Winding up a Company
As per section 270 of the Companies Act, 2013 a company can be closed either by a tribunal or by way of voluntary winding up. The provisions of this act regulates the winding up of a company in India. The closing down of the company is the last stage of a companies existence. There can be many reasons for winding up of the company like mutual agreement among stakeholders, loss, bankruptcy, death of promoters, etc. Winding up of a company is the process through which a corporate entity is closed and it is the end of the company.The winding-up of the company can be done by different mechanisms, such as:
- Winding up by the court: One of the methods of winding up of a company is that of obligatory winding up by the order from the court. If the court founds that the company thus formed` is illegal or the activities being conducted by the company or organization are illegal or in case, if the company has been found violating any norms or regulations, then the court orders the winding of the company.
- Voluntary winding up: Sometimes the company might go for voluntary winding up of the company. The members, in this case, take a decision in the company meeting and if the decision is approved by the majority, and thus the resolution is passed for winding up the company.
- Creditors voluntary winding: Under this head, the creditors aim at winding up the company when they realize that the company can not pay its debt, therefore the creditors aim for winding the company by holding a meeting and passing a resolution with all the members of the company.
- Mostly the companies wind up because they are not able to pay the liabilities taken by them hence, they close the company because continuing with the company is no longer profitable.
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Procedure to wind up a company
- The petition will be filed
- The Company or
- The Trade Creditors of the Company or
- Any contributor or contributory
- The Central or State Government or
- By the Registrar of the Companies
- The petition shall be accompanied together with the Statement of Affairs of the Company
- Advertisement for at least 14 days: The Petition should be Advertised in a daily journal at least 14 days and the language of the advertisement should be in the Regional language (Regional Language of the area) and in English.
- Proceedings of the Tribunal: Form 11 need to be filed for the order of winding up the company. With the following details-:
- Balance sheet and the audit of the company
- The date, time and place for the Company Liquidator
- Surrender the assets and the documents of the assets.