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Hi, Could please help me to understand why the correct answer for this question below is B. I think the answer is D because as a private company, Robin Ltd, allows to suspend its activities and become a dormant company.
Question: Which one of the following is NOT ground for the court to order a compulsory winding-up? Where …
a. Ralf plc fails to obtain a trading certificate within twelve months of incorporation
b. the number of directors in Rowena plc falls below statutory minimum for a period in excess of six months
c. Rosa plc has passed a special resolution to petition the Court for a compulsory winding up
d. Robin ltd suspends its business activities for a period in excess of twelve months.Here is S122 of the Insolvency Act:
“122 Circumstances in which company may be wound up by the court.
(1)A company may be wound up by the court if—
(a)the company has by special resolution resolved that the company be wound up by the court,
(b)being a public company which was registered as such on its original incorporation, the company has not been issued with a trading certificate under section 761 of the Companies Act 2006 (requirement as to minimum share capital)] and more than a year has expired since it was so registered,
(c)it is an old public company, and has not reregistered under changed law in 1986
(d)the company does not commence its business within a year from its incorporation or suspends its business for a whole year;
(e)the number of members fall below the statutory limit (see my comment below)
(f)the company is unable to pay its debts,
(g)the court is of the opinion that it is just and equitable that the company should be wound up.”
Re paragraph (e) – this ground has been removed because it’s now available for even a public company to have only 1 member – but it still requires 2 directors
However, that is not a ground for a compulsory liquidation order within the section
Note that there is no mention made within the section as to whether the Court will only act against a public company – it applies to all companies (your mistake)
The reason that the answer is not option (d) is because the Court will not interfere in the life of a company unless someone petitions the Court and, public or private, it’s unlikely that anyone will petition the Court for a liquidation order against a dormant company
Besides, the Court will normally only get involved if there is likely to be benefit to the petitioner and others following a liquidation order
Does that answer you?
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