscription
1 Name Clause[ section 4 -1a]

▪ The memorandum must state the name of the

company with ‘limited’ as the word ,in case of
a public limited company and with ‘private
limited', in the case of a private limited
company .
▪ the company is free to choose any name but it
must not be undesirable or must not resemble
the name of any other registered company.

43
2.Registered office clause [section 4(1)(b)]

▪ The state in which the registered office of a

company will be situated is mentioned in this
clause .the registered office of the company is
the official address of the company where the
statutory books and records must normally be
kept.

44
3. Object Clause section 4(1)(c)&(d)]

This clause is quite important and must be very carefully

drafted as it determines the activities of the company. In
the object clause each and every detail of activities of the
business to be carried out must be laid down.
Main object:- this sub-clause contains the main objects of
the company to the pursued on its incorporation
Objects incidental or ancillary :- it covers the objects
which are incidental or ancillary to the attainment of the
main object
Other objects :- this sub-clause will cover any objects
which are not included in the ‘main objects’

45
4. Liability Clause[section 4(2)]
This clause states the nature of liability of the members
of the company .
In the case of a company limited by share or by guarantee
the fact that the liability of its members is limited must be
made absolutely clear .
If the share are fully paid up his liability is clear. But in
case of partly paid-up shares the liability is limited to the
amount which is unpaid.
In case of a company limited by guarantee ,the liability
clause must state the amount which every member
undertakes to contribute to the assets of the company in
the event of its winding up.

46
5. Capital Clause[section 4(4)(a)]

▪ This clause states that amount of the capital

with which the company is to be registered .
▪ This clause should also state the number and
face value of shares into which the capital of
the company is divided.
▪ The capital with which the company is
‘registered’ or ‘nominal’ or ‘authorized’ .

47
6. Association clause [section 4(4)(c)]

▪ The association clause states – in this cause ,

the subscribes declare that they desire to be
formed into a company and agree to take the
shares stated against their names .
▪ the names ,address and occupation of the
subscribers must be given each subscriber
must sign in the presence of witness.
▪ They also agree to the purchase of
qualification shares if any.
48
 Case: Company for Restaurant

• Husband and wife, Niraj and Seema Mishra,

based in Mumbai, are forming a company. They
want a short name for the company with their
surname in it. The company is being formed to
run a restaurant. They project they would need 20
lakhs as the capital of the company. Immediately,
the husband would contribute Rs. 2,00,000 to the
share capital of the company. Mr. Mishra hopes to
find others, after the company is formed, to take
the shares of the company. They also contemplate
occasionally hiring out the car they would buy for
the company. Develop a Memorandum of
Association for the Company.
49
Memorandum of Association of the
Mishra private limited
I . The name of the company is Mishra Private
Limited
II. The registered office of the company will be
situated in the state of Maharashtra.
III. The objective for which the company is begin
established are as follows:
a. Main object: running of restaurants
b.Ancillary object : opening bank accounts, hiring
premises an running of bakery
c. Other objects: Hiring out of vechicles
50
IV. The liability of the members is limited
v. The authorized share capital of the company is
RS.20,00,000,divided into 2,00,000

51
 ALTERATION OF
MOA.
As per section 16
“ A company shall not alter the condition contain in its
memorandum ,except i n the case ,in the mode ,and to the
extent for which express provision is made in the company
act.”
Alteration of MOA (Section 13)

The MOA can be altered after incorporation, but specific changes require special approval:
Type of Alteration Approval Required
Special Resolution + Central
Change of Name
Government Approval (MCA)
Change of Registered Office (Same
Board Resolution + ROC Approval
State)
Change of Registered Office Special Resolution + Regional
(Different State) Director Approval
Change of Object Clause Special Resolution + ROC Filing
Increase in Capital Clause Ordinary Resolution + ROC Filing
Alteration of Liability Clause Requires Consent of Members
Subscription Clause Cannot be altered
 ALTERATION OF NAME CLAUSE.
CLAUSE

• Special Resolution with Written Approval of

Central Government.
• No Approval of Central Government is
necessary if the change of name involves only
the addition or deletion of the word “Private”
with ordinary resolution (sec 22).
• Change by “ordinary resolution” and approval
of Central Government when name is identical
or too closely resembles the name of an
existing company (sec 23).
54
 CHANGE OF REGISTERED OFFICE

From one premises to another premises in the

same city, town or village.

• By passing a resolution to Board of Directors

(board’s resolution) , & with notice within 30
days.

55
 CHANGE OF REGISTERED OFFICE

From one town or city or village to another town

or city or village in the same state
1. Special Resolution.
2. Confirmation of Regional Director — when
jurisdiction of Registrar of companies is
changed.
3. Copy of (i) & (ii) to be filed with Registrar
office.
4. Notice of new location to Registrar office
within 30 days (sec 146).
56
 ALTERATION OF OBJECTS CLAUSE

A.A. Special Resolution

B. Alteration is sought on any of these grounds: (sec 17 1-2)
• To carry on its business more economically & more
efficiently.
• To attain its main purpose by new or improved means.
• To enlarge or change the local area of its operations.
• To carry on some business which under existing
circumstances may conveniently or advantageously be
combined with the business of the company.
• To sell or dispose off the whole or any part of the
undertaking.
• To amalgamate with any other company.
C. Copy of (A & B) is filed with ROC within 30 days.

