COMPANY LIQUIDATOR IN VOLUNTARY WINDING UP

In continuation of our discussion about voluntary winding up, we will discuss on company liquidator in voluntary winding up.

APPOINTMENT OF COMPANY LIQUIDATOR (SECTION 310):

The company in its general meeting, where a resolution of voluntary winding up is passed, shall appoint a Company Liquidator from the panel prepared by the Central Government for the purpose of winding up its affairs and distributing the assets of the company and recommend the fee to be paid to the Company Liquidator.

Where the creditors have passed a resolution for winding up the company under sub-section (3) of section 306, the appointment of the Company Liquidator shall be effective only after it is approved by the majority of creditors in value of the company. Where creditors do not approve the appointment of a Company Liquidator by members, creditors shall appoint another Company Liquidator.

The creditors, approving of appointing a company liquidator, shall a suitable resolution with regard to the fee of the Company Liquidator.

On appointment as Company Liquidator, such liquidator shall file a declaration within seven days of the date of appointment disclosing conflict of interest or lack of independence in respect of his appointment, if any, with the company and the creditors and such obligation shall continue throughout the term of his or its appointment.

POWER TO REMOVE AND FILL VACANCY OF COMPANY LIQUIDATOR (SECTION 311):

A Company Liquidator may be removed by the company where his appointment has been made by the company and, by the creditors, where the appointment is approved or made by such creditors.

Where a Company Liquidator is sought to be removed, he shall be given a notice in writing stating the grounds of removal from his office by the company or the creditors, as the case may be.

Where three-fourth members of the company or three-fourth of creditors in value, as the case may be, after consideration of the reply, if any, filed by the Company Liquidator, in their meeting decide to remove the Company Liquidator, he shall vacate his office.

If a vacancy occurs by death, resignation, removal or otherwise in the office of any Company Liquidator, the company or the creditors, who appointed company liquidator fill the vacancy.

NOTICE OF APPOINTMENT OF COMPANY LIQUIDATOR TO REGISTRAR (SECTION 312):

The company shall give notice to the Registrar of the appointment of a Company Liquidator along with the name and particulars of the Company Liquidator, of every vacancy occurring in the office of Company Liquidator, and of the name of the Company Liquidator appointed to fill every such vacancy within ten days of such appointment or the occurrence of such vacancy.

If a company contravenes, the company and every officer of the company who is in default shall be punishable with fine which may extend to five hundred rupees for every day during which such default continues.

CESSER OF BOARDS POWERS ON APPOINTMENT OF COMPANY LIQUIDATOR (SECTION 313):

On the appointment of a Company Liquidator, all the powers of the Board of Directors and of the managing or whole-time directors and manager, if any, shall cease, except for the purpose of giving notice of such appointment of the Company Liquidator to the Registrar.

POWERS AND DUTIES OF COMPANY LIQUIDATOR (SECTION 314):

The Company Liquidator shall perform such functions and discharge such duties as may be determined from time to time by the company or the creditors, as the case may be.

The Company Liquidator shall settle the list of contributories, which shall be prima facie evidence of the liability of the persons named therein to be contributories.

The Company Liquidator shall call general meetings of the company for the purpose of obtaining the sanction of the company by ordinary or special resolution, as the case may require, or for any other purpose he may consider necessary.

The Company Liquidator shall maintain regular and proper books of account in such form and in such manner as may be prescribed and the members and creditors and any officer authorised by the Central Government may inspect such books of account.

The Company Liquidator shall prepare quarterly statement of accounts and file such statement of accounts duly audited within thirty days from the close of each quarter with the Registrar. Failing which the Company Liquidator shall be punishable with fine which may extend to five thousand rupees for every day during which the failure continues.

The Company Liquidator shall pay the debts of the company and shall adjust the rights of the contributories among themselves.

The Company Liquidator shall observe due care and diligence in the discharge of his duties.

If the Company Liquidator fails to comply, he shall be punishable with fine which may extend to ten lakh rupees. The Company Liquidator shall not be punished when he fail to pay the debt and adjust the rights of the contributories.

APPOINTMENT OF COMMITTEES (SECTION 315):

Where there are no creditors of a company, the company in its general meeting and, where a meeting of creditors is held, creditors, may appoint committees as considered appropriate to supervise the voluntary liquidation and assist the Company Liquidator in discharging his or its functions.

COMPANY LIQUIDATOR TO SUBMIT REPORT ON PROGRESS ON PROGRESS OF WINDING UP (SECTION 316):

The Company Liquidator shall report quarterly on the progress of winding up of the company to the members and creditors and shall also call a meeting of the members and the creditors as and when necessary but at least one meeting each of creditors and members in every quarter and appraise them of the progress of the winding up of the company.

If the Company Liquidator fails to comply, he shall be punishable, in respect of each such failure, with fine which may extend to ten lakh rupees.

REPORT OF COMPANY LIQUIDATOR TO TRIBUNAL FOR EXAMINATION OF PERSONS (SECTION 317):

Where the Company Liquidator is of the opinion that a fraud has been committed by any person in respect of the company, he shall immediately make a report to the Tribunal and the Tribunal shall, without prejudice to the process of winding up, order for investigation under section 210 and on consideration of the report of such investigation. The Tribunal may pass such order and give such directions under this Chapter as it may consider necessary including the direction that such person shall attend before the Tribunal on a day appointed by it for that purpose and be examined as to the promotion or formation or the conduct of the business of the company or as to his conduct and dealings as officer thereof or otherwise.

The provisions of section 300 shall mutatis mutandis apply in relation to any examination directed. We have discussed this section here.

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