BLAW UNIT-5 | Degree 2nd semester bcom business law unit-5 full explanation in 1 video | O.U |

[00:00:00]Hello dear students, welcome back to our YouTube channel Learn with Sahira. In this video I'm going to give you the complete and clear explanation of unit number five from the subject of business law, which is for degree second semester B.Com students. Definitely watch the video till the very end and if you're new to our YouTube channel Learn with Sahira, subscribe it for more exam preparation videos. Students, one more important thing, I've already prepared dam sure important question and answers notes for all subjects and languages of degree second semester. These notes are easy, simple, clear to understand and 100% exam oriented. And the best part of these notes is just by giving a reading you will get perfect with the complete subject, complete language because I have given in detail explanations with very easy and simple terminology. If you want these notes to score O grade in your exams, definitely message me on my Instagram. My Instagram ID link is available in this video description.

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[00:01:08]Without getting late, let us get started.

[00:01:11]Guys, from unit number five, question number one is define winding up, explain tribunal or compulsory winding up. Guys, tribunal or compulsory winding up is one and the same, okay? Even if they ask you tribunal winding up or compulsory winding up, you have to write this answer. Guys, first let us try to understand what winding up means.

[00:01:30]Winding up is the legal process of closing a company. Guys, when a company is closed, its business activity stop.

[00:01:38]So, the company's assets, all the assets like buildings, machines, other assets, all they are sold. After selling, whatever the amount comes, with that amount they will be paying it to creditors. Like it is used to Uh, remove the debts and the remaining money, whatever it is remained, that is distributed among the shareholders.

[00:02:01]Basically, guys, after completing all these steps, the company is officially dissolved. Suppose a company is unable to continue its business, so it will decide to close permanently. Its machines, buildings, all other assets, they are sold. The money received, it is first to use to pay the creditors. If the money is left, it is distributed to the shareholders. So, the whole process is nothing but winding up, guys. Now, let us try to understand tribunal or compulsory winding up.

[00:02:34]Guys, compulsory winding up means the company is closed by the order of the National Company Law Tribunal. Okay?

[00:02:42]Like, the law will be ordering the company that you please close your company because of certain reasons. The company does not clone close on its own, guys. Instead, the tribunal orders the company to wound up because of certain legal reasons. What are the reasons? Let us try to understand. First, special special resolution by the company, guys.

[00:03:03]If the company passes passes a special resolution requesting the tribunal to wind it up, the tribunal may order compulsory winding up. Acts against the sovereignty and integrity of India. If the company acts against the sovereignty, security, or integrity of India, the tribunal may order its winding up. This is done to protect the country's interests, guys. Fraudulent or unlawful activities. If the company carries on fraudulent or illegal activities, the tribunal can order compulsory winding up. Okay? Basically, this will prevent misuse of the company for unlawful purposes. Default in filing financial statements or annual returns.

[00:03:41]Guys, every company must file its financial statements and annual returns regularly. If a company continuously fails to do so, the tribunal may order its winding up, okay? Just and equitable grounds. Sometimes the tribunal may feel that it is fair and reasonable to close the company. In such situations, it can order winding up on just and equitable grounds. For example, guys, if the company has completely stopped its business and cannot continue its operation, the tribunal may order winding up, okay? So, these are the different grounds for compulsory winding up.

[00:04:16]What is the procedure procedure or steps to be taken? Let us try to understand.

[00:04:21]Filing of petition, guys, the winding up process begins by filing a petition before the National Company Law Tribunal. Hearing by tribunal, the tribunal hears both sides and examines all the facts and documents. Winding up order, if the tribunal is satisfied that the company should be closed, it passes a winding up order. Appointment of liquidator, after passing the order, the tribunal appoints a company liquidator.

[00:04:44]Basically, the liquidator takes charge of the company's affair, okay?

[00:04:48]Collection and sale of assets, the liquidator collects all the company's assets and sells them. Basically, this will help in arranging money to pay the company's debts, okay? Harze banne ke liye ye paise kaam me aa jaata. Then, the money received from the sale of assets sales first used to pay the company's creditors and other liabilities, guys. After all the debts are paid and the remaining amount is distributed among shareholders, the tribunal passes an order to dissolve the company. So, the company legally comes to an end here. This is the complete procedure. Then, we also have effects, guys. First, business activity stop, the company stops carrying on its normal business activities. Directors powers cease, the powers of the directors come to an end, they can no longer manage the company. Liquidator takes control, the company liquidator takes control of the company's assets and manages the winding up process. Creditors are paid, the company's debts are paid from the company received by selling company's assets, like whatever the money is received, it is used to pay the creditors. Company is dissolved, guys.

