Association of Chartered Certified Accountants (ACCA) Certification Practice Test

What is a possible ground for petitioning a winding up order related to a special resolution?

1. The company has decreased its capital

2. The company has passed a special resolution to be wound up by court

3. The company has declared bankruptcy

4. The company has changed its management structure

The correct answer is: The company has passed a special resolution to be wound up by court

The basis for petitioning a winding up order in relation to a special resolution primarily lies in the fact that a company has passed a special resolution to be wound up by the court. A special resolution requires a higher majority than an ordinary resolution, often necessitating at least 75% of the votes in favor. When a company’s members choose to initiate the winding-up process through a special resolution, it indicates a clear intention to cease operations and liquidate assets. In this context, the passing of a special resolution serves as the legal framework for the court to consider winding you the company. This action is fundamental because it reflects the consensus among the shareholders regarding the direction of the company, thus, providing a legitimate and formal basis for court intervention. The other scenarios presented do not provide adequate grounds for a winding-up petition related to a special resolution. For instance, while a decrease in capital may raise concerns, it does not in itself constitute a formal decision or consensus for winding up. Similarly, a company declaring bankruptcy typically falls under insolvency proceedings but does not automatically lead to the winding-up process through a special resolution. Lastly, a change in management structure does not imply that the company wishes to cease its operations, making it irrelevant in this context.