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CS Professional · Insolvency and Bankruptcy - Law and Practice · Winding-Up by Tribunal

Zenith Polymers Ltd has passed a special resolution for voluntary winding up. Meanwhile, the Central Government has ordered an investigation into its affairs under the Companies Act, 2013. The directors argue that the investigation must now be stopped. What is the position?

The investigation continues. Under section 226 of the Companies Act, 2013, an investigation is not stopped or suspended only because the company has passed a special resolution for voluntary winding up, so the directors cannot rely on the resolution to halt it.

  1. AThe investigation must be stopped because voluntary winding up has begun
  2. BThe investigation may continue, as it is not stopped or suspended merely because of the special resolution for voluntary winding upCorrect
  3. CThe investigation is suspended until the Company Liquidator submits his first report
  4. DThe investigation can continue only with the consent of the shareholders

Explanation

Section 226 says an investigation may be initiated, and shall not be stopped or suspended, merely because the company has passed a special resolution for voluntary winding up. The directors' argument therefore fails. No liquidator report or shareholder consent is required.

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