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CS Executive · Company Law and Practice · Legal Status and Types of Registered Companies

Vrindavan Mills Ltd is not registered under the Companies Act, 2013. When a winding-up petition is presented, it is an association of 12 members. Which statement about winding up as an unregistered company is correct?

It can be wound up under the Act but never voluntarily. Section 375 includes an association with more than seven members as an unregistered company, bars voluntary winding up, and allows winding up where the Tribunal considers it just and equitable, among other circumstances.

  1. AIt may be wound up voluntarily by a special resolution
  2. BIt may be wound up under the Act, but not voluntarily, and may be wound up if the Tribunal thinks it just and equitableCorrect
  3. CIt cannot be wound up because it is not registered
  4. DIt may be wound up only if it has fewer than seven members

Explanation

Section 375 treats an association or company with more than seven members at the time of the petition as an unregistered company. It may be wound up under the Act, but sub-section (2) bars voluntary winding up, and sub-section (3)(c) permits winding up where the Tribunal considers it just and equitable. The seven-member limit works in the opposite direction to the last option.

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