VOLUNTARY WINDING UP OF COMPANY BY SHAREHOLDERS

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voluntary winding up of company

Under the section 270 Companies Act, 2013, a company would wound up either by the Tribunal or voluntary wind up. To carry out voluntary winding up of private limited company procedure, a winding up meeting needs to be called where a resolution is passed to carry out the winding-up procedure of the company. The creditor’s winding up meeting should be held either of the days fixed for General meeting or on the very next day. The procedure for winding up of a company can be initiated voluntarily by the shareholders or creditors or by a Tribunal.

STEP 1:

  • The directors may, at a meeting of the Board, make a declaration verified by an affidavit, to the effect that they have made a full inquiry into the affairs of the company, and that, having done so, they have formed the opinion that the company has no debts, or that it will be able to pay its debts in full within such period not exceeding three years from the commencement of the winding-up as may be specified in the declaration. The declaration is to be made within the five weeks immediately preceding the date of the passing of the resolution for winding up the company (mentioned below) and is delivered to the Registrar (ROC) for registration before that date.  Profit and Loss Account and Balance sheet is accompanied by a copy of the report of the auditors of the company on the profit and loss account of the company for the period commencing from the date up to which the last such account was prepared and ending with the latest practicable date immediately before the making of the declaration and the balance sheet of the company made out as on the last-mentioned date and also embodies a statement of the company’s assets and liabilities as at that date. 
  • The company shall issue notices in writing calling for the General Meeting of the company proposing the resolutions, with suitable explanatory statement. In the general meeting, winding-up can be initiated:
  • Through a resolution in general meeting on expiry of fixed period or occurrence of the event:
  • Through a special resolution for winding up of a company voluntarily.
  • The process of winding shall commence from the time when the resolution is passed. The same is to be filed with ROC within thirty days. The company shall cease to carry on its business, except so far as may be required for the beneficial winding up of such business. However, the corporate state and corporate powers of the company shall continue to till it is dissolved.
  • The company shall within fourteen days of the passing of the resolution, give notice of the resolution by advertisement in the Official Gazette, and also in some newspaper circulating in the district where the registered office of the company is situated. The company in general meeting shall appoint one or more liquidators and fix the remuneration. Notice of appointment of liquidator has to be given to ROC within ten days of the event to which it relates.

STEP 2:

  • On the same day or the next day of the passing of resolution of winding up of the Company, conduct a meeting of the Creditors. If two thirds in value of creditors of the company believe that it is in the interest of all parties to wind up the company, then the company can be wound up voluntarily. If the company cannot meet all its liabilities on winding up, then the Company must be wound up by a Tribunal. Notice of any resolution passed at a creditors’ meeting shall be given by the company to the ROC within ten days of the passing thereof.
  • If the liquidator believes that the company will not be able to pay its debts in full within the period stated in the declaration, or that period has expired without the debts having been paid in full, he shall call a meeting of the creditors, and shall lay before the meeting a statement of the assets and liabilities of the company.

STEP 3:

  • As soon as the affairs of the company are fully wound up, the liquidator shall make up an account of the winding-up, showing how the winding-up has been conducted and the property of the company has been disposed of; and call a general meeting of the company to lay the account before it, and give any explanation thereof. The meeting shall be called by advertisement specifying the time, place and object of the meeting and published not less than one month before the meeting in the Official Gazette, and also in some newspaper circulating in the district where the registered office of the company is situated. Within one week after the meeting, the liquidator shall send to the ROC and Official Liquidator (OL) copy each of the account and shall make a return to each of them of the holding of the meeting and the date thereof. free legal advice online in delhi

STEP 4:

  • The ROC on receiving the account and either the return or the return shall register them. The Official Liquidator on receiving the account and the return would make a scrutiny of the books and papers of the Company to ascertain as to whether the affairs of the Company has not been carried on in a manner prejudicial to the interest of its members or public, and makes a report to the concerned Tribunal. If the Tribunal is satisfied with the report of the Official Liquidator, Tribunal may pass an order under which the company is deemed to be dissolved. The Company shall then file the dissolution order with the ROC and the ROC shall then publish it in the Official Gazette.[1]

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