Winding-Up:
(a) A company is dissolved, i.e. ceases to exist, when its name is removed from the register. It is usually necessary, before it can be dissolved, to liquidate or wind up the company ("liquidation" and "winding up" have the same meaning ); i.e. the assets are realized, the debts are paid, the surplus (if any) is returned to members, and the company is then dissolved. But the registrar has power, if it appears to him that the company is defunct to strike it off the register summarily without a previous liquidation: CA s.339. There is also an obsolete procedure for voluntary winding up under the supervision of the court: CA s.304.
(b) Liquidation begins with a formal decision to liquidate. If the members in general meeting resolve to wind up the company that is a voluntary winding up, which may be either a members' or creditors' voluntary winding up depending on the creditors' expectation that the company will or will not be able to pay its debts in full. Creditors have a decisive part in the liquidation of an insolvent company since the remaining assets belong to them.
(c) Although voluntary liquidation is simpler, quicker and less expensive, it is possible only if a majority of votes is cast in general meeting on a resolution to liquidate. A company may, however, be obliged to wind up by a compulsory liquidation ordered by the court on a petition usually presented by a creditor or a member.
(d) Whether liquidation is voluntary or compulsory it is in the hands of the liquidator (or joint liquidators) who take over control of the company from its directors. Although liquidation may begin in different ways and there are differences of procedure the working method is much the same in every type of liquidation and the same legal problems can arise.
(e) The sequence of topics below is the procedure by which compulsory, members' voluntary and creditors' voluntary liquidation begin. The legal problems, with which the liquidator may be concerned are considered in the next following session.