The winding up of companies by the court : an analysis of the relevant provisions of the Companies Act, 1995

Abstract

"Until quite recently, the public's perception of insolvency law has been one which was regarded as a symptom of ghoulish morbidity. Even Parliamentary draftsmen showed a tendency to conceal the relevant law in the darker recesses of the early Companies Acts. Exhausted students of company law might encounter a chapter on compulsory winding up at the very end of the course of study while no one - but no one - studied bankruptcy". Only in the last twenty years has it been realised that insolvency is a subject of great commercial importance, legal complexity and intellectual fascination. This thesis is one of the fruits of this awakening interest. Today, a sound knowledge of insolvency has become increasingly important for both legal practitioners and accountants and this is due to the fact that in recent years, around the world, there has been an increase in business failures which have resulted in record annual numbers of liquidations of companies and bankruptcies. Because of this, it has become more important than ever before that students of law, commerce and accountancy who in the future are to take up appointments in the said professional fields, should be provided with a range of literature on insolvency law and practice to meet their needs. Professor Harry Rajak remarks in his introductory chapter to one of his works upon the subject of company liquidations, that:"For a large number of solicitors and accountants, dealing with insolvent companies has become an everyday occurrence. Attempts must be made to stave off the company's demise ( the commonest metaphor is perhaps, 'taking an insolvent company into intensive care!'); decisions must be taken on behalf of the creditors whether to pursue claims against the company, and if so, how". This thesis provides an ordered presentation of the substantive law, both local and foreign, governing the insolvency of companies, particularly, court winding up, together with a reasonably detailed account of the procedure for initiating and conducting the proceedings of a company's dissolution and consequential winding up by the court. Throughout, the underlying principles of the subject are explored and other ideas and materials for constructing an argument on questions which have not yet received a definitive answer from Parliament or the courts are considered. Since English Law is the source par excellence of our new Companies Act, continuos reference is made to the English position and ample judicious citation of academic writings by English authors upon the subject are present throughout. Therefore, besides analyzing the provisions laid down in our Companies Act, 1995, cross-reference is constantly made to the British insolvency legislation, namely the UK Insolvency Act, 1986. This Act contains most of the provisions relating to insolvency which were already incorporated in the UK Companies Act, 1985. Such reference is made in order to understand and appreciate further the provisions adopted by our legislator in regulating local corporate insolvency law.