Voluntary winding up of a company

Company Registration in Bangalore – Voluntary winding up of a company is mentioned below in this article. I hope this article will help to found the right solutions on your related queries on the Voluntary winding up of a company.

A company may be wound up voluntarily if-

  • A resolution passes during the company general meeting requires the company to be wound up voluntarily as a result of the expiry of a period for its duration, if any, fixed by the articles or the occurrence of any event with respect to the articles provide that the company has to be dissolved; or
  • If the company produces a special resolution that the company is wound up voluntarily.

Declaration of solvency in case of a proposal to wind up voluntarily

If it is proposed to wind up a company voluntarily, its directors or director, or in the case of company has more than two directors, the majority of its directors, at a meeting of the board, makes a declaration verified by an affidavit to the effect that they have been made a full inquiry in to the affairs of a company and they form an option that the company has no debts and if it is able to pay its debts in full from the proceeds of assets which is sold in voluntary winding up.

A declaration made under sub-section (1) shall have no effect for the purposes of this act, unless-

  • It is created within five weeks immediately preceding the date of the passing of the appropriate resolution for winding up the company and it is transmitted to the registrar for company registration before that date;
  • It contains a declaration that the company is not being wound up to defraud any person or person;
  • It is associated with a copy of the report of the auditors of the company which is prepared in accordance with the provisions of this act, on the profit and loss account of the company for the period starting from the date up to which the last such account was prepared and ending with the latest practicable date immediately before the producing of the declaration and the balance sheet (credit benefits ) of the company passed out as on that date which would also contain a statement of the assets and liabilities of the company on that date accordingly; and
  • Where there are any assets (or properties) of the company, it is associated with a report of the valuation of the assets of the company prepared by a registered valuer.
  • Where the company is wound up in accordance of a resolution passed within a specified period of five weeks after the producing of the declaration, but its debts are in absence of paying or given for in full, it shall be assumed, until the contrary is shown, that the director or directors did not have reasonable grounds for his or their opinion under sub-section (1).
  • The company director makes a declaration under section without having any reasonable grounds for the opinion that the company may able to pay its debts in full from the assets which are to be sold in voluntary winding up has to be punishable with imprisonment for a term which should not be less than years but it could have extended to five years or with fine which should not be less than fifty thousand rupees but that may extend to three lakh rupees or with both.

Meeting of creditors:

The company shall accompanied with the calling of meeting of the another company at which the special resolution for the voluntary winding up is to be proposed, create a meeting of its creditors either on the same day or on the next day and shall make a notice of such meeting to be sent by registered post to the appropriate creditors with the notice of the meeting of that company under section 304 of the Companies Act, 2013.

The board of directors of the company shall-

  • Cause to be presented a full statement of the position of the affairs of the company together with the list of creditors of the company, if any, the copy of a declaration under section 305 and the estimated amount of the claims before such meeting; and
  • Appoint one of the directors to head position at the meeting for the required company;

In the creditors of a company, two thirds in the value of the company and are of the opinion that-

It is in the individual interest of all members that the company be wound up voluntarily, the company shall be wound up voluntarily; or

The company may be in a situation that it cannot able to pay for its debts in full from the proceeds of assets which have been sold in voluntary winding up and pass a resolution that may be in the interest of all the parties if the company is wounding up by the tribunal accordance with the provisions, the company within fourteen days and after that file an application before the tribunal.

The notice of any resolution passed at a meeting of creditors in pursuance shall be given by the company to the registrar within ten days of the passing thereof.

If the provisions contravened by a company, then the particular company will be punished with a fine amount which wouldn’t be less than fifty thousand rupees but that could extend to two lakh rupees and the directors of a company who is in default may be punishable with the imprisonment for a period that may extend up to two lakh rupees and the directors of the company who is in default may be punishable with the imprisonment for a term may extend to six months or with fine that should not be less than fifty thousand rupees but which may extend up to 2 lakh rupees or with both.

Publication of resolution to wind up voluntarily:

Where a company has passed a special resolution for voluntary winding up and a special resolution under sub-section (3) of section 306 is produced, it shall within fourteen days of the passing of the resolution provide notice of the resolution by advertisement in the district where the registered office or the principal office of the company is situated.

