Winding Of Company
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Winding up of a company is the last stage of bringing a company to an end. Various reasons can be there to dissolve a company like failing to file the regular compliance, bankruptcy, etc. This process can be initiated anytime by the shareholders of a company.
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Winding Up of Company
Winding up of a company is the process through which a company is brought to its end. There can be a number of reasons to wind up a company like bankruptcy, insolvency and so on. A liquidator is appointed to control the company assets and pays the debts and if any surplus amount or assets remain then it is distributed among the shareholders in accordance with their respective rights.
Reasons for Winding Up
- Debt Free
After winding up the company and after the liquidation process all the directors are debt-free. - Compliance
If the company is not active and there is no revenue generated from the company but the company s required to maintain regular compliance. Therefore, winding up of the company is advised. - Low Cost
Winding up of a company is cheaper than maintaining it As the liquidation process is cheap and it will be according to the sale of the assets. - Fast
In 3-6 months a company can be closed by filing the closure application with the MCA. The whole process is online and easy to execute. - Fines
An inactive company fails to file its regular compliance and then attracts fines and penalties. Therefore it is advised to wind up the company.
Ways of Winding Up
- Winding Up Tribunal
- Board meeting
- Petition filed
- Liquidator appointed
- Selling off assets and paying off debts
- Reports sent to Tribunal
This type of winding up is compulsory and it is due to bankruptcy, loss, death of the promoter, etc. Process of winding up can be started by the Tribunal or the shareholders.
Steps Involved
- Voluntarily Wind Up
- Board meeting
- Issuance notice for the meeting
- Passing of resolution
- Meeting for Creditors
- Appointment of Liquidator
- Notice of resolution in Official Gazette
- File certified copies of the resolution
- Winding up remaining affairs
- Final General meeting
- Resolution for final disposal of books and papers of the company
- Within 2 weeks file a copy of accounts and application to Tribunal for closure
- If the Tribunal is satisfied then the order is passed within 60 days.
- Liquidator files a copy of the order with Registrar.
- Publishing of dissolution in the official Gazette.
Company’s shareholders can initiate a voluntary wind up by passing a resolution. It can due to a number of reasons like inactive company, insolvency, etc.
Steps Involved
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