A company’s shareholders or partners may trigger a voluntary winding up, usually by the passage of a resolution. If the company is insolvent, the shareholders may trigger a winding-up to avoid bankruptcy and, in some cases, personal liability for the company’s debts.
It’s possible for a 50% shareholder to liquidate a company by presenting a winding up petition at court on ‘just and equitable’ grounds. … The court will try to establish whether trust between the two shareholders has completely broken down, as well as looking at other potential options.
Winding up petitions on just and equitable grounds are relatively rare. The court will take into account whether mutual trust and confidence has broken down, which in the case of deadlock between 50/50 director/shareholders is likely, and whether there are any other options apart from voluntary liquidation.
Who can apply to wind up a company?
Under s. 124(1) IRDA, the creditor, amongst others, are entitled to present a winding-up petition. By far the vast majority of winding up applications are made by creditors seeking to enforce the payment of undisputed debts.
“A fully paid-up shareholder is a contributory, and as such entitled to present a winding up petition.
Can the shareholders overrule the board of directors? … Shareholders can take legal action if they feel the directors are acting improperly. Minority shareholders can take legal action if they feel their rights are being unfairly prejudiced.
How can I wind my limited company without debt?
This is done by petitioning the court for a compulsory winding up order. Assuming that the company has no debts or is able to repay them in full before closure, the process followed is called a Members’ Voluntary Liquidation, or MVL.
Shareholders are key figures when placing a company into liquidation. The shareholders must pass a special resolution to place their company into liquidation. They play a fundamental part in commencing the process, as without a 75% vote in favour, an insolvent company cannot enter a CVL.
Ordinarily, it is not difficult to remove a director, however, to do so you must own over 50 per cent of the votes of the shareholders. … If you can control over 50 per cent of the vote then you are obliged to provide special notice before passing the resolution to remove the director.
With a majority of over 50% shareholding, they are able to pass ordinary resolutions such as (i) authorising the directors to allot shares (other than if there is one class of share, as this is authorised under company law), and (ii) appointing and/or removing directors.
When can a company be voluntarily wound up?
A company may, voluntary wind up its affairs, if it is unable to carry on its business, or if it was formed only for a limited purpose, or if it is unable to meet its financial obligation, and etc.
Can a company be dissolved without winding up?
Dissolving a Company
Usually, you need to file articles of dissolution or a similar document with the secretary of state. Dissolution terminates the existence of a company, but you must still: Wind up the operations. Liquidate the assets.
Under what circumstances will a court order winding up of a company?
As per provisions of the Companies Act, 2013, compulsory winding up is possible only under the following circumstances: When the company has passed the special resolution effecting that the company be wound up by the Court or Tribunal. Has acted against the interest of the sovereignty and integrity of the country.