A court of law has a right to compulsorily wind up a company. Explain the grounds for a compulsory winding up of a company by the court.

Under section 219 of the Companies Act, a company may be wound up by the court if:
• Members have by special resolution so resolved.
• The number of members of the company have fallen below two in the case of a private company or below seven in the case of a public company.
• The company has failed to commence business within one year of incorporation.
• The company has suspend its business for a whole year.
• The company has failed to hold the statutory meeting in accordance with the provisions of the Act.
• The company has failed to deliver a copy of the statutory report to the registrar for registration as required by law.
• The company is unable to pay its debts (insolvency)
• The court is of the opinion that it is just and equitable that the company should be wound up for example:
o The company‟s‟ substratum has failed. o The company is a “bubble”
o Deadlock in management and membership
o Members have justifiably lost confidence in the manner in which thecompany‟s affairs are being managed.

• Winding up proceedings have been commenced outside Kenya against a company registered outside Kenya, but carrying on business in Kenya.

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