Companies Act 1994

(Act XVIII of 1994) governs COMPANY LAW in Bangladesh. It received the assent of the President of the People's Republic of Bangladesh on 11 September 1994 and was published in the Bangladesh Gazette, Extra, 12 September 1994. Before its enactment in 1994, company law was governed by the Companies Act 1913 which was amended in 1915, 1920, 1926, 1930, 1932, 1936, 1938, 1949 and 1969, 1973 and 1984. The early history of company law of India was laid in the British Companies Act 1844 on the basis of which the Joint Stock Companies Act 1850, the first company law for the sub-continent, was formulated. This act was based on 'unlimited liability'. Through a major amendment in the Joint Stock Companies Act 1850 in 1857, the provision of unlimited liability was replaced by 'limited liability' and the act was renamed as The Companies Act 1857. With the expansion of trade and commerce in the sub-continent, the Companies Act 1857 was amended in 1860, 1866, 1882, 1887, 1891, 1895, 1900 and 1908. The Indian Companies Act 1913 was actually the amended and reformed version of The English Companies Act 1908. The Companies Act 1994 has 11 parts. Part-V of the act provides details of the mode and methods of winding up, liabilities of contributories and their successors, procedures and options of winding up, ordinary and extraordinary power of courts to be involved in the winding up process, appointment of official liquidator and their powers and duties, settlement of debts of companies and transfer and distribution of assets and liabilities.

What is winding up:

Winding up is a process where the companys asset will be gathered and will be used to pay all debts, and the balance for the cost of winding up will be distributed among the shareholders according to their interests in the company. The term "winding-up" (or "wound-up") bears a similar meaning of "liquidation". It generally means that all the assets of the company would be realized (sold off and converted to cash) through a legal process in order to repay its debts. Winding Up The process of selling all the assets of a business, paying off creditors, distributing any remaining assets to the principals or parent company, and then dissolving the business. Winding up can refer to such a process either for a specific business line of a corporation or to the dissolution of a corporation itself.

Winding up of Company:

The term winding up of a company may be defined as the proceedings by which a company is dissolved (i.e. the life of a company is put to an end). Thus, the winding up is the process of putting an end to the life of the company. And during this process, the assets of the company are disposed of, the debts of the company are paid off out of the realized assets or from the contributories and if any surplus is left, it is distributed among the members in proportion to their shareholding in the company. The winding up of the company is also called the liquidation of the company. So, the legal procedure by which the existence of an incorporated company is brought to an end is known as winding up.

Objective of Winding up of Company:

The objective of winding up of a company is to realize the assets and pay the debts of the company expeditiously and fairly in accordance with law. At the end of the winding up the company will have no assets and liabilities. But that does not mean that the company ceases to exist on winding up. It continues to exist even after winding up and ceases to exist only after dissolution order is passed by the court. Thus, in between the winding up and dissolution, the legal status of the company continues.
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Consequences of winding up
Some important consequences of winding up of company are: 1) As regards the company itself: winding up does not mean that the company has ceased to exist. The company exists as a corporate entity with all the rights of such entity, with only change that its management and administration is to be carried on through liquidator / liquidators till the final dissolution of the company. 2) As regards the shareholders: A new statutory liability as contributories comes into existence. Every transfer of shares or alteration in the status of a shareholder, after the winding up has commenced by the order of the Court , shall unless approved by the liquidator , be void. 3) As regards the creditors: i. They cannot file or continue suits against the company, except with the leave of the Court. ii. They cannot proceed with the execution, if they have obtained decrees already. iii. They must lodge their claim and prove their debt before the liquidator. 4) As regards the management: on appointment of liquidator, all the powers of the directors, chief executive and other officers, shall cease, except for the purpose of giving notice of resolution to wind up and appointment of liquidator and filing of consent of liquidator etc. 5) As regards the disposition of companys property: All such dispositions are void unless with the leave of the Court or the liquidator.

Modes of Winding up of the company:

Section 234 of company act 1994 lays down that there are three modes of winding up. 1. Compulsory winding up by the court. 2. Voluntary winding up. 3. Winding up under the supervision of the court.

