Companies Act Section 277 — Intimation to Company Liquidator, provisional liquidator and Registrar

CHAPTER XX WINDING UP

Commercial / Corporate

Summary

Sub-section (1) says that when the Tribunal passes an order appointing a provisional liquidator or ordering the winding up of a company, it must send notice of that order to the Company Liquidator or provisional liquidator, as the case may be, and to the Registrar. This notice must be sent within seven days from the date the order is passed.

Sub-section (2) states that once the Registrar receives a copy of the order appointing a provisional liquidator or the winding up order, the Registrar must record that fact in the company's records and publish a notification in the Official Gazette that such an order has been made. If the company is listed, the Registrar must also inform the stock exchange or exchanges where the company's securities are listed about the appointment or order.

Sub-section (3) provides that the winding up order is treated as a notice of discharge to the officers, employees, and workmen of the company. This does not apply when the business of the company is continued.

Sub-section (4) requires the Company Liquidator to apply to the Tribunal within three weeks from the date of the winding up order for the constitution of a winding up committee. This committee is meant to assist and monitor the progress of the liquidation proceedings by the Company Liquidator in carrying out the functions mentioned in sub-section (5). The committee must consist of the following persons: the Official Liquidator attached to the Tribunal, a nominee of secured creditors, and a professional nominated by the Tribunal.

Sub-section (5) says that the Company Liquidator will be the convener of the meetings of the winding up committee. The committee is to assist and monitor the liquidation proceedings in the following areas of liquidation functions: taking over assets; examination of the statement of affairs; recovery of property, cash, or any other assets of the company including benefits derived from them; review of audit reports and accounts of the company; sale of assets; finalisation of the list of creditors and contributories; compromise, abandonment, and settlement of claims; payment of dividends, if any; and any other function that the Tribunal may direct from time to time.

Sub-section (6) requires the Company Liquidator to place before the Tribunal a report along with the minutes of the meetings of the committee on a monthly basis. The minutes must be duly signed by the members present at the meeting. This is to be done for consideration until the final report for dissolution of the company is submitted before the Tribunal.

Sub-section (7) states that the Company Liquidator must prepare a draft final report for consideration and approval by the winding up committee.

Sub-section (8) provides that the final report, once approved by the winding up committee, must be submitted by the Company Liquidator before the Tribunal for passing a dissolution order in respect of the company.

Official Text

(1) Where the Tribunal makes an order for appointment of provisional liquidator or for the winding up of a company, it shall, within a period not exceeding seven days from the date of passing of the order, cause intimation thereof to be sent to the Company Liquidator or provisional liquidator, as the case may be, and the Registrar.

(2) On receipt of the copy of order of appointment of provisional liquidator or winding up order, the Registrar shall make an endorsement to that effect in his records relating to the company and notify in the Official Gazette that such an order has been made and in the case of a listed company, the Registrar shall intimate about such appointment or order, as the case may be, to the stock exchange or exchanges where the securities of the company are listed.

(3) The winding up order shall be deemed to be a notice of discharge to the officers, employees and workmen of the company, except when the business of the company is continued.

(4) Within three weeks from the date of passing of winding up order, the Company Liquidator shall make an application to the Tribunal for constitution of a winding up committee to assist and monitor the progress of liquidation proceedings by the Company Liquidator in carrying out the function as provided in sub-section (5) and such winding up committee shall comprise of the following persons, namely:—

(i) Official Liquidator attached to the Tribunal;

(ii) nominee of secured creditors; and

(iii) a professional nominated by the Tribunal.

(5) The Company Liquidator shall be the convener of the meetings of the winding up committee which shall assist and monitor the liquidation proceedings in following areas of liquidation functions, namely:—

(i) taking over assets;

(ii) examination of the statement of affairs;

(iii) recovery of property, cash or any other assets of the company including benefits derived therefrom;

(iv) review of audit reports and accounts of the company;

(v) sale of assets;

(vi) finalisation of list of creditors and contributories;

(vii) compromise, abandonment and settlement of claims;

(viii) payment of dividends, if any; and

(ix) any other function, as the Tribunal may direct from time to time.

(6) The Company Liquidator shall place before the Tribunal a report along with minutes of the meetings of the committee on monthly basis duly signed by the members present in the meeting for consideration till the final report for dissolution of the company is submitted before the Tribunal.

(7) The Company Liquidator shall prepare the draft final report for consideration and approval of the winding up committee.

(8) The final report so approved by the winding up committee shall be submitted by the Company Liquidator before the Tribunal for passing of a dissolution order in respect of the company.