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Wind Up

Discussion in 'Investing Glossary' started by Glossary, 28th Sep, 2006.

  1. Glossary

    Glossary Active Member

    12th Sep, 2006

    Winding up is a form of external administration under which a liquidator assumes control of a company to discharge its liabilities in preparation for its dissolution. The liquidator's role is to:
    • identify the company's liabilities;
    • convert its assets into cash;
    • terminate its contracts;
    • dispose of the company's business;
    • distribute the net assets to creditors;
    • distribute any surplus to the shareholders; and
    • finally extinguish the company as a legal entity by formal dissolution.
    Chapter 5 of the Corporations Act governs the winding up of most companies.

    A winding up may be a compulsory winding up ordered by a court or a voluntary winding up by members or creditors

    Winding up is basically the process for ending a company's existence. The process of winding up is also known as "liquidation".

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