Compulsory winding up by the court(Sec-241)

Circumstances in which company may be wound up by Court

There are following six reasons for which a company may be wounded by court:1) Special resolution A company may be wound up by the court if a special resolution is passed for this Purpose. 2) Statutory report or meeting If default is made in filing the statutory report or in holding the statutory meeting. 3) Failure to commence business When the company does not commence business within a year from its incorporation or suspends business for a year. 4) Reduction in number of members: Where the number of members of public company is reduced below seven or in case of private company below two. 5) Inability to pay its debts: Where the company is unable to pay its debts in the following situation. a. If a creditor whos debt exceeds. Rs.50,000 or one percent of its paid up capital whichever is less under section 306 (a) has served notice requiring payment and is not paid within 30 days.
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b. If execution in favor of creditor remains unsatisfied or c. If the court is fully satisfied that the company is quite unable to pay its debts. 6) Court's decision When the court is of the opinion that it is just and equitable that the company should be wound up due to its mismanagement, dead-lock, fraudulent or any other reasonable grounds.

(Sec-242) Company when deemed unable to pay its debts. (1) A company shall be deemed to be unable to pay its debts (i) if a creditor, by assignment or otherwise, to whom the company is indebted for a sum exceeding five hundred take then due, has served on the company, by causing the same to be delivered by registered post or otherwise at its registered office, a demand under his hands requiring the company to pay the sum so due and the company has for three weeks thereafter neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor; or (ii) if execution or other process issued on a decree or order of any court in favour of a creditor of the company is returned unsatisfied in whole or in part; or (iii) if it is proved to the satisfaction of the Court that the company is unable to pay its debuts, the Court shall take into account the contingent and prospective liabilities of the company. (2) The demand referred to in clause (i) of sub--section (1) shall be deemed to have been duly given under the hand of the creditor if it is signed by an agent or legal advisor duly authorised on his behalf, or in the case of a firm, if it is signed by such agent, or by a regal adviser or by any one member of the firm on behalf of the firm. (Sec-243). Winding up may be referred to District Court. Where the High Court Division makes as order for winding up of a company under this Act it may, if it thinks fit, direct all subsequent proceedings to be had in a District Court, and thereupon such District Court shall for the purpose of winding up the company, be deemed to be "the Court" within the meaning of this Act and shall have, fir the purposes of such winding up, all the jurisdiction and powers of the High Court Division.

(Sec-244) Transfer of winding up from one District Court to another. If during the progress of a winding up in a District Court it is made to appear to the High Court Division that the same may be more conveniently prosecuted in any other District Court, the High court Division may transfer the same to such other District Court, and there upon the winding up shall proceed in such other District Court, and at any state of such proceedings, that Division may with draw the proceedings from any of such District Courts and dispose it off. (Sec-245) Provisions as to applications for winding up. An application to the Court for the winding up of a company shall be by petition presented, subject to the provisions of this section, either by the company, or by any creditor or creditors, including any contingent or prospective creditor or creditors, contributory or contributors, or by all or any of those parties, together or separately or by the Registrar: Provided that (a) a contributory shall not be entitled to present a petition for winding up a company, unless-(i) either the number of members is reduced in the case of a private company, below two, or, in the case of any other company, below seven; or (ii) the shares in respect of which he is a contributory or some of them either were originally allotted to him or have been held by him, and registered in his name for at least six months during the eighteen months before the commencement of the winding up, or have devolved on him through the death of a former holder; (b) The Registrar shall not be entitled to present a petitions for winding up a company (i) except on the ground from the financial condition of the company as disclosed in its balance sheet or from the report of an inspector appointed under section 195 or, in a case falling within section 204, it appears that the company is unable to pay its debts; and (ii) Unless the previous sanction of the Government has been obtained to the presentation of the petition: Provided that no such sanction shall be given unless the company has first been afforded an opportunity of being heard. (c) a petition for winding up of a company on the ground of default in filing the statutory report or in holding the statutory meeting shall not be presented by any person except by a shareholder, nor before the expiration of fourteen days after the last day on which the meeting ought to have been held;

