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When a company undergoes winding up what happens to the rights of the shareholders?
Wiki User
∙ 15y ago
Shareholder rights are always protected.
Even in dissolution (which is what happens to the Corporation the stockholders own after it winds up business).
I suspect you mean what happens to the the value of their stock.
If after all liabilities are resolved, the Co as additional assets, normally converted to cash, a dissolving distribution, or dividend, is paid to each share.
However, this is not normally the case in a BK. In a BK one class of creditors (at least), normally bondholders or lenders, are forced to receive less than they should have, with any additional debt being extinguished by the BK. (In fact, frequently and generally when the creditor is a bondholder where the security for the bond amounts to the right to get the stock of the Co, in exchange for the debt they are owed, they are given the stock of the company and then dissolve it, so the original stockholders no longer have any).
This is reasonable and fair because stockholders have a right to protection for being liable for the debt of the Co they own - they are only at risk up to the value of their stock/investment (they can't be assessed for any more). It would be entirely unfair to say creditors/vendors/bondholders, etc (who had no chance of sharing in the profits) won't receive what they are owed and were promised by the Co, but the owners (stockholders) who benefited and basically failed to run a Co that pays it legal debts, get to keep anything. That anything should go to the creditors.
Wiki User
∙ 15y ago
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When does a company become a limited company?
Limited company refers to a company whose liabilities are limited to the number shares of shareholders. During the time of winding up the business shareholders are liable to pay only the remaining amount that has to be paid as shares. If a shareholder had already paid full amount of his shares for him there is no need to pay any money.Limited company is different from limited liability company.
What do you mean by compulsory winding up of a company?
What do you understand by "compulsory" and "voluntary" winding up of a company
Benefits of winding up of a company?
benefit of winding up
Winding up of a joint stock company?
it means to liquidation the company that we can do it by three methods winding up by court voluntary winding up and winding up subject to supervition of the court
Modes of winding up of company?
there are three modes of winding up of a company:- 1. winding up by the court i.e., compulsory winding up(sec433 to 483) 2. voluntary winding up (sec. 484 to 521). this may be- (a) members voluntary winding up. (b) creditors voluntary winding up. 3. winding up subject to supervision of court.
What happens when the primary winding is energized and the secondary winding is open circuited?
A voltage appears between the terminal points of the secondary winding
What is meant by winding up Explain different modes which can be adopted for winding up a company?
Winding up. (n.) = The act of bringing something to an end. Winding up is the process by which the normal activities of the company/corporation or association of person is stopped and the assets and liabilities of the company is assessed and distributed among the shareholders as per the existing agreement and according to the Company law and the Rules made there under. On the winding up of the company ceases to be going concern. The owners are eligible to get the share of the residual property and may require to compensate in the event the assets are insufficient and the existing agreement so specifies. Strictly speaking, the terms winding up mean the death/extinction of a company.Extinction. (n.) = the act of extinguishing or making extinct; a putting an end to; the act of putting out or destroying light, fire, life activity, influence, etc. In case of a company, the company is extinguished/dead by means of legal provisions.Winding up = It is an usual term used in the Company Law. It means putting an end to the carrying on the business of a company. Winding-up puts the full-stop to the company. It is nothing but a death of the company by the Operation of Law.Object = Winding up of a company saves the creditors and members from the further losses, indebtedness, injury, etc. The surplus if any, can be distributed among the creditors and the members, so that last chance of getting their amount back may not be disappeared from the scene.
What happens to voltage in a step down?
The voltage induced into the secondary winding will be lower than the voltage applied to the primary winding. The primary winding being the winding connected to the supply, while the secondary winding is the one connected to the load.
What happens in the winding house of mine?
The winding house houses the engine that raises and lowers the mine's cage (lift).
Explain briefly the different modes of winding up of a company?
Modes of Winding Up of CompaniesAs per Section 425 of the Act, the modes of winding up are:Compulsory Winding up by the court. Members' Voluntary winding up.Creditors' Voluntary winding up.Voluntary winding up,Winding up subject to supervision of the court.MODES OF COMPANIES WINDING UPCompulsory Winding-up by the CourtThe court may wind up a Company:a. if the company has, by special resolution, resolved that the company should be wound up by the court;b. if default is made in delivering the statutory report to the Registrar or in holding the statutory meeting;c. if the company does not commence its business within a year from its incorporation, or suspends its business for a whole year;d. if the number of members is reduced, in the case of a public company, below seven, and in the case of a private company, below two;e. if the company is unable to pay its debts;f. if the court is of the opinion that it is just and equitable that the company should be wound up.The 'just and equitable' clause effectively makes the powers of the court unlimited. In a normal situation, the court might order the winding-up of a company in situations such as a deadlock in the business or continuous losses eroding the capital.Voluntary Winding-upA voluntary winding-up may be made on any one of the following grounds:(a) when the period, if any, fixed for the duration of company by its articles, has expired;(b) an event has taken place, on the occurrence of which the articles provide that the company is to be dissolved;(c) if the company passes a special resolution that the company should be wound up voluntarily (section 484(1) of the Act).In circumstances (a) and (b), an ordinary resolution passed in a general meeting for winding-up is sufficient.A voluntary winding-up may be(a) a members' voluntary winding-up,(b) a creditors' voluntary winding-up.The members' voluntary winding-up may be resorted to only when the directors or the majority of the directors, are able, at a meeting of the board, to make a declaration verified by an affidavit, to the effect that they have made a full inquiry into the affairs of the company, and that, having done so, they are of the opinion that the company has no debts, or that it will be able to pay its debts in full within such period (not exceeding three years) from the commencement of the winding-up as may be specified in the declaration (section 488 of the Act). In circumstances where the company is not solvent, it cannot be wound up by way of members' voluntary winding-up and it must resort to a creditors' voluntary winding-up. The procedure for a creditors' voluntary winding-up is that the company causes a meeting of the creditors' voluntary winding-up is that the company causes a meeting of the creditors of the company to be called for the day, or the next following day, on which the general meeting of the company is to be held at which the resolution for winding-up is to be proposed, and causes notices of the meeting of creditors to be sent to the creditors by post, simultaneously with the sending of the notices of the general meeting of the company (section 500 of the Act). The creditors and the company at their respective meetings may nominate a person to be the liquidator for the purpose of winding up the affairs and distributing the assets of the company.Winding-up subject to the Supervision of the CourtAfter the company has passed a resolution for voluntary winding-up, the court may make an order that the voluntary winding-up shall continue, but subject to the supervision of the court and with such liberty for creditors, contributories or others to apply to the court, and generally on such terms and conditions as the court thinks just (section 533 of the Act). Thus, a voluntary winding-up can e converted into a winding-up subject to the supervision of the court, on terms and conditions imposed by the court.
What do you understand by winding-up of a company?
dissolve a company, by the court, or voluntarily or the by the supervision of the court
An order for winding up a banking company can be issued by?
The RBI
