Grounds for compulsory winding up

A company may be wound up by the court under s.219 if:

1) The company so resolves by special resolution,

2) Default is made in delivering the statutory report or holding the statutory meeting: a petition can be presented by members only at least 14 days after the last available date for the meeting s.221: the court may order the report to be delivered or the meeting held instead of making a winding-up order s.222,

3) The company has not commenced business within a year of incorporation or has suspended business for a whole year (and has no intention of carrying on or resuming business: (Middlesbrough Assembly Rooms Co.)

4) The number of members fall below seven, or two if a private company

5) Company is unable to pay its debts: this is deemed to be so if -

• A creditor for more than Shs 1,000 has served a written demand for payment on the company, and payment has not been made within three weeks; or
• Execution or other process on a judgement remains wholly or partly unsatisfied; or
• It is otherwise proved to the satisfaction of the court that the company cannot pay its debts, taking into account its contingent and prospective liabilities s.220.
• The court is of opinion that it is just and equitable for the company to be wound up, e.g., substratum gone, (re German Date Coffee Co), deadlock in management (re Yenidje Tobacco Co Ltd), company a "bubble" or formed for a fraudulent or illegal purpose mismanagement or misapplication of funds by directors of a private company (Loch v John Blackwood Ltd). The petitioner may rely on any circumstance of justice or equity which affects him, in a capacity, in his relations with the company or with the other shareholders (Ebrahimi v Westbourne Galleries 1972).