[00:05:54]After completing all the legal formalities, the company is officially dissolved and its legal existence comes to an end. So, yes, this is the complete explanation of a tribunal winding up or compulsory winding up. Do not worry at all. In my notes, I have given you in detail 100% exam-oriented answers. Here in this video, I'm giving you short and brief explanation, guys, but this is not the way how you are going to write it in your examination. I'm giving this explanation for you to understand the unit.

[00:06:23]>> [snorts] >> But, exam-oriented answers are already available in my notes. I have prepared damn sure important questions with their easy, simple, and in detail explanation answers notes. Basically, my notes are 100% exam-oriented. In very less time, just by giving a reading once in my notes, you will get perfect for your examination. Your preparation will be done in very less time. If you want these notes to score over it in exams, definitely message me on my Instagram.

[00:06:48]My Instagram ID link is available in this video description.

[00:06:51]Guys, let us get into question number two now. Who is a company's liquidator?

[00:06:55]Explain the appointment, powers, and duties of a company liquidator. Guys, just now we have seen, right, what is a company liquidator? Who is a company liquidator, guys? A company liquidator is a person appointed to conduct the winding up process of a company.

[00:07:10]Basically, the liquidator takes control of the company's assets, guys, sells them, pays the company's debts, and distributes the remaining assets among the shareholders. So, the main responsibility of the liquidator is to ensure that the winding up process is completed fairly according to the law.

[00:07:27]Let us try to talk about appointment.

[00:07:30]Appointment by the tribunal. In compulsory winding up, the National Company Law Tribunal appoints the company liquidator. Like the tribunal will select a suitable person to carry out the winding up process. Selected from an approved panel, the liquidator is generally selected from an approved panel of qualified professionals. These professionals have the required knowledge and experience to handle the winding up process. Appointed for proper administration, the main purpose of appointing a liquidator is to ensure that the company's affairs are managed to properly during winding winding up, guys. So, the liquidator works honestly and protects the interest of creditors, shareholders, and other stakeholders.

[00:08:11]So, these are the three different ways with which a company liquidator is appointed. Now, let us try to talk about powers. Uh liquidator takes custody of company assets, guys. They like the liquidator has the power to take possession of all the company's property, records, cash, and other assets. This will help him to manage the company's affair during winding up. Sell company assets. The liquidator can sell the company's assets to collect the money. Institute or defend legal proceedings. The liquidator can file cases on behalf of the company or defend the company in court whenever it is necessary. Collects debts. The liquidator has the power to recover money that other people owe to the company.

[00:09:03]Then, appoint professional, guys. If required, the liquidator can appoint lawyers, accountants, valuers, or other experts to help in completing the winding up process, okay? These are powers. At the same time, company liquidator has duties or responsibilities. First is take control of company property. The first duty of the liquidator is to take charge of all the company's assets, records, and properties.

[00:09:29]Prepare list of assets and liabilities.

[00:09:32]Like the liquidator prepares a complete complete list of company's assets and liabilities, okay? Then realize assets.

[00:09:39]The liquidator sells the company's assets and converts them into cash. Pay creditors. After collecting the money, the liquidator pays the money to the creditors and clears all the outstanding debts according to the law. Then whatever the amount is remained, that all amount is distributed among the shareholders according to their rights.

[00:10:00]So yes, guys, this was the complete explanation about a liquidator, his responsibilities as well as powers, appointment, everything, okay? Do not worry, in my notes I have given you in detail explanation answers notes ready for quick exam preparation. If you want these notes, you can message me on my Instagram. Instagram link is available in this video description.

[00:10:23]Next question is, what do you mean by voluntary winding up? Explain the conditions to be followed. Guys, voluntary winding up is the process in which a company decides on its own to close its business, okay? It is done without the order of the National Company Law Tribunal, guys. Like here the company itself decides to stop its business after following all the legal rules. So during this process, the company's assets are sold, debts are paid, and the remaining amount is distributed among the shareholders. Same thing, but here company will decide to wind up, not an NCLT, okay?

[00:10:59]NCLT, basically. Now, let us try to understand the conditions. First, we have passing of special resolution. The first step is to pass a special resolution. Like the shareholders of the company must agree to close the company by passing this resolution in a meeting.

[00:11:14]Declaration of solvency. The directors should declare that the company is able to pay all its debts. This declaration is called declaration of solvency.