57
 ALTERATION OF LIABILITY CLAUSE

• The liability of a member of a company cannot

be increased unless the member agrees in
writing (sec 38).

• From unlimited liability, it can be made limited

by re-registration of the company.

58
 ALTERATION OF CAPITAL CLAUSE

• A company can reduce share capital by first passing a special

resolution for reduction of capital .but powers to reduce
share capital must be guaranteed in the articles of the
company ,otherwise the share capital can be altered by
special resolution giving such powers.
• The company can apply to the court by petition for getting
confirmation from the court for reducing the share capital .
The main duty of the court is to look after the interest of the
creditors and different classes of shareholders , and then
decide whether the company should be allowed to reduce
share capital . Same for vice versa.

59
 ‘ULTRA VIRES’’

The words :
• Ultra means beyond
• Vires means the powers
• Ultra Vires means beyond the powers.

A company which owes its incorporation to statutory

authority can not effectively do anything beyond the
powers expressly or impliedly conferred upon it by
the statute or Memorandum of Association.

60
Doctrine of ultra vires
▪ The object clause of the Memorandum of
the company contains the object for which
the company is formed.
▪ An act of the company must not be beyond
the objects clause, otherwise it will be ultra
vires and, therefore, void and cannot be
ratified even if all the members wish to
ratify it. This is called the doctrine of ultra
vires.
Cont…

▪ This doctrine prevents the wrongful application

of the company’s assets likely to result in the
insolvency of the company and thereby protects
creditors/invester.
▪ Besides the doctrine of ultra vires prevents
directors from departing the object for which
the company has been formed and, thus, puts a
check over the activities of the directions.
▪ It enables the directors to know within what
lines of business they are authorized to act .
Articles Of Association

▪ A document that specifies the regulations

for a company's operations. The articles of
association define the company's purpose
and lays out how tasks are to be
accomplished within the organization,
including the process for appointing
directors/body and how financial records
will be handled.

63
Cont...

▪ It must be a) Printed b) Divided into

paragraphs & numbered consecutively
c) signed by each subscriber to the
Memorandum in the presence of
witness (sec 30).
Items covered by the Articles of
Association include :-
▪ The importants of company.
▪ Powers, duties, rights and liabilities of Directors.
▪ Powers, duties, rights and liabilities of members.
▪ Rules for Meetings of the Company.
▪ Dividends.
▪ Borrowing powers of the company.
▪ Calls on shares.
▪ Transfer & transmission of shares.
▪ Voting powers of members

65
Companies which must have Articles

▪ Unlimited Companies: (sec 27 1)

The Articles of such a company must state:
■ Total number of members; and
■ Share capital.
▪ Companies limited by Guarantee: (sec 27 2)
Articles of such company must state total
number of members.
Companies which must have Articles

…contd.
▪ Private Companies limited by shares:
must include requirements of Section
3(1)(iii).
a)Transfer of shares, b) No of member
c) prohibition of any invitation d) prohibition
of deposites.
No Article Company
▪ A public limited company having share
capital may be registered without Articles.
 Memorandum of Association Articles of Association
Charter of Company Regulations for internal management

Defines the scope of the activities Rules for carrying out the objects of
company.

Supreme document Subordinate to the memorandum.

Must for every company Public Company limited by shares need

not have it (Table ‘A’ applies)

Strict restrictions, alteration only with Can be altered by special resolution.

sanction of central govt./ tribunal.

It define the relationship between the It define the relationship between

company & the outsiders company & its staff and between
members & members interests
 Doctrine of Constructive Notice
▪ According to Section 610,

▪ “Every person dealing with the company is

deemed to have read M/A and A/A and
understood in proper sence, this is called as
constructive Notice of memorandum and
articles”
Legal effect

▪ The legal effect of this doctrin is that if a person

deal with a company in a manner which is
inconsistent with the provisions contained in M/A
& A/A .
▪ He must be deemed to have dealt with the
company at his own risk & cost and shall have to
bear consequences thereof.
 DOCTRINE OF INDOOR MANAGEMENT

There is exception to the above doctrine of

constuctive notice that is
1) Persons dealing with the company are not
bound to enquire into the regularity of the
internal proceedings
2) They need not enquire as to whether the
general meeting of the shareholder or the
meeting of the bord of directors was
convened on proper notice.
3) Whether a proper quorum was present at the
meeting or whether the necessary
resolution was properly pass or not .
These are entitled to assume that what has been
regularly done by the company And can hold the
company liable even if the internal formalities
are found ‘ not to have been completed’

This rule is know as the doctrin of indoor management.

