Winding up of a company is defined as a process by which the life of a company is brought to an end and its property administered for the benefit of its members and creditors. A liquidator is appointed and he takes control of the company, collects its assets, pays debts and finally distributes any surplus among the members in accordance with their rights. At the end of winding up, the company will have no assets or liabilities. When the affairs of a company are completely wound up, the dissolution of the company takes place. On dissolution, the company's name is struck off the register of the companies and its legal personality as a corporation comes to an end. When a company is wound up by the members or the creditors without the intervention of Tribunal, it is called as voluntary winding up. It may take place by:-
By passing an ordinary resolution in the general meeting if: - (i) the period fixed for the duration of the company by the articles has expired; or (ii) some event on the happening of which company is to be dissolved, has happened.
By passing a special resolution to wind up voluntarily for any reason whatsoever. Within 14 days of passing the resolution, whether ordinary or special, it must be advertised in the Official Gazette and also in some important newspaper circulating in the district of the registered office of the company.
The Companies Act (section 484) provides for two methods for voluntary winding up: 1.
Members voluntarily winding up
Creditors winding up
Members voluntarily winding up:
A Board Meeting is convened to transact the following business: (a) Making sure that the company can pay its debts in full within a period of three years if put into liquidation. (b) Declaration in Form No. 149 under Rule 313 of the Companies (Court) Rules, 1959, and verified by an affidavit, by the Directors sworn before a Judicial Magistrate on non-judicial stamp paper of Rs. 20/-. (c) The Declaration will be accompanied by:
i) The audited Balance Sheet and Profit & Loss Account commencing from the date of last audited balance sheet and profit and loss account and ending with the latest practicable date before the date of declaration. ii) A statement of the company’s assets and liabilities as at that date; and iii) A copy of the report of the auditors of the company on the above two documents. (d) Approve at the meeting the draft resolution for Member’s Voluntary Winding up and for appointing Liquidator and fix remuneration and also fix the date, time, place of the general meeting.
Copies of item (b) and (c) are filed and registered with the Registrar at least 5 weeks before the General Meeting.
Notice is issued for the general meeting proposing a Special Resolution, with suitable Explanatory Statement.
The General Meeting is held and Special Resolution is passed for winding up. The winding up commences from the time of passing the resolution.
Within ten days of passing of the resolution, notice is filed with the ROC for the appointment of the liquidator after paying the requisite fee.
A statement on the company’s affairs in Form No.57 in duplicate, duly verified by affidavit in Form No. 58 is submitted to the liquidator within twenty-one days of the commencement of winding up.
The Special Resolution passed for winding up is filed with the ROC within 30 days of its passing with requisite fee.
Within 14 days of passing the resolution for voluntary winding up, notice of the resolution is given by advertisement in the Official Gazette and also in some newspaper circulating both in English and the local language of the district where the registered office of the company is situated.
Simultaneously, the Liquidator has to publish in the Official Gazette the Notice of his appointment in Form No. 151 of Company Court Rules and file with Registrar the Notice of his Appointment in Form no. 152 of Company Court Rules.
Simultaneously, the Liquidator also has to...
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