Question

When a company is wound up at the instances of either the members or the creditors, the winding up is termed as _____________.

• A. Compulsory winding up
• B. Voluntary winding up
• C. Winding up subject to supervision of court
• D. None of the Above

Answer 1

Answer: (B)

Voluntary winding up

Voluntary winding up is the process in which a company is unable to carry out it's operations or the period for carrying the operations expires or if it is unable to meet its financial obligations. It can carry this process either by passing special resolution or by ordinary resolution. Under creditor's voluntary winding up the board of directors are not in position to give declaration on the liability of the company. Hence, they call meeting of creditors to wind up the company.