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Winding Up - Company
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Winding up of a Company
Winding up is the liquidation of Company’s assets which are collected and sold in order to pay the debts incurred. When the company winding up takes place firstly the debts, expenses and costs are paid away and distributed among the shareholders.
Once the Company is liquidated it is formally dissolved and the Company ceases to exists.
Winding up is the legal mechanism to shut down a company and cease all the activites that re carried on . After the Company winding up the existence of the Company comes to an end and the assets are monitored so that the stakeholders interest is not hampered.
A Private Limited Company is an artificial judicial person and requires various compliances if the company fails to maintain these compliances there are fines and penalties or even disqualification of the Directors from further incorporating a Company. It is always a better to wind up a company that has become inactive or where there are no transaction.
Types of Company windup
What are the different ways in which an individual can windup a Company?
A company can be wound up in two different ways-
- Voluntary winding up of a Company
- Compulsory winding up of a company
1. Voluntary Winding up of a Company
The Winding up of a Company can be done voluntarily by the members of the Company, if :
Procedure for Voluntary winding up of a Company
2. Compulsory winding up of a Private Limited Company
Tribunal is responsible for this kind of wind up of Companies.
Here are the reasons for the same:
Procedure for compulsory winding up of a Company
Step:1 Is to File a petition to the tribunal along with the statement of the affairs of the Company that is to wind up.
Step:2 The tribunal will either accept or reject the petition if the person other than company files a petition then the tribunal may ask the company to file objection. it goes along with the statement of affairs within 30 days.
Step:3 Liquidator needs to be appointed by the tribunal for the winding up process. The liquidator carries out the function of assisting and monitoring the liquidation proceedings.
Step:4 Liquidator is supposed to prepare a draft report for approval. when the draft report gets approved he shall submit the final report to the tribunal for passing the winding up order.
Step:5 It is necessary of the liquidator to forward a copy to the ROC within 30 days,If he fails to do so then he will get a penalty.
Step:6 If the ROC finds the draft satisfactory he then approves the winding up of the Company and the name of the Company is striked from the register of Companies.
Step:7 ROC sends notice for Publication in the official gazette of India