TUTORIAL 12- WINDING UP

KOLEJ PROFESSIONAL MARA AYER MOLEK

COMPANY LAW (LAW 2513)

TUTORIAL 12 – WINDING UP

1.           The process by which all the company’s assets are collected, its debts paid and the surplus ,if any , distributed among its members is known as      

              A.   liquidation

              B.   petition

              C.   frustration

              D.   registration   

2.       Which of the following statements is NOT the legal effect of the court’s order for                             compulsory winding up?

A.            The winding up shall be deemed to have commenced when the petition for winding up was presented in the court

B.            Employees are automatically dismissed but the liquidator may, nevertheless, continue to employ all or some of them if he continues the company’s business

C.            Seizure of the company’s assets after the liquidation is valid

D.            When the winding up order has been made and the liquidator has been appointed, no action shall be taken against the company, except by leave of the court

3.       The declaration of solvency shall be attached with the statement of affairs of the company in the prescribed form which include;

         

I        the assets of the company

II.      the total amount expected to be realized from the assets

III.         the liability of the company

IV.          the estimated expenses of winding up

A.            I, II, and III

B.            II, III and IV

C.            I, II and  IV

D.           I, II, III and IV

4.     Which of the situations below can make a company to be wound up by the court?

        A.        A number of members is reduced below 2

        B.        A company has no profit 

        C.        All the shareholders in the company are died

        D.        A company has conflict with its subsidiaries

5.       The court has a power to wind up a company on the following ground…

A.       the company’s director make a written declaration of solvency to the company

B.       the number of member is reduced below two

C.       the company’s member passes special resolution to wind up a company

D.       the member in general meeting appoint a liquidator

6.       The court will make a winding up order on just and equitable ground in the following situations except:

           

A.            Reconciliation among company’s members is possible

B.            Fraud

C.            Breakdown of mutual trust and confidence

D.           Deadlock

7.       ‘Compulsory winding up’ of a company is also called winding up by                 .

          A.       members of the company

          B.       order of court

          C.       shareholders

          D.       company’s secretary

8.       The court will make a winding up order on just and equitable ground in the following situations except:

A.            reconciliation among company’s members is possible

B.            fraud

C.            breakdown of mutual trust and confidence

D.           deadlock

9.       For compulsory winding up of a company, if members or creditors appoint different people as a liquidator,

A.         the members choice would prevail.

B.         the creditors choice would prevail.

C.         the court will appoint a new liquidator.

D.        liquidator appointed by both members and creditors is not valid.

10.     A members’ voluntary winding up can only be proceeded as such if the company is,

A.         insolvent.

B.         solvent.

C.           unable to pay its debts within 12 months after the commencement of winding up.

D.           able to pay its debts with 24 months after the commencement of winding up.

11.     “Compulsory winding up” of a company is also called winding up by,

          A.       members of the company

          B.       order of court

          C.       shareholders

          D.       company’s secretary

                                         

12.     “Creditors’ voluntary winding up” may arise in a situation where,

          A.       there is a proposal to wind up the company voluntarily but the directors do not make and lodge a declaration of solvency.

          B.       there is a winding up initiated by the creditors.

          C.       there is a proposal to wind up the company voluntarily and the directors make and lodge a declaration of solvency.

          D.       there is a winding up initiated by the court.

13.         Below are the characteristics of creditor’s voluntary winding up, EXCEPT:

A.            Initiated by special resolution passed by members in general meeting.

B.         Declaration of solvency made by company’s Board of Directors.   

C.         Creditors are called to attend creditor’s meeting.

D.        Appointment of liquidator by creditors at the creditor’s meeting.

14.     Among the persons permitted to apply for winding up order under section 217 Companies Act 1965 are ____________.

I.             The Registrar.

II.      The debtor of the company.

III.         The creditor of the company.

A.         I and II.

B.         I and III.

C.         II and III.

D.        I, II and III.

14.         Jutaria Sdn. Bhd. is a company with 2 shareholders, Roy and Fred. Both held equal shares of 50% and controlled the company together. Recently, it comes to Roy knowledge that Fred has made sexual advance towards Roy’s wife. Roy was frustrated and no longer wants to continue with the company but Fred refused. Roy wants to make an application for court ordered winding up.

What would be the best ground for Roy in his application to court?

         

A.    Breakdown of trust.

B.    Deadlock.

C.    Misconduct and oppression.

D.   Failure of substratum.   

 

SECTION B

 

Question 1

With regard to the winding up of a company, explain the following:

(a)                  Types of winding up of a company                                            [ 4 marks]

(b)                 Winding up on just and equitable ground                                     [ 8 marks]

(c)                  Four grounds of compulsory winding up                                                [ 8 marks]

            [Total : 20 marks]

Question 2

           

(a)      Explain the following situations where the court will make a winding up order on just and equitable ground under s. 218 (1)(i) of Companies Act 1965. Support your answer with relevant decided cases.

         

i)             Breakdown of mutual trust and confidence                              [4 marks]

ii)            Deadlock                                                                          [4 marks]

(b)     Meena and Kajol are the only directors and shareholders of Ketambola Sdn Bhd. They have a serious disagreement and there was no chance of reconciliation. As a result, the company is unable to function properly.

          Advise Melly on what is possible ground to wind up the company.

                                                                                                          [12 marks]

                                                                                                                    [Total : 20 marks]

Question 3

a)       Briefly explain three (3) grounds for compulsory winding up.   

[7 marks]

b)       “Winding up or liquidation…entails the collection of the company’s assets, payments of its debts and distribution of the surplus, if any, to the members. It is only on completion of this process that the company would be dissolved and ceases to exist.” Krishnan Arjunan, Company Law in Malaysia, Cases and Commentary, 1998 at p. 614.

With regard to the above statement, explain four (4) situations where the court would order winding up on just and equitable grounds.

                                                                                                                    [8 marks]

                                                                                                                                                                [Total : 15 marks]