Running a business comes with its own challenges. Sometimes when things do not work out a business may have to be shut down. There can be several reasons to close or wind up the company
Winding up of a company is the process through which life of a company comes to an end and its property is administered for the benefit of its members & creditors.
Modes Of Winding Off of Company:
1. Voluntary Winding Up Of a Company
2. Compulsory Winding Up of a Company
• When company is unable to discharge it’s debts
• Company in it’s general meeting, resolved by special resolution for winding up by tribunal
• The company has acted in contrary of
• Sovereignty and integrity of India
• The security of the State
• Liasion with foreign countries
• Public Order
• Decency or morality
• Default in Filing of financial statements and annual returns for preceesing 5 consecutive years
• If tribunal thinks fit that company’s winding up is required
• If the affairs of the company have been conducted in a fraudulent manner or the company was formed for fraudulent and unlawful purposes or the persons concerned in the formation or management of its affairs have been guilty of fraud, misfeasance or misconduct in connection therewith and it is proper that the company be wound up.
• If the company passes a special resolution for winding up of the Company.
• The company in general meeting passes a resolution requiring the company to be wound up voluntarily as a result of the expiry of the period of its duration, if any, fixed by its articles of association or on the occurrence of any event in respect of which the articles of association provide that the company should be dissolved.
• Conduct a board meeting with 2 directors
• Pass a resolution with declaration of directors that:
either company do’t have any debt liability
After selling all assets, company is able to pay it’s debts.
Issues notices in writing for calling of a General Meeting proposing the resolution along with the explanatory statement.
In the General Meeting, pass the ordinary resolution for winding up of the company by ordinary majority or special resolution by 3/4 majority. The winding up of the company shall commence from the date of passing of this resolution.
On the same day or the next day of 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 are of the opinion 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.
Within 10 days of passing of resolution for winding up of company, file a notice with the Registrar for appointment of liquidator.
Within 14 days of passing of resolution for winding up of company, give a notice of the resolution in the Official Gazette and also advertise in a newspaper with circulation in the district where the registered office is present.
Within 30 days of General Meeting for winding up of company, file certified copies of the ordinary or special resolution passed in the General Meeting for winding up of the company.
Wind up affairs of the company and prepare the liquidators account of the winding up of the company and get the same audited.
Call for final General Meeting of the Company.
Pass a special resolution for disposal of the books and papers of the company when the affairs of the company are completely wound up and it is about to be dissolved.
Within two weeks of final General Meeting of the Company, file a copy of the accounts and file and application to the Tribunal for passing an order for dissolution of the company.
If the Tribunal is satisfied, the Tribunal shall pass an order dissolving the company within 60 days of receiving the application.
The company liquidator would then file a copy of the order with the Registrar.
The Registrar, on receiving the copy of the order passed by the Tribunal then publish a notice in the Official Gazette that the company is dissolved.