Winding up of a company is the process of dissolution of the company through which the company life will be end and its property is administered for the benefit of its members & creditors. Administrator who can be called as a liquidator is appointed to take control of the company, collects its assets, pays its debts and finally distributes any surplus among the members in accordance with their rights.
The winding up of the company may be initiated either voluntarily by the members or creditors of the company or wind up by Tribunal.
Winding up of a company by Tribunal:
Section 433 states the wound up of company by the Tribunal
- The company passes a special Resolution regarding their winding up by the court
- If the company fails to deliver the statutory report to the Registrar of company or failure in holding a statutory meeting
- If the company suspends the business for a year or does not commence the business within a year
- If the prescribed minimum number of members in a company is reduced below seven in case of public limited and below 2 in case of a private limited company
- If the public or private limited company unable to pay its debts
- If the court orders to wind up
- If the company fails to file its annual Returns with the Registrar of company for five consecutive financial years
- If the company acts against the interest of sovereignty and integrity of the Nation
- If the court orders to wind up under the circumstances specified under section 424G.
Voluntary winding up:
A company may wound up voluntarily under certain circumstances as per Section 304(1)
- If the Resolution require the company to wind up voluntarily in a General meeting as a result of the Expiring of period of its duration or if the duration fixed by the articles of the company or occurrence of any events in respect to the articles provided by the company should be dissolved.
- If a Special Resolution Passed by the company in a General meeting that the company be wound up voluntarily.
Procedure for Voluntary winding up of a Company:
Convening a Board Meeting: A Board meeting should be conducted, and a Resolution should be passed with the declaration of the director about no debts or capability of paying the debts by means of the asset sold in voluntary winding up of the company.
- The Time, Date and Venue of the General meeting should be fixed, and it should be 5 weeks later to that of the board meeting
- Agenda of the Meeting should be attached to the notice of calling for the general meeting.
Call for General Meeting: A notice should be issued to all the members in writing for the company proposing the Resolution with the Explanatory statement
Ordinary Resolution Passed: In the General Meeting, the Ordinary Resolution must be passed regarding the winding up of the company
File with ROC: A notice for appointment of liquidator should be filed up with the Registrar of company within 10 days of the ordinary resolution passed
Advertise in newspaper: A notice of Resolution should be sent to official gazette and publish in the newspaper under the circulation in which the ROC situated. This should be done within 14 days of passing the resolution of winding up of company.
Filing of Certified Copies: The Certified copies of Ordinary and special Resolution must be filed within 30 days of the resolution passed
Prepare and Audit Liquidator Account: The liquidator account regarding the assets and debts should be prepared and should be Audited.
Final General meeting: Call for the Final general Meeting and in the Meeting a resolution of Disposal should be passed
Order of Dissolution from Tribunal: A application should be made to the Tribunal to pass an order for the Dissolution of the company within 2 weeks of the final General meeting. If the Tribunal is satisfied with the application, it will pass an order for the dissolution of the company within 60 days of the application.
Filing in ROC by Liquidator: The Liquidator of the company will file the order of the Tribunal to the Registrar of Company. The Registrar publish the notice in official gazette that the company is Dissolved.
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