The correct answers are: The company cannot pay its debts; It is just and equitable to wind up the company.

Under the Insolvency Act 1986, s.122, the two most important statutory reasons for a winding up petition are, first, that the company cannot pay its debts, and secondly, that it is just and equitable to wind up the company.

The incompetence of the directors or the existence of a court judgement are not a reasons in themselves, although they could be evidence for a 'just and equitable' petition or of inability to pay debts.

If shareholders want to wind up the company they can pass a resolution in general meeting.