SRCC

Dissolution Of Company

What Is This Thing Called Winding Up?

The liquidation of a company’s assets, which are collected and sold in order to pay off its obligations, is known as winding up. When a business is wound up, the debts, expenditures, and charges are first paid off and dispersed among the shareholders.

The Company is legally dissolved and ceases to exist after it has been liquidated.

The legal process of winding up a business and ceasing all operations is known as winding up. The Company’s existence comes to an end when it is wound up, and the assets are managed to ensure that the interests of the stakeholders are not jeopardised.

A Private Limited Business is an artificial judicial person that must comply with a number of regulations. If the company fails to comply with these regulations, fines and penalties may be imposed, as well as the Directors’ ability to incorporate another company. It is usually preferable to close a business that has become dormant or has no transactions.

The Company’s shareholders can begin the company’s winding up at any moment. If there are any secured or unsecured creditors or workers on the books, all debts must be paid. After the debts have been settled, all of the company’s bank accounts must be closed. In the event of a company’s closure, the GST registration must be relinquished as well.

The winding up application petition can be submitted with the Ministry of Corporate Affairs after all of the registrations have been relinquished.

Types of Business Dissolution

What are the many methods through which a person might dissolve a corporation?

There are two methods for winding up a business:

  1. A company’s voluntary dissolution
  2. Compulsory liquidation of a business
A Company's Voluntary Dissolution

A voluntary winding up of a company can be carried out by its members provided the following conditions are met:

The board of directors approves a special resolution to dissolve the corporation.

The General Meeting of the Company passes a resolution requiring a company to wind up voluntarily as a result of the expiration of the period of its duration, any as provided in the Articles of Association, or the occurrence of any event for which the articles of association provide that the company should be dissolved.

Procedure for a Company's Voluntary Dissolution
  • Convene a board meeting with the directors, at which a resolution should be passed with a declaration by the directors that they have investigated the Company’s affairs and that the Company has no debts or that the Company will pay from proceeds of assets sold in the voluntary winding up of the company.
  • Notices to call for the general meeting of the Company proposing the resolutions, along with an appropriate explanatory statement, shall be sent in writing.
  • Pass an ordinary resolution for the Company’s winding up by a simple majority in the general meeting, or a special resolution by a 3/4 majority in the general meeting. The Company’s winding up will begin on the date the resolution is passed.
  • A creditors’ meeting should be held on the same day or the following day after the winding-up resolution is passed. If two-thirds of the creditors agree that winding up the company is in the best interests of all stakeholders, the company can be wound up voluntarily.
  • A notification for appointment of liquidator must be filed with the registrar within 10 days after passing the resolution for company winding up.
  • Certified copies of the ordinary or special resolution passed in the general meeting for the winding up of the Company within 30 days of the general meeting for the winding up of the Company.
  • The company’s affairs must be wound up, and the liquidators account of the Winding up account must be prepared and audited.
  • Call for the Company’s last General Meeting.
  • When the company’s affairs are entirely wound up and it is going to be dissolved, a specific resolution should be made for the disposal of the company’s books and documents.
  • File a copy of the accounts and file, as well as the application to the tribunal for the granting of an order for the dissolution of the company, within two weeks of the general meeting of the company.
  • Within 60 days after receiving the application, the tribunal must issue an order dissolving the corporation.
  • A copy of the order must be filed with the registrar by the company liquidator. The registrar will then issue a notice in the official gazette stating the Company has been dissolved after obtaining a copy of the Tribunal’s ruling.
The Compulsory Winding Up of a Private Limited Company Tribunal is in charge of this type of company winding up.

The following are the reasons behind this:

  • a company’s unpaid debts
  • When a special resolution fort wound up is passed
  • An illegal conduct committed by a corporation or its management.
  • If the firm is implicated in any type of fraud or misbehaviour.
  • If you don’t file your yearly reports or financial statements with the ROC for five years in a row, you’ll be fined.
  • The firm should be wound up, according to the Tribunal.
Procedure for a Company's Compulsory Dissolution
  1. Is to file a petition with the tribunal, along with a statement of the company’s affairs.
  2. If a person other than the corporation submits a petition, the tribunal may request that the company file an objection. Within 30 days, it will be accompanied by the statement of affairs.
  3. For the winding up procedure, the tribunal must appoint a liquidator. The liquidator is responsible for helping and overseeing the liquidation process.
  4. A draught report is to be prepared by the liquidator for approval. He will submit the final report to the tri once the draught report has been authorised.
  5. If the liquidator fails to send a copy to the ROC within 30 days, he will face a penalty.
  6. If the ROC is satisfied with the draught, he authorises the Company’s winding up and the name of the Company is struck from the register of companies.
  7. The ROC issues a notice for publication in India’s official gazette.
What are the most common causes for businesses to fail?
  1. The Companies Act establishes a legal entity known as a private limited company. As a result, a business must maintain frequent compliance throughout its life cycle.
  2. The procedure of winding up is for a company that is no longer in operation and wants to avoid compliance obligations.
  3. In roughly 3 to 6 months, a corporation can be closed by filing an application with the ministry of corporate finances. This procedure may be completed entirely online. When you use SRCC to close a corporation, the procedure is quick and simple.
  4. If a company fails to file its compliances on time, it will be fined and the directors will be barred from forming another company. In this way, it is preferable to wind up an inactive corporation in order to avoid future penalties or liabilities.
  5. In comparison to maintaining compliances for a dormant firm, it is actually to re-establish a corporation when the time comes. Winding up your SRCC account is just Rs. 15899.
  6. A firm that complied with all regulations can simply be liquidated. If there are any outstanding complaints, they must be resolved first. It should be emphasised, however, that all registrations must be relinquished as well.

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