[00:11:23]Approval by members, guys. The members or shareholders of the company should approve the decision to wind up the company. Their approval is necessary before starting the process, basically.

[00:11:34]Appointment of liquidator, already we have seen. Settlement of debts and all, sale of all these we have seen, right?

[00:11:41]Preparation of final accounts, guys.

[00:11:43]Till here, what is happening? Liquidator will be appointed and that liquidator will sell all, like he will see what liabilities and what debts are there, what assets are there. After that, assets are sold and the money taken after selling the assets, it is used to clear the debts and distribute among all the shareholders.

[00:12:06]Then the liquidator prepares the final accounts, guys, like showing the company's assets were sold, how the debts were paid, and how the remaining amount was distributed. Then after completing all the legal formalities, the company's officially dissolved, okay? Like from the date the company ceases to exist legally, okay? So, this is voluntary winding up. Here the tribunal will not order. Company itself decide to close the business or to close the company, okay? Do not [snorts] worry, in my notes I have given you in detail explanations, all subheadings with their in detail explanation as well as examples also I have provided, so that it will be easy for you to understand the answers, okay? If you want them, you can message me on my Instagram.

[00:12:47]Guys, question number four, explain the Insolvency and Bankruptcy Code 2016 IBC.

[00:12:52]The Insolvency and Bankruptcy Code 2016 IBC is law made by government to India, guys. Like it is made by government of India, basically. Like it will provide a time-bound process for resolving insolvency and bankruptcy cases of companies, partnership firms, and individuals, guys. Insolvency means a person or company's unable to pay its debts on time. Basically, the main purpose of IBC is to help solve financial problems quickly, protect the interests of creditors, and improve the country's financial system, guys. Let me give you an example for your better understanding, guys. I hope you all are not getting this. Let me uh give you a clear explanation. For example, if a company cannot repay the money it has borrowed. Okay, a company taken some money from other person and the company is not able to pay back. So, here the IBC will provide a legal process to settle the matter. Okay?

[00:13:52]Objectives, let us try to understand.

[00:13:54]Time-bound resolution. The main objective of IBC is to resolve insolvency cases within a fixed time.

[00:14:00]This avoids unnecessary delays and helps in finding a quick solution.

[00:14:04]Maximization of asset value. It aims to protect and increase the value of the company's assets, guys. Proper management of assets will help to reduce financial losses. Protection of creditors' interest, guys. The code protects the rights of creditors by providing a fair process for recovering their money, okay?

[00:14:22]Promotion of entrepreneurship. It encourages people to start and run businesses without fear. Improvement of credit system. The code strengthens the credit system by ensuring that loans are repaid properly. Do not worry, guys, even if you're getting confused about these activities or these objectives. In my notes, I have given you very easy, simple, and in-detail explanation answers. Just by giving a reading once, you will get perfect with the complete subject. If you want them, message me on my Instagram. We have important authorities, guys. First one is NCLT, National Company Law Tribunal. It deals with insolvency cases of companies and limited liability partnership, LLPs.

[00:15:02]DRT, Debt Recovery Tribunal. It deals with insolvency cases relating to individuals and partnership firms.

[00:15:10]Insolvency and Bankruptcy Board of India. It deals or it is the regulatory authority under the IBC. Basically, it will supervise insolvency professionals, insolvency agencies, and basically it will ensure that the provisions of the code are properly followed, okay? Now, we have insolvency resolution process.

[00:15:30]First, the process begin when the company creditor or any eligible person files an application before the appropriate authority. Appointment of insolvency professional, guys. After accepting the application, an insolvency professional IP is appointed.

[00:15:46]That professional will take charge of managing the company affairs during the uh resolution process, okay? Then we have moratorium period. During this period, no legal action can be taken against the company. COC, formation of committee of creditors. The committee reviews the financial position of the company and discusses possible solutions, okay? Then approval of resolution plan. A suitable resolution plan is suit uh prepared to revive the company. Basically, if the committee of creditors approves the plan and the authority also accepts it, the company continues its business according to the plan. Liquidation, guys. If no suitable resolution plan is approved within the prescribed time, the company goes into liquidation, okay? Like all the assets are sold, the debts are paid, and the company's finally dissolved. All right? So, yes, this was the complete explanation of uh unit number five. Do not worry at all. In my notes, I have given you very easy, simple, and in-detail explanation answers. If you need those notes, you can message me on my Instagram. Join our Telegram channel for important updates. Check out our playlist for all explanation videos. If you're having any doubts, do let me know in the comment section. All links are available in this video description. All the very best. Bye-bye.