15. Winding Up(1).pptx - WINDING UP Meaning A process that...

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WINDING UP
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Meaning A process that entails selling all the assets of a business entity, paying off creditors, distributing any remaining assets to the principals, and then dissolving the business. Essentially, "winding up" is just another term for liquidation. SUNWAY UNIVERSITY
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Types TWO TYPES VOLUNTARY (By way of special resolution) Members Creditors COMPULSORY (Court Ordered) Insolvency Other Grounds SUNWAY UNIVERSITY
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Members Voluntary Winding Up Section 4(1): A winding up under Div 3 of Pt X – essentially it is the liquidation of a solvent company. SUNWAY UNIVERSITY
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Members Voluntary Winding Up -Process 1. Section 257(1) - Directors (majority) at a directors’ meeting make a declaration of solvency 2. Must lodge the declaration with the registrar of companies not earlier than 5 weeks before the passing of the resolution 3. Send out notice of meeting to propose winding up 4. Members pass special resolution to wind up company [see s254(1)(b), 256(1) and (2)] 5. Members appoint a liquidator [s258(1)] SUNWAY UNIVERSITY
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Creditors Voluntary Winding Up This is similar to a members winding up except that in this case the company is insolvent. It is not initiated by the creditors but is one that is initiated by the members but converts to a creditors winding up normally because the directors have not made a declaration of solvency. SUNWAY UNIVERSITY
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Creditors Voluntary Winding Up-Process Section 260 – members in a general meeting pass a special resolution that the company be wound up voluntarily, where the directors have not made a declaration of solvency.
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