Exceptions :-
1) Knowledge of Irregularity
2) Negligence by outsider
3) Forgery
4) Acts outside the scope of Apparent Authority.
The Directors
▪ Section 2(13) define a Director
▪ “ Any Person occupying the position of
dorector, by what ever name is called as a
directors”

▪ The director are responsible for contemplating

and determining the general policy of
management and directing the company’s
business in best possible manner.
 Duties of the Directors

1) Fiduciary Duties
a) To act honestly and with good faith
b) Not to use confidential information of the company for their own
purpose.
c) Duty of Care and to act reasonably while acting for the company.

Statutory Duties
a) Not to contract with company, where he/she or his relative has an
interest in the Contract.
b) where he/she has a interest, they need to inform the board or seek
prior approval while entering into contract, otherwise the contract is
voidable.
c) Duty to attend and convene meetings.
d) Duty not to delegate.
74
The directors liabilities
▪ The liability of the directors can be either civil or
criminal.

▪ If provided in the MOA, the liability may be unlimited,

for a limited company, otherwise it may be altered.

▪ Liability may be for breach of fiduciary duties

▪ The directors are personally liable for the following:

▪ a) Ultra vires acts
▪ b) negligent acts
▪ c) liability for the acts of third parties
Criminal Liability
▪ Liability of the director for any untrue statement
in the prospectus
▪ Inviting any deposits in contravention of the law
▪ Liability for false advertisement
▪ Failure to repay the application money, which
was excess
▪ Concealing the names of the creditors
▪ Failure to lay the balance sheet.
▪ Failure to provide information to the auditor etc.
Prospectus

▪ A document containing detailed information

about the company and an invitation to the
public for subscribing to the share capital and
debentures issued is called prospectus

Business Law 77
Contents of a Prospectus

▪ General Information
▪ Capital Structure of the company
▪ Terms of the present issue
▪ Company Projects

Business Law 78
Statement in lieu of Prospectus

When a public company chooses to raise its

capital only from its directors, members or
their relatives then it issues a statement in lieu
of prospectus which contains the details of
share capitals filed with the registrar.

Business Law 79
Shelf Prospectus

▪ A shelf prospects means a prospects issued by

any financial institution or bank for one or
more issues of the securities or class of
securities specified in that prospectus.
▪ Such prospectus is valid for one year.

Business Law 80
Meetings

▪ “Any gathering ,assembly or coming together

of two or more persons for the transaction of
some lawful business of common concern is
called meeting” - P K Ghosh

▪ “ concurrence or coming together of atleast a

quorum of members by previous notice or
mutual agreement for transacting business for
a common interest is a meeting”
Various kinds of Meetings

▪ Statutory Meeting

▪ Annual General Meeting

▪ Extra Ordinary General Meeting

Business Law 82
Statutory Meeting

▪ For a public Ltd. Co. happens once in a life time,

not required for Pvt. Ltd. Co.
▪ Should be conducted within the one month of
issuing of certificate of commencement.
▪ A statutory report is prepared which give details
about the shares allotted, the progress with respect
to the contract of the company.
▪ Failure of holding the statutory report can lead to
the winding of the company.

Business Law 83
Annual General Meeting (AGM)

▪ Held once in a year to adopt the final account,

appoint new auditors, elect directors,
declaration of dividend.

Business Law 84
 Extra Ordinary General Meeting
(EGM)
▪ Any meeting of shareholders after the AGM would
be an EGM.
▪ Normally called between two AGMs, this meeting
can be called by directors, can be called by court or
if 10% of the shareholders make a requisition to the
board to call for an EGM.
▪ The board of directors must do so with in 45 days,
failing which these 10% shareholders can call the
EGM themselves

Business Law 85
Requisites of a valid meeting

▪ Notice of the meeting

▪ Agenda of the meeting
▪ Proxy
▪ Quorum of Meeting
▪ Voting
▪ Minutes of meeting

Business Law 86
Winding Up

▪ Winding up of a company is a process

whereby its life is ended and its property
administered for the benefit of its creditors and
members

Business Law 87
Process

▪ A liquidator is appointed by the court / director

and director gives the whole of the control /
affairs of the company to the liquidator at the
time of the winding up of the company.
▪ After utilizing all the information's liquidator
disposed the assets of the company and the funds
are utilized to pay the creditors and the surplus is
distributed among the shareholders. Once this is
over the company is said to be dissolved.

Business Law 88
Modes of Winding Up

1. Winding up by Tribunal ( Court) or

Compulsory winding up

2. Voluntary Winding Up

Business Law 89
Winding up by tribunal

1. If the company has, by special resolution,

resolved that the company be wound up by the
tribunal.
2. If default is made by company in delivering the
statutory report to the registrar or in holding the
statutory meeting.
3. If the company doesn’t commence the business
within a year of its incorporation, or suspends its
business for a whole year.

Business Law 90
Winding up by tribunal

4. If the number of members is reduced, in the case

of public company below 7, and in the case of
private company below 2.
5. If the company is unable to pay its debts.
6. If the company has mad a default in filing with
the registrar its balance sheet and profit & loss
account or annual return for any five consecutive
financial year.
7. If the company has acted against the interest of
the India

Business Law 91
Voluntary Winding Up

▪ Voluntary winding up is one which is

voluntarily decided by the members or
creditors on their own level without
intervention of tribunal

Business Law 92
Thank You

93