(d) The Court shall not give a hearing to a petition for winding up of a company by a contingent or prospective condition until such security for costs has been given as the Court thinks reasonable and until a prima face case for winding up has been established to the satisfaction of the Court. (Sec-246) Effect of winding up order.-- An order for winding up of a company shall operate in favour of all the creditors and of all the contributories of the company as if made on the join petition of a credition and of a contributory. (Sec-247) Commencement of winding up by Court.-- A winding up of a company by the Court shall be deemed to commence at the time of the presentation of the petition for the winding up. (Sec-248) Court may grant injunction.-- The Court may, at any time after the presentation of the petition for winding up of a company under this Act and before making an order for winding up the company, upon the application of the company or of any creditor or contributory of the company, restrain further proceedings in any suit or proceedings against the company and may also pass other similar order upon such terms as the Court thinks fit. (Sec-249) Powers of Court on hearing petition. (1) On hearing the petition, the Court may dismiss it with or without costs, or adjourn the hearing conditionally or unconditionally, or make any interim order or any other order which, it deems just, but the Court shall not refuse to make a winding up order on the ground only that the assets of the company have been mortgaged to an amount equal to, or in exceeds of, those assets or that the company has no assets. (2) Where the petition is presented on the ground of default in filing the statutory report or in holding the statutory meeting the Court may order the costs to be paid by any persons who, in the opinion of the Court, are responsible for the default. (3) Where the Court makes an order for the winding up of a company, it shall, except where a liquidator is appointed simultaneously, forthwith cause intimation thereof to be sent to the official receiver.

(Sec-250) Suits stayed on winding up order. When a winding up order has been made or a provisional liquidator has been appointed, no suit or other legal proceedings shall be proceeded with or commenced against the company except by leave of the Court and subject to such terms as the Court may impose. 7

(Sec-251) Vacancy in the office of liquidator. (1) For the purposes of this Act, so far as it relaters to the winding up of companies by the Court, or, if there is no such official receiver, then such person as the Government may, by notification in the official Gazette, appoint for the purpose. (2) On the making of a winding up order the official receiver shall become the official liquidator of the company and shall continue to act as such until his further continuance is terminated by an order of the Court. (3) The official receiver shall, as the official liquidator, forthwith take into his custody and control all the books, documents and the assets of the company. (4) The official receiver shall be entitled so such remuneration as the Court shall fix. (Sec-252) Copy of winding up order to be filed with the Registrar. (1) On the making of a winding up order, it shall be the duty of the petitioner in the winding up proceedings and of the company to file with the Registrar a copy of the order within thirty days from the date of the making in the order. (2) On the filing of a copy of a winding up order, the Registrar shall register a summary thereof in his books relating to the company, and shall notify in the official Gazette that such an order has been made. (3) Such order shall be deemed to be notice of discharge to the servants of the company except when the business of the company is continued. (Sec-253) Power of Court to stay winding up. The Court may, at any time after an order for winding up, on the application of any creditor or contributor, and on proof to the satisfaction of the Court that all proceedings in relation to the winding up ought to be stayed, make an order staying the proceedings, either altogether or for a limited time, on such terms and conditions as the Court thinks fit.

(Sec-254) Court may have regard to wishes of creditors or contributories-- The Court may,
as to all matters relating to a winding up, have regard to the wishes of the creditors or contributories as proved to it by any sufficient evidence.

VOLUNTARY WINDING UP(Sec-286)

Sec-286 describes some Circumstances in which company may be wound up voluntarily

(1) A company may be wound up voluntarily-(a) when the period, if any, fixed for the duration of the company by the articles expires, or the even, if any occurs, on the occurrence of which articles provide that the company is to be dissolved and the company in general meeting has passed a resolution requiring the company to be wound up voluntarily; (b) if the company resolves by special resolution that the company be wound up voluntarily; (c) if the company resolves by extraordinary resolution to the effect hat it cannot by reason of its liabilities continue its business, and that it is advisable to wind up. (2) The expression "resolution for voluntarily winding up" when used hereafter in this Part means a resolution passed under clause (a), clause (b), or clause (c) of this section. There are two kinds of voluntary winding up:-

1. Member's voluntary winding up. 2. Creditors voluntary winding up.

Members' Voluntary Winding up(Sec-291)

Sections 292 to 296 of company Act 1994 describes the members voluntary winding up (Sec-292) Power of company to appoint and fix remuneration of liquidator: (1) The company in general meeting shall appoint one or more liquidators for the purpose of winding up the affairs and distributing the assets of the company, and may fix the remuneration to be paid to him or them. (2) On the appointment of liquidator, all the powers of the directors shall cease, except so far as the company in general meeting or the liquidator, sanctions the continuance thereof.