If the provisions are contravened by a company under the sub-section(1), the company and the officer of the company who is in default will be punished with a fine amount, that may extend to five thousand rupees for each day during which default continues.

Commencement of voluntary winding up:

A voluntary winding up shall be deemed to start on the date of passing of the resolution for voluntary winding up under section 304.

Effect of voluntary winding up:

In, voluntary winding up, the company from the commencement of the winding up cease to carry its business except as far as required for the beneficial winding up of its business:

The corporate state and the powers of the company may continue until it is dissolved.

Appointment of company liquidator:

In a general meeting of a company, when the resolution of a voluntary winding up is passed may appoint a company liquidator from the panel which is prepared by the central government for the purpose of winding up its affairs and distribution of the assets of the company and recommend the fee to be paid to the company liquidator.

The creditors passed a resolution for winding up the company under sub-section(3) of section 306, the appointment of the company liquidator may be effective only after it has been approved by the majority of the creditors in the value of the company;

Provided that where such creditors do not approve the appointment of such company liquidator, creditors shall appoint another company liquidator.

The appointment of company liquidator will be approved by the creditors and that is approved by the company or appointing the company liquidator of their own choice as the case may be, the suitable resolution has to be passed with regard to the fee of the company liquidator.

The appointment of a natural person as company liquidator, such liquidator shall have a declaration in the prescribed form within seven days of the date of appointment disclosing critical of individual interest or not awaking of independence in respect of his appointment, if any, with the company and the creditors and such obligation, shall continue throughout the term of his or its appointment.

Power to reject and appoint the vacancy of company liquidator:

A company liquidator shall be appointed under section 310 may be removed by the company where his appointment has been provided by the company and, by the creditors, where the appointment is approved or made by such creditors.

Where a company liquidator is sought to be removed under this section, he shall be given a notice in writing stating the grounds of removal from his own registered office by the appropriate company or the concerned creditors, as the case may be.

If three fourth members of the company or three fourth of creditors in value, as the case may be, after the consideration, if any of that filed by the company liquidator in their meeting decides to remove the company liquidator, he may vacate his office.

If a vacancy occurs by resignation, removal, death or otherwise in the office of any company liquidator appointed under section 310, the creditors or the company, as the case may be, fill the vacancy in a manner specified in that section.

Notice of appointment of company liquidator

The company would give the notice to the registrar for the appointment of a company liquidator along with the name and particulars of that particular company liquidator, each and every vacancy occurring in the office of the company liquidator and the name of the company liquidator appoints to fill such vacancy within ten days of such appointment or the occurrence of such vacancy.

Final meeting and dissolution of the company

  • As soon as the affairs of the company are fully wound up, the company liquidator shall prepare a report of the winding up showing that the property and assets of the company have been removed of and its debt fully discharged or discharged to the satisfaction of the creditors and thereafter call a general meeting of the company for the usage of situating the final winding up accounts before it and giving any explanation therefor.
  • The meeting referred to in sub-section (1) shall be called by the company liquidator in such form and manner as may be prescribed.
  • The majority members of the company after considering the report of the liquidator is satisfied that the company may wound up, and a resolution may be passed for dissolution.
  • Within two weeks after the meeting, the company liquidator shall-
    • Send to the registrar-
      • A copy of the final winding up accounts of the company and shall make a return in respect of each meeting and of the date thereof; and
      • Copies of the resolutions passed in the meetings; and
  • File an application along with his report under sub-section(1) in such manner as may be prescribed along with the books and papers of the company relating to the winding up, before that the tribunal for producing a special order of dissolution of the company.
  • If the tribunal is satisfied, after taking the report of the company liquidator that the process of winding up has been just and fair, the tribunal shall produce a special order produced to the company within sixty days of the receipt of the application under sub-section (4).
  • The company liquidator shall file a copy of the order under sub-section (5) with the registrar within thirty days.
  • The registrar, on receiving the copy of the order passed by the tribunal under sub-section (5), shall forthwith publish a notice in the official gazette that the company is dissolved.
  • If the company liquidator absences to accompanied with the provisions of this section, he shall be punishable with fine which may extend to one lakh rupees.

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