ADVISORY COMMITTEE DURING WINDING UP PROCEEDINGS UNDER COMPANIES ACT, 2013

[Mr. M. GOVINDARAJAN]

Advisory Committee

The National Company Law Tribunal (‘Tribunal’) for short), while passing winding up order in the winding up proceedings initiated under the provisions of the Companies Act, 2013 (‘Act’ for short) may direct that there shall be, an advisory committee to advise the Company Liquidator and to report to the Tribunal on such matters as the Tribunal may direct.

Members of Advisory Committee

The advisory committee (‘Committee’ for short) appointed by the Tribunal shall consist of not more than 12 members, being creditors and contributories of the company or such other persons in such proportion as the Tribunal may, keeping in view the circumstances of the company under liquidation, direct.

Meeting of creditors and contributories

The Company Liquidator shall convene a meeting of creditors and contributories, as ascertained from the books and documents, of the company within thirty days from the date of order of winding up for enabling the Tribunal to determine the persons who may be members of the advisory committee.

As soon as possible but not later than seven days after the holding of the meeting of the creditors and contributories, the Company Liquidator shall report the result thereof to the Tribunal and such report shall be in Form WIN 23.

Constitution of Committee

Where the creditors and contributories have agreed upon the constitution and composition of the advisory committee and the persons who are to be members thereof, an advisory committee shall be constituted in accordance with such decision, and the Company Liquidator shall set out in his report the names of the members of the committee so constituted.

Where the creditors and contributories have not agreed upon the composition of the advisory committee and the persons who are to be members thereof, the Company Liquidator shall, at the time of making his report as aforesaid, apply to the Tribunal for directions as to what shall be its composition, and who shall be the members thereof, and the Tribunal shall thereupon fix a date for the consideration of the report of the Company Liquidator and the notice of the date so fixed shall be advertised by the Company Liquidator in such manner as the Tribunal shall direct not less than 7 days before the date so fixed, and the advertisement shall be in Form WIN 24.   The Tribunal may, after hearing the Company Liquidator and any creditor or contributory who may appear, decide as to who would be the members of the said advisory committee or pass such orders or give such directions in the matter, as the Tribunal may think fit.

Resignation

A member of the advisory committee may resign by notice in writing signed by him and delivered to the Company Liquidator.

Removal of member

If a member of the advisory committee is adjudged as an insolvent, or compounds or arranges with his creditors, or is absent from five consecutive meetings of the said committee without the leave of those members who, together with himself, represent the creditors or contributories, as the case may be, his office shall become vacant.

A member of the advisory committee may be removed, subject to the directions of the Tribunal, at a meeting of creditors if he represents creditors, or at a meeting of contributories if he represents contributories, by an ordinary resolution of which 7 days' notice has been given, stating the object of the meeting.

Vacancy

On a vacancy occurring in the advisory committee, the Company Liquidator shall forthwith summon a meeting of creditors or of contributories, as the case may require, recommending for filling the vacancy and the meeting may, by resolution, recommend for reappointing the same, or propose for appointing another creditor or contributory, as the case may to fill the vacancy. 

If the Company Liquidator, having regard to the position in the winding up, is of the opinion that it is unnecessary for the vacancy to be filled, he may apply to the Tribunal and the Tribunal may make an order that the vacancy shall not be filled, or shall not be filled except in such circumstances as may be specified in the order.

The continuing members of the advisory committee, if not less than two, may act notwithstanding any vacancy in the said committee.   Where the creditors or contributories, as the case may be, fail to fill the vacancy for whatever reason, the Company Liquidator shall forthwith report such failure to the Tribunal and Tribunal may, by order, fill such vacancy.

Rights of the Committee

The advisory committee shall have the right to inspect the books of account and other documents, assets and properties of the company under liquidation at a reasonable time.

Meeting of the Committee

The Company Liquidator shall convene a meeting of creditors and contributories, as ascertained from the books and documents, of the company within 30 days from the date of order of winding up for enabling the Tribunal to determine the persons who may be members of the advisory committee.  The meeting of advisory committee shall be chaired by the Company Liquidator.

The provisions relating to the convening of the meetings, the procedure to be followed thereat and other matters relating to conduct of business by the advisory committee shall be such as may be prescribed.

The advisory committee shall meet at such times as it may from time to time appoint and the Company Liquidator or one-third of the total number of members of the said committee may also call a meeting of that committee as and when they think necessary.

Quorum

The quorum for a meeting of the advisory committee shall be one-third of the total number of the members, or two, whichever is higher.  The advisory committee may act by a majority of its members present at a meeting, but shall not act unless a quorum is present.

Restrictions to Committee Members

Any member of the advisory committee shall not, while acting as such  member of such committee in any winding up, either directly or indirectly, by himself or through his employer, partner, clerk, agent, servant, or relative, become purchaser of any part of the company's assets, except by leave of the Tribunal and any such purchase made contrary to the provisions of this rule may be set aside by the Tribunal on the application of the said liquidator or of a creditor or contributory, as the case may be, and the Tribunal may make such order as to costs as it may think fit.

Obligations of Members

No member of the advisory committee shall, while acting as member of such committee in any winding up, either directly or indirectly, by himself or through his employer, partner, clerk, agent, servant, or relative, become purchaser of any part of the company's assets, except by leave of the Tribunal. If  any such purchase is  made contrary to the provisions of this rule the same may be set aside by the Tribunal on the application of the said liquidator or of a creditor or contributory, as the case may be, and the Tribunal may make such order as to costs as it may think fit.

The Rules also prohibits the members of the Advisory Committee to derive any profit from any transaction arising out of the winding up or to receive out of the assets any payment for services rendered by him in connection with the administration of the assets, or for any goods supplied by him to the Company Liquidator for or on account of the company and where any profit or payment has been made contrary to the provisions of this rule, such payment shall be disallowed or the profit shall be recovered, as the case may be, on the audit of the such liquidator's accounts or otherwise.

Payment to Advisory Committee

The Tribunal may order for payment to a member of the Advisory Committee for services rendered by him in connection with the administration of the Company’s assets is obtained.  Such service performed by the member shall be of a special nature.  Except by the express order of the Tribunal no remuneration shall be paid to a member of the Advisory Committee for services rendered by him in discharge of the duties attached to his office as a member of such Committee.

Cost of obtaining order of Tribunal

In any case in which an order of the Tribunal is obtained the costs of obtaining such order shall be borne by the person in whose interest such order is obtained and shall not be payable out of the companies' assets.