(Sec-293) Power to fill vacancy in the office of liquidator. (1) If a vacancy occurs by death, resignation or otherwise in the office of liquidator appointed by the company, the company in general meeting may, subject to any agreement with its creditors, fill vacancy. (2) For the purpose of filling in the said vacancy, a general meeting may be convented by any contributory or, if there were more liquidators than one, by the continuing liquidator. (3) The meeting shall be held in the manner provided by this Act or by articles, or in such manner as may, on application by any contributory or by the continuing liquidators, be determined by the Court. (Sec-294) Power of liquidator to accept shares, etc as consideration for sale of property of company.-(1) Where a company is proposed to be, or is in course of being, wound up altogether voluntarily, and the whole or part of its business or property is proposed to be transferred or sold to another company, whether a company within the meaning of this Act or not, in this section called "the transferee company", may with the sanction of a special resolution of that company conferring either a general authority on the liquidator or an authority in respect of any particular arrangement, receive, in compensation or part compensation for the transfer or sale, shares, polices, or other like interests in the transferee company,for distribution among the members of the transferor company, or may enter into any other arrangement where by the members of the transferor company may, in lieu of receiving cash or shares, policies or other like interests or in addition thereto, participate in the profits of, or receive any other benefit from, the transferee company. (2) Any sale or other transfer or arrangement in pursuance of this section shall be binding on the members of the transferor company. (3) If any member of the transferor company who did not vote in favor of the special resolution expresses his dissent therefore in writing addressed to the liquidator and left at the registered office of the company within seven days after the passing of the special resolution, by may require the liquidator either to abstain from carrying the resolution into effect or to purchase his interest at a price to be determined by agreement or any arbitration in manner hereafter provided. (4) If the liquidator elects to purchase the member's interest, the purchase money must be paid before the company is dissolved, and be raised by the liquidator in such manner as may be determined by special resolution.

(5) A special resolution shall not be invalid, for the purpose of this section by reason only that it is passed before or concurrently with a resolution for voluntary winding up or for appointment of

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liquidators, but if an order is made within a year for winding up the company by or subject to the supervision of the Court, the special resolution shall not be valid unless sanctioned by the Court. (6) The provisions of the Arbitration Act, 1940(X of 1940), other that those restricting the application of the Act in respect of the subject matter of the arbitration, shall apply to all arbitrations in pursuance of this section. (Sec-295) Duty of liquidator to call general meeting at the end of each year:-(1) In the event of the winding up continuing for more than one year, the liquidator shall summon a general meeting of the company at the end of the first year from the commencement of the winding up and of each succeeding year, or as soon thereafter as may be convenient within ninety days, of the close of the year, and shall lay before the meeting an account of his acts and dealings and of the conduct of the winding up during the proceeding year and a statement in the preseribed form containing the prescribed particulars with respect to the position of the liquidation. (2) If the liquidator fails to comply with this section, he shall be liable to a fine not exceeding five hundred taka. (Sec-296) Final meeting and dissolution (1) As soon as the affairs of the company are fully wound up, liquidator shall make up an account of the winding of up showing how the winding up has been conducted and the property of the company has been disposed of, and thereupon shall call a general meeting the company for the purpose of laying before it the account and giving explanation thereof. (2) The meeting shall be called by advertisement specifying the time, place and object thereof and published one month at least before the meeting in the manner specified in sub-section (1) of section 289 for publication of a notice under that sub-section; (3) Within one week after the meeting the liquidator shall send to the Registrar a copy of the account and shall make a return to him of the holding of the meeting and of its date, and if the copy is not sent or the return is not made in accordance with this sub-section, the liquidator shall be liable to a fine not exceeding one hundred taka for everyday during which the default continues: Provided that, if a quorum is not present at the meeting the liquidator shall in lieu of the said return make a return that the meeting was duly summoned and that no quorum was present thereat, and upon such a return being made the provisions of this sub--section as to the making of the return shall deemed to have been complied with. (4) The Registrar on receiving the account and either of the returns mentioned in sub-section (3) shall forthwith register them and on the expiration of three months from the registration of the return the company shall be deemed to be dissolved: Provided that the Court may, on the he application of the liquidator or of any other person who appears to the Court to be interested, make an order deferring the date at which the dissolution of the company is to effect for such time as the Court thinks fit.

