MRL3701 Assignment 2 Due 13 April 2024
WINDING UP MEANS - ans -essentially the procedure by which a company's assets
are sold, its debts are paid, and any money left over is divided amongst the
shareholders according to their rights.
WINDING UP OF COMPANIES IS REGULATED BY THE FOLLOWING LEGISLATIVE
PROVISIONS - ans -1. Section 79 - 81 of the Companies Act 71. Winding up of solvent
companies
2. Chapter 14 of the Companies Act.
3. Various provision of the Insolvency Act.
MODES OF WINDING UP AND ALTERNATIVES TO WINDING UP - ans -Company
may be wound up in either of the two ways:
1. By the court
2. voluntarily
WINDING UP BY THE COURT - ans -Sometimes called compulsory winding up is
initiated by an application to court. Application is usually brought by a creditor in the
case of an insolvent company and a shareholder in the case of a solvent company
VOLUNTARY WINDING UP - ans -Initiated by a special resolution of the shareholders.
The special resolution has to state whether the winding up is to be conducted by the
creditors or by the shareholders, and a voluntary winding up by the company in the case
of a solvent company.
JURISDICTION OF COURT - ans -under S12(1) of the 1973 Act the court which had
jurisdiction in regard to winding up was the High Court having jurisdiction over the area
in which the company had its registered office or main place of business.
WHEN COMPANY MAY BE WOUND UP BY COURT - ans -1. Special Resolution
2. Failure to commence of continue with business
3. loss of capital
4. inability to pay debts
5.dissolution of external company
6. just and equitable
7.Conversion of voluntary winding up into winding up by court
8. no reasonable prospect of business rescue succeeding
9. termination of business rescue proceedings
10. Deadlock my management or voting
11. Fraud, illegality or misapplication of company assets
12. failure to comply with compliance notice.
, FAILURE TO COMMENCE OR CONTINUE WITH BUSINESS - ans -Court may wind
up company if it has not commenced its business within a year from its incorporation or
if it has suspended it business for a whole year
LOSS OF CAPITAL - ans -If 75% of its issued share capital has been lost or become
useless for its business.
INABILITY TO PAY DEBTS - ans -Unable to pay debt as described in S345. Cannot be
relied upon if the company is solvent despite being unable to its debts.
S345 - COMPANY DEEMED TO BE UNABLE TO PAY DEBTS IN THE FOLLOWING
CASES - ans -1. Creditor to whom company is indebted for at least R100 has left a
demand for payment at company's registered office and the company has neglected for
three weeks thereafter to pay, secure, compromise the claim to satisfaction of creditor.
2. A warrant of execution issued on a judgement against the company has been
returned by the sheriff with an endorsement that he did not find disposable property
sufficient to satisfy the judgement, or that the disposable property he found did not,
upon sale, satisfy the process.
3. It is proved to the satisfaction of the court that the company is unable to pay its debts.
Court must take into account the contingent and prospective liabilities of the company.
DISSOLUTION OF EXTERNAL COMPANY - ans -If external company has been
dissolved in the country in which it was incorporated or has ceased to carry on
business, or is carrying on business only for the purpose of wining up its affairs.
Relates only to insolvent external companies.
JUST AND EQUITABLE - ans -That it is just and equitable that the company should be
wound up.
Courts have held that it is just and equitable to wind up a company in the following
instances.
1. Where main object for which the company was formed is not possible of being
attained.
2. where company lacked infrastructure of its own and which was unable to work
because of deadlock between its shareholders.
3. where company's objects are illegal, or the company was formed to defraud the
persons invited to subscribe for its shares.
4. Where there is justifiable lack of confidence in the conduct and management of the
company's affairs.
WINDING UP MEANS - ans -essentially the procedure by which a company's assets
are sold, its debts are paid, and any money left over is divided amongst the
shareholders according to their rights.
WINDING UP OF COMPANIES IS REGULATED BY THE FOLLOWING LEGISLATIVE
PROVISIONS - ans -1. Section 79 - 81 of the Companies Act 71. Winding up of solvent
companies
2. Chapter 14 of the Companies Act.
3. Various provision of the Insolvency Act.
MODES OF WINDING UP AND ALTERNATIVES TO WINDING UP - ans -Company
may be wound up in either of the two ways:
1. By the court
2. voluntarily
WINDING UP BY THE COURT - ans -Sometimes called compulsory winding up is
initiated by an application to court. Application is usually brought by a creditor in the
case of an insolvent company and a shareholder in the case of a solvent company
VOLUNTARY WINDING UP - ans -Initiated by a special resolution of the shareholders.
The special resolution has to state whether the winding up is to be conducted by the
creditors or by the shareholders, and a voluntary winding up by the company in the case
of a solvent company.
JURISDICTION OF COURT - ans -under S12(1) of the 1973 Act the court which had
jurisdiction in regard to winding up was the High Court having jurisdiction over the area
in which the company had its registered office or main place of business.
WHEN COMPANY MAY BE WOUND UP BY COURT - ans -1. Special Resolution
2. Failure to commence of continue with business
3. loss of capital
4. inability to pay debts
5.dissolution of external company
6. just and equitable
7.Conversion of voluntary winding up into winding up by court
8. no reasonable prospect of business rescue succeeding
9. termination of business rescue proceedings
10. Deadlock my management or voting
11. Fraud, illegality or misapplication of company assets
12. failure to comply with compliance notice.
, FAILURE TO COMMENCE OR CONTINUE WITH BUSINESS - ans -Court may wind
up company if it has not commenced its business within a year from its incorporation or
if it has suspended it business for a whole year
LOSS OF CAPITAL - ans -If 75% of its issued share capital has been lost or become
useless for its business.
INABILITY TO PAY DEBTS - ans -Unable to pay debt as described in S345. Cannot be
relied upon if the company is solvent despite being unable to its debts.
S345 - COMPANY DEEMED TO BE UNABLE TO PAY DEBTS IN THE FOLLOWING
CASES - ans -1. Creditor to whom company is indebted for at least R100 has left a
demand for payment at company's registered office and the company has neglected for
three weeks thereafter to pay, secure, compromise the claim to satisfaction of creditor.
2. A warrant of execution issued on a judgement against the company has been
returned by the sheriff with an endorsement that he did not find disposable property
sufficient to satisfy the judgement, or that the disposable property he found did not,
upon sale, satisfy the process.
3. It is proved to the satisfaction of the court that the company is unable to pay its debts.
Court must take into account the contingent and prospective liabilities of the company.
DISSOLUTION OF EXTERNAL COMPANY - ans -If external company has been
dissolved in the country in which it was incorporated or has ceased to carry on
business, or is carrying on business only for the purpose of wining up its affairs.
Relates only to insolvent external companies.
JUST AND EQUITABLE - ans -That it is just and equitable that the company should be
wound up.
Courts have held that it is just and equitable to wind up a company in the following
instances.
1. Where main object for which the company was formed is not possible of being
attained.
2. where company lacked infrastructure of its own and which was unable to work
because of deadlock between its shareholders.
3. where company's objects are illegal, or the company was formed to defraud the
persons invited to subscribe for its shares.
4. Where there is justifiable lack of confidence in the conduct and management of the
company's affairs.
