VOLUNTARY WINDING UP OF A COMPANY

The Companies Act, 2013 has largely replaced the Companies Act, 1956 but many of its provisions
have not as of yet been notified. Thus, where such notification is absent the previous company laws
still apply. Thus, Voluntary Winding Up of a Company is still governed by the Companies Act,
1956.
S.484 of the Companies Act, 1956 (hereinafter referred to as the 1956 Act) deals with the
circumstances under which a company may be wound up voluntarily. As per s. 484 (1)(b) states that
the company can pass a special resolution so that the said company may be wound up voluntarily.
When a company has passed a resolution for voluntary winding up, it shall, within fourteen days of
the passing of the resolution, give notice of the resolution by advertisement in the Official Gazette,
and also in some newspaper circulating in the district where the registered office of the company is
situated.1

The Procedure for the same is as follows1. To convene a Board Meeting:

(a) To make a declaration of solvency2 in Form 149 under Rule 313 of the Company Court
Rules, 1959.
Such Declaration can be made only if Directors are of the opinion that company has no
debts or will pay its debts within 3 years.
It should be signed by directors or majority of Directors of the company.
The same should be verified by affidavit.
It should be made 5 weeks preceding the date of the passing of the resolution for
winding up.3
Declaration should be accompanied by :
Audited Balance Sheet and Profit & Loss account as on the nearest practicable date
before declaration & Auditors Report thereon.

1 S. 485 of the Companies Act, 1956

2 S.488 of the Companies Act, 1956

3 S.488 (2)(a) of the Companies Act, 1956

Resolve that the company will be wound up under S. 484 of the Companies Act, 1956 and
the same shall be notified in the official gazette as per S.485 of the Companies Act, 1956.

(b) Approval of the draft declaration and affidavit.

(c) Authority to the director to sign and deliver the declaration to the RoC (Registrar of
Companies) before the date of passing the resolution.
(d) The draft resolution has to be approved in order to be passed during a meeting of the
Shareholders.
(e) To appoint liquidator (s) and fix their remuneration.4
-One or more person can be appointed as liquidator.
-Body corporate cannot be appointed, however, body corporate of professionals as
approved by Central Govt. can be appointed.
-CA firm can be appointed as liquidator.
-The remuneration fixed by the members in meeting cannot be increased.
(g) To fix date, time and venue for holding General Meeting and approve the draft notice.

To issue notice for General Meeting.

2. To file the declaration duly verified by an affidavit before a Judicial Magistrate with concerned
ROC before the date of General Meeting in E-Form GNL-2.
3. To hold General Meeting and pass Ordinary or Special Resolution as applicable.
(a) For winding up5 (b) For appointment of liquidator6
1

To forward copies of notices and proceedings of general meeting to Stock Exchange promptly
(if applicable).

4. To file notice for the appointment of the liquidator within 10 days from the date of passing of
Resolution of winding up to the Registrar of Companies (E-Form GNL-2).

4 S. 490 of the Companies Act, 1956

5 S.484 of the Companies Act,1956

6 S. 490 of the Companies Act, 1956

The vacancy in the office of the liquidator will be filled by company in its general meeting 7 and
fresh notice will be given to ROC within 10 days of such appointment8.

5. To submit a statement of affairs of the company in Form-57 duly verified by Affidavit in Form58 within 21 days of commencement of winding up to the liquidator.9

The Statement of Affairs primarily includes :-

Assets, liabilities and debts

Name, address and other particulars of creditors, secured and unsecured. In case of
secured creditors the nature of security be mentioned.

Details of debts due to company.

To file E-Form-MGT-14 for Ordinary / Special Resolution passed in General Meeting with the
ROC within 30 days from the date of passing Special Resolution.

6. To give notice of Special Resolution passed through an advertisement in Official Gazette and
also in newspaper within 14 days of passing of resolution.10
7. To forward six copies of notice of Resolution advertised as above with the Stock Exchange.
8. Once the Company has appointed liquidator, the powers of Board of Directors, Managing
Director, and Manager, shall cease to exist.11
9. The liquidator is generally given a free hand, to carry out the winding up procedure, in such a
manner, as he thinks best in the interest of creditors, and company.
10. In case, the winding up procedure, takes more than one year, then liquidator will have to call a
general meeting, at the end of each year, and he shall present, a complete account of the

7 S. 492 of the Companies Act, 1956

8 S. 493 of the Companies Act, 1956

9 S. 454 of the Companies Act, 1956

10 S. 485 of the Companies Act, 1956

11 S.491 of the Companies Act, 1956

procedure, and position of liquidator in Form 153 and verified by an affidavit by way of Form
154.12
11. The liquidator shall take the following steps, when affairs of the company are fully wound up13 :

Call a general meeting by giving notice in Form 155 of the members of the company,
and lay before them, a complete picture of the accounts, winding up procedure and how
the properties of the company are being or have been disposed of i.e., prepare
Liquidators Account of winding up in Form 156 and have the same audited.

The meeting shall be called by advertisement, specifying the time, place and object of
the meeting. The same notice is to be given in Form-155 not less than one month
before the meeting.

The liquidator shall send to, the Registrar and official Liquidator copy of account,
within one week of the meeting in Form-157 on stamp paper.

In case quorum is not present in the final meeting, file Form-158 with the RoC and the
Official Liquidator

If from the report, official liquidator comes to the conclusion, that affairs of the
company are not being carried in manner prejudicial to the interest of its members, or
public, then the company shall be deemed to be dissolved from the date of report to the
court.

However, if official liquidator comes to a finding, that affair have been carried in a
manner prejudicial to interest of member or public, then court may direct the liquidator
to investigate further.

12 S. 496 of the Companies Act, 1956

13 S. 497 of the Companies Act, 1956