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(5) It shall be the duty of the person on whose application an order of the Court under sub-section (4) is made, within twenty--one after the making of the order, to deliver to the Registrar a certified copy of the order for registration and if that person fails so to do he shall be liable to a fine not exceeding one hundred taka for every day during which the default continues. Creditor's voluntary winding up

Creditor's voluntary winding up( Sec-297)

Sections 298 to 305 of company Act 1994 describes the members voluntary winding up

Power of company to appoint and fix remuneration of liquidator.

a. Solvency declaration
Statutory declaration regarding solvency of the company is not necessary in case of creditor's voluntary winding up.

b. General meeting
A general meeting of the company will be called for the purpose of passing extraordinary resolution. This resolution is required for the winding up of the company because it cannot continue its business because of its liabilities.

c. Creditor's meeting
The company must call a meeting of the creditors on the same day or on the following day after the general meeting of the company. A notice must be sent in writing to each creditor for this purpose.

d. Statement of company's position

The directors of the company must lay before the creditors a full statement of company's position, a list of creditors and their estimated claims. A director of the company, appointed by other directors must preside the creditor's meeting.

e. Intimation to registrar
The information regarding the notice of resolution passed must be sent to registrar within ten days from the date of creditor's meeting.

f. Appointment of liquidator
The creditors and the company at their respective meeting may nominate a person to act as liquidator. If different persons are nominated by creditors and company respectively, the opinion of the creditors shall hold good.

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g. Committee of inspection
The creditors and the members at their respective meeting may appoint a committee of inspection consisting of five persons in each committee.

h. Liquidator's powers and duties

The liquidator may exercise his power for the winding up of the company with the sanction of the committee of inspection or in the absence of such committee, with the creditors.

i. Liquidator's remuneration
The liquidator's remuneration is fixed by the committee of inspection or, if there is no such committee, by the creditors.

j. After the expiry of one year

If winding up continues for more than one year, the liquidator must. call the meeting of .creditors and members at the end of each year. He must lay before the meeting an account of his acts for the winding up during the preceding year.

k. At the end of winding up

On completion of the winding up, the liquidators have to cal final general meeting of the members and a meeting of creditors. The notice for these meetings must publish in the gazette and news papers at least ten days before the meeting. The liquidator has to lay his reports regarding the accounts and assets of the company before the meeting. Within one week after the date of the meeting, the liquidator must submit to Registrar a copy of his accounts and a return of the holding of such meeting.

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Winding up under the supervision of the court.(Sec-316)

Sometimes if Court feels necessary it may issue the order to dissolve the company under its own supervision. Dissolution of a company can take place under the supervision of a court under the following conditions. 1. If a liquidator is partial. 2. If the rules for winding up are not observed strictly. 3. If the winding up resolution is obtained by fraud. 4. If the liquidator is not taking keen interest.

The following is the process of the court for winding up

a. Resolution
At first the company has to pass special or extra ordinary resolution to wind up voluntarily.

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b. Petition for subject to supervision

When there are frauds or irregularities in the voluntary winding up, the petition may be presented by one or more of the competent parties for winding up under the supervision of the court.

c. Supervision order
The court may, if it thinks fit, order that the voluntary winding up shall continue but subject to the supervision of the court and on such terms and conditions as the court thinks just.

d. Power of the court

The court has power to appoint an additional liquidator of to remove any liquidator. But generally the liquidator appointed by the company for the voluntary winding up continues in office subject to his giving of security.

e. Dissolution of the company

When the supervision order made, the liquidator may exercise all his powers in a voluntary winding up. On completion of the winding up, the court will make an order that the company is dissolved.

Removal of defunct Companies from Register(Sec-346)

Sec-346 of the contract Act 1994 lays down that Registrar may strike defunct company off Registrar:-Sub-section(1) Where the Registrar has reasonable cause to believe that a company is not carrying on business or in operation, he shall send to the company by post a letter inquiring whether the company is carrying on business or in operation. Sub-section (2) If the Registrar does not within thirty days of sending the letter receive any answer thereto, he shall within fourteen days, after the expiration of the said thirty days send to the company by post a registered letter referring to the first letter and stating that no answer thereto has been received and that if an answer is not received to the second letter with thirty days from the date, thereof, a notice will be published in the official Gazette with a view to striking the name of the company off the register;

