Company Law 2 Test

KALYANGO KEITH STEVEN 221-053012-21223
QUESTION 1
The process of winding up a business or other kind of corporation is how it ends. Stated
otherwise, the firm or any other kind of corporation dissolves as a corporate body. As a result,
the Companies Act, which established the firm, also provides for its dissolution in the event that
it has completely failed financially. It should be mentioned that liquidation is not always the best
option for a firm with poor finances. Other options are available as well, which are covered
under both Acts; as an alternative, a business may choose to use the following strategies to
prevent complete collapse rather than ending up.
A court-approved process known as an arrangement or compromise allows a financially troubled
or almost financially troubled firm to restructure the terms of its obligations with its creditors or
members. The agreement is of a contractual nature and may encompass everything that the
parties may legitimately decide upon together. All members of the class of individuals to whom
the agreement applies must abide by it.
Instead of selling all of the firm's assets to pay off its obligations, this agreement with its
creditors enables the company to repay its debts over a predetermined length of time and,
ultimately, be saved. The company will keep running and doing business as normal since a
moratorium will shield it from creditors' actions.
When a compromise or arrangement is proposed between a company and its creditors or any
class of them, or between the company and its members or any class of them, on its own
application, or on the application of a creditor, member, or liquidator in the case it is being
wound up, the court may, under S. 234 of the Companies Act, order a meeting of the creditors or
class of creditors, or of the members of the company or class of members, as the case may be, to
be summoned in the manner it directs.
The majority-agreed compromise or arrangement from the above meeting will, if approved by
the court, bind all creditors, the class of creditors, the members, or the members' class, as
applicable, as well as the company, and, in the event that the company is in the process of being
wound up, the liquidator and contributories of the company.
Only once it has been submitted to the register for registration will the aforementioned order
(subsection 2) be operative.
Amalgamation under the Companies Act.
Two or more businesses may merge and continue as one company, which may be one of the
merging firms or may be a new company, under the provisions of S.237 businesses Act.
The incorporation document that requests authorization under Section 238 must follow the
format guidelines and include the information specified in S. 240.
According to Section 241 of the Companies Act, the directors of each merging company must
decide that, in their judgment,
(a) the merger is in the best interests of the company's shareholders and
(b) the combined company will be solvent right away following the date on which the merger is
to take effect.
After being approved, the merger must be recorded in accordance with Section 242. Within ten
working days of the resolution passed under this Act for that purpose, the following documents
must be duly completed and delivered to the registrar in relation to the amalgamated company:
KALYANGO KEITH STEVEN 221-053012-21223
(a) the notice of change of incorporation document, or the incorporation document itself, if the
amalgamated company is the same as one of the amalgamating companies;
(b) consents in the prescribed form, signed by each of the individuals named as director or
secretary in the notice of change of incorporation document, or the incorporation document
itself, as applicable;
(c) the certifications that Section 243 stipulates.

The certificate of merger must be issued in accordance with S. 243 Companies Act, and the date
on it indicates that the amalgamation has been effective.
One well-known merger in Uganda is that of Airtel and Warid, which produced one of the
biggest companies with over 7.5 million mobile phone users. This was due to the fact that there
was a chance that the two might end up together, but they decided to combine instead.
In conclusion, even though it is evident that the majority of businesses choose to close their
doors if they experience financial instability, this isn't always the best course of action in this
situation. Therefore, rather than jumping into winding up, it is crucial for one to obtain
experienced legal guidance so that they can understand how to handle their financially failing
firm. As was previously mentioned, winding up is one of the options available under both the
Companies Act and the Insolvency Act. As a result, one should be able to use the most suitable
one given the circumstances of the organization. Rewinding ought to be the very last option.

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KALYANGO KEITH STEVEN 221-053012-21223

(c) the certifications that Section 243 stipulates.

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