Winding Up

Submitted By: Group 6

U112111:Siddharth Grover U112112:Soumya Ranjan Sahoo U112113:Sreenesh Bhatt U112114: Sujit Kumar Routray U112115:Swetali Kar U112116:Uttam Kumar Tiwari U112117:Varun Didwania U112118:Venkat Agrawal U112119:Vidit Mediratta U112120:Yogesh Puneeth V

Companies Act,1956

Winding Up-Meaning
Definition:

The process of selling all the assets of a business, paying off creditors, distributing any remaining assets to the principals or parent company, and then dissolving the business. Winding up can refer to such a process either for a specific business line of a corporation or to the dissolution of a corporation itself

Why is it Important?
Winding up is a process that initiates the process for dissolution of the company and finally leads to dissolution of the company whereby the company loses its legal personality and is no longer capable of functioning or being recognized as an entity

process or a tool in the hands of creditors

winding up is different from dissolution of company and it is winding up that leads to dissolution of the company

To ensure administration

proper

Modes of Winding Up
Section 425 states that winding up can be made by the following two modes:

Winding Up

Compulsory

Voluntary

Members Voluntary Winding Up

Creditors Voluntary Winding Up

Compulsory Winding Up
Also known as Winding Up by Tribunal as it takes place under the supervision of the Tribunal (Company law Tribunal) Circumstances
Special Resolution of the Company Default in Delivering the statutory report to Registrar Failure to commence/Suspension of business Reduction in Membership

Inability to pay its debts

Just and Equitable

Compulsory Winding Up(Contd..)

Presenting the Petition
Compulsory Winding Up can be initiated by presenting a petition by:
The company upon a special resolution passed for the same by the Board of Directors. The creditors of the company The contributory An appointed person or other members The Registrar The Central or State Government

Compulsory Winding Up(Contd..)

The Process
Filing of Petition

Order Winding Up

Dismiss Petition

send a notice to the Official liquidator

the Liquidator shall take charge of the company and carry out the winding up process

Voluntary Winding Up
Winding up process is initiated and carried out without the intervention of the tribunal Two modes:

Voluntary Winding Up
Members Creditors

Voluntary Winding Up(Contd.)

Generally initiated when the company is unable to run or for any other reason that members choose to wind up the company Process:
ordinary resolution Initiated By special resolution
passed in case the company is unable to pay the debts prescribed period for running the company prescribed by the articles of Association has ended or objective to run the company no longer exists

Voluntary Winding Up(Contd.)

Member Voluntary Winding Up Winding Up Proceedings

Liquidator appointed Registrar informed to cease to function in company affairs

General Body Meeting and no debts declaration by Board of Directors

Liquidator calls meeting of members of the company Presentation on winding up procedure followed

Initiation

Complete Winding Up

Member Voluntary Winding Up(Contd..)

S448->Declaration of Solvency

S492->Appointment and Remuneration of liquidators

S491->Boards power to cease

S493->Notice of the appointment of the liquidator to be given to the registrar

S497->Power of liquidator to accept shares, etc., as consideration of sales of property of the company

S495->Duty of liquidator to call creditors meeting in case of insolvency

S496->Duty of liquidator to call general meeting at the end of each year

S497->Final meeting and dissolution

Voluntary Winding Up(Contd.)

Creditor Voluntary Winding Up Winding Up Proceedings

Creditor nominates Liquidator Liquidator given the charge to handle the company affairs Creditors may forma five member Committee of Inspection to supervise work of Liquidator

Members of the company propose winding up resolution Notice for a meeting sent to members and creditors

Liquidator calls meeting of members of the company Presentation on winding up procedure followed

Initiation

Complete Winding Up

Creditor Voluntary Winding Up(Contd.)

S501 Notice to registrar

S502 Appointment of liquidator

S503 Committee of inspection

S505 Fixing of liquidators remuneration

S505 Boards power to cease on appointment of liquidator

S508 Duty of liquidator to call meeting of company and creditors at the end of each year

S509 Final meeting and dissolution

Defunct Company
Means a company which has never commenced business or which has ceased to carry business The most easy & shortest method for dissolving of any company Where the company is carrying on any business or operation, it can make any application to the Registrar of Companies for declaring it as defunct company Where the company is carrying on any business or operation, it can make any application to the Registrar of Companies for declaring it as defunct company For declaring a company defunct, the company is required to file an application to the Registrar of company supported by affidavit of Directors and balance sheet carrying NIL assets and liabilities The whole process of striking off takes around 3-4 months

Defunct Company(Contd.)
PROCESS FOR DISSOLUTION OF A DEFUNCT COMPANY (SECTION 560)
Sec 560 - Power of Registrar to strike defunct company off register

Where the registrar has reasonable cause to believe that a company is not carrying on business or in operation, he shall send to the company by post a letter inquiring whether the company is carrying on business or in operation.

If the Registrar does not within one month of sending the letter receive any answer thereto, he shall within fourteen days after the expiry of the month, send to the company by post a registered letter referring to the first letter, and stating that no answer thereto has been received and that, if an answer is not received to the second letter within one month from the date thereof, a notice will be published in the Official Gazette with a view to striking the name of the company off the register

If the Registrar either receives an answer from the company to the effect that is is not carrying on business or in operation, or does not within one month after sending the second letter receives any answer, he may publish in the Official Gazette, and send to the company by registered post, a notice that at the expiration of three months from the date of that notice, the name of the company mentioned therein will unless cause is shown to the contrary, be struck off the register and the company will be dissolved