Legal Framework for Corporate Dissolution
Comparative Analysis of Liquidation Modes
| Feature | Voluntary Winding Up | Court-Ordered Liquidation |
|---|---|---|
| Statutory Basis | Section 286 - 315 | Section 241 - 285 |
| Initiator | Shareholders or Creditors | Creditors, Contributories, or Registrar |
| Grounds | Solvency or Expiry of Period | Inability to pay debts (Section 241) |
| Liquidator Appointment | Appointed by Company/Creditors | Official Liquidator (Section 255) |
| Court Involvement | Minimal (unless disputes arise) | High (High Court Division oversight) |
The Liquidation Roadmap
1. Members' Voluntary Winding Up
Under Section 290, the directors must file a 'Declaration of Solvency' stating the company can pay its debts in full within 3 years. A Special Resolution must be passed within 5 weeks of this declaration (Section 286).
2. Compulsory Winding Up by Court
The High Court Division may order winding up under Section 241 if the company is unable to pay its debts, or if the court is of the opinion that it is just and equitable to do so. A petition must be filed under Section 245 by an authorized party.
3. Statutory Compliance & Tax Clearance
Regardless of the mode, the company must obtain a Tax Clearance Certificate under the Income Tax Act 2023 and settle all statutory dues to the Customs, Excise and VAT Act 2022 authorities before the final dissolution order is issued.
Consult Barrister Liton Asaduzzaman Sarkar
For expert legal opinions on corporate insolvency and RJSC compliance.
Schedule Scoping MeetingFrequently Asked Questions
When is a company deemed 'unable to pay its debts'?
Under Section 242 of the Companies Act 1994, a company is deemed unable to pay its debts if a creditor serves a demand for a sum exceeding 500 Taka and the company neglects to pay it for three weeks, or if execution on a decree remains unsatisfied.
What is the penalty for a false Declaration of Solvency?
Pursuant to Section 290(3) of the Companies Act 1994, any director making a declaration without reasonable grounds for the opinion that the company will be able to pay its debts shall be punishable with imprisonment for a term which may extend to six months, or with fine, or both.
Can the Court stay a winding-up proceeding?
Yes, under Section 249 of the Companies Act 1994, the Court may, at any time after an order for winding up, on the application of the liquidator or any creditor/contributory, make an order staying the proceedings.
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