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Sub-section (3) If the Registrar either receives an answer from the company to the effect that it is not carrying on business or in operation, or not within thirty days after sending the second letter receive any answer, he may publish in the Official Gazette and send to the company by post a notice that at the expiration of ninety days from the date of that notice, the name of the company mentioned therein will, unless cause is shown to the contrary, be struck off the register and the company will be dissolved and in such a case the Registrar may send a copy of the notice to the company while in sending it to the concerned authority for its publication official Gazette; Sub-section (4) If, in any case where a company is being wound up, the Registrar has reasonable cause to believe either that no liquidator is acting or that the affairs or the company are fully wound up and the returns required to be made by the liquidator have not been made for a period of six consecutive months after notice by the Registrar demanding the returns, has been sent by post to the company or to the liquidator at his last known place of business, the Registrars may publish in the official Gazette and sent to the company a like notice as is provided in the sub-section (3); Sub-section (5) At the expiration of the time mentioned in the notice the Registrar may unless cause to the contrary is previously shown by the company, strike its name on the register and on the he publication in the official Gazette of a notice to the effect the company shall be dissolved. Sub-section (6) If a company or any member or creditor thereof feels aggrieved by the company having been struck off the register, the Court on the application of the company or member or creditor, may if satisfied that the company was at the time of the striking off carrying on business or in operation or otherwise that it is just that the company be restored, to the register, and thereupon the company shall be deemed to have continued in existence as its name had not been struck off; and the Court may by order give such directions and make such provisions as seem just for placing the company and all other persons in the same positions as nearly as may be as if the name of the company has not been struck off; Sub-section (7) A letter or notice under this section may be addressed to the company at its registered office, or if no office has been registered, to the care of some director, manger or other officer of the company or, if there is no director, manger or other officer of the company whose name and address are known to the registrar such letter or notice may be sent to each of the persons who subscribed the memorandum, at the address mentioned in the memorandum.

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Winding up an Unregistered Company

According to the Companies Act, an unregistered company includes any partnership, association, or company consisting of more than seven persons at the time when petition for winding up is presented. But it will not cover the following:A railway company incorporated by an Act of Parliament or other law; A company registered under the Companies Act, 1994; A company registered under any previous company laws. An illegal association formed against the provisions of the Act.

However, a foreign company carrying on business in India can be wound up as an unregistered company even if it has been dissolved or has ceased to exist under the laws of the country of its incorporation. The provisions relating to winding up of a unregistered company:

Such a company can be wound up by the Tribunal but never voluntarily. Circumstances in which unregistered company may be wound up are as follows: If the company has been dissolved or has ceased to carry on business or is carrying on business only for the purpose of winding up its affairs. If the company is unable to pay its debts. If the Tribunal regards it as just and equitable to wind up the company. Contributory means a person who is liable to contribute to the assets of a company in the event of its being wound up. Every person shall be considered a contributory if he is liable to pay any of the following amounts:

Any debt or liability of the company; Any sum for adjustment of rights of members among themselves; Any cost, charges and expenses of winding up;

On the making of winding up order, any legal proceeding can be filed only with the leave of the Tribunal.

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Some Problems and answer

1. A Company made a default in holding the statutory meeting within 6 months from the date at which the company was establish to commence business. A petition for winding up this ground is person to the court. Is the court bound to order winding up ? Ans: NO, the court may , instead of making winding up order, extend the time and fix a date for holding the meeting.[sec 241] 2. A company trade has been suspended temporarily owing to the trade depression but it has bonafide intention to continue is operations when conditions improve. A Prayer was made to court for winding up the company. Ans : The court should dismiss the petition since the suspension is well accounted for and appears to be due to temporary or unavoidable causes and there is bonafide intention of the company to commence its business when conditions improve. [ Re Middesboroug in Assembly Rooms , co,p 397] 3. A Company was formed to carry on business in Bangladesh to abroad . In the first year of its corporation, the company carried on business abroad only and no business was transacted in Bangladesh during this period. Will the court order winding up ? Ans : NO, the court will not order winding up the ground that the company had not transacted any business in india. The requirement of law is that the company must commence its business within a year of it incorporation. The company carried on its business abroad in its first year. [ Re capital Fire Insurance Association, p397] 4. A creditor of a company applied for winding up of the company for its inability to pay his claim, after proper demand had been made by him and on the lapse of three weeks from the date of such demand . It was proved to the satisfaction of the court, during enquiry, that the company was commercially solvent. ( CA , 1965 ) Ans : The company should be wound up by the court . Once a creditor has made a proper demand and there is a failure on the part of the company to meet the creditors demand within the prescribed period, winding up , or shall be made and the commercial solvency of the company is of no relevance.[ Hariprasad Ltd. P 399 ]

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5. A foreign company formerly carrying on business in Bangladesh is dissolute under the laws of the country n which it was incorporated and it can be nevertheless wound up under any provisions of the company Act,1994, on its ceasing to carry on business in Bangladesh. Ans : yes. It can be wound up as unregistered company.

Conclusion
So, after all we can assume that, the winding up or liquidation of Company means the termination of the legal existence of a Company by stopping its business, collecting its assets and distributing the assets among creditors and share holders, in the manner laid down in the mentioned Act.

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