If you’ve got a company in India that’s in the process of winding up, the procedure involves a shutdown of all the businesses, any exchange and auctioning to clear away the financial arrears. So, when all the obligations have been tied up, the remaining benefits of the business are then shared amongst the concerned investors based on the capital that they had invested. There are two ways to wind up a company, namely –
a. Mandatory Winding Up: This action is called for by either a council or a court, bypassing the unique resolutions made by the organisation’s executive gathering, which has proposed a court intercession. If the business or the company has indulged in any unlawful activity, it will be forced to wind up.
b. Wilful Winding Up: In this case, the founders of the company would want to consciously close down the company and auction the wealth and assets of the organisation or even move the stakes to another company.
Voluntary Winding Up Of A Company
The voluntary winding up of a company takes place when it can’t release its liabilities. To see it through, a resolution is passed to initiate the wind up strategy. A notification expressing the wind up is sent to all creditors and parties involved in the company. When the undertakings are wrapped up, the liquidator will apply with NCLT for its disintegration along with the final report. The last report will comprise evaluated liquidation records and proclamations indicating the subtleties of the discarded resources and even mentioning how they were sold. When the final report is submitted, the NCLT will pass on this request for disintegration and the company will stand closed down from this date of the NCLT request. A duplicate of this request should be sent to the ROC within 14 days of when the request was passed.
Compulsory Winding Up Of The Company
A firm or a company might be asked to wind up if it is deemed as bankrupt, or when some circumstance has made it unlawful for the business to continue or even when some event has taken place which makes it illicit for the firm to continue.
Dissolution By Court: A partnership firm