Unit 6: Dissolution, Liquidation or Winding up of Company
6.1 Meaning of Dissolution of Company
Dissolution = the company’s death — the end of its legal personality (the register’s closure; the name’s strike-off): the corporate person ceases. Dissolution is the endpoint; the road to it is winding up (6.2) — the two must not be confused: winding up is the process (assets collected, liabilities paid, surplus distributed), dissolution the event (existence ends).
6.2 Meaning of Winding up or Liquidation of Company
Winding up (liquidation) = the company’s affairs’ closure process: ceasing business, collecting assets, discharging creditors in the priority order, distributing the surplus to members, and dissolving. The liquidator (6.4) is the process’s master; the creditors’ and members’ interests are the process’s poles; the court/OCR’s oversight is the process’s guard. The modes’ map (6.3): voluntary, compulsory, and the Nepali specialty — deregistration.
6.3 Modes of Winding up of Company
6.3.1 Voluntary Winding up of Company
The members’ own decision: the special resolution to wind up (or the resolution’s statutory triggers — the MOA’s period expiry); the solvency’s declaration (the directors’ statement that debts will be paid within the statutory window — the solvent route); the liquidator’s appointment by the members; the creditors’ variant where insolvent (the creditors’ meeting’s parallel control — the insolvency face); the process: realisation, payment, distribution, the final account, and dissolution’s application. The voluntary mode is the orderly exit of the honest company.
6.3.2 Compulsory Winding up, Ground and Procedures
The court-ordered mode (the High Court’s jurisdiction over the registered company): the petitioners (the company itself, a creditor, a contributory, the registrar’s statutory face, the regulator); the grounds (the Act’s catalogue): inability to pay debts (the insolvency’s face), the just-and-equitable ground (the deadlock, the oppression’s dead-end, the substratum’s loss), the special-resolution trigger, the statutory-default faces (the failure to file accounts/returns, the dormant company), the fraud’s face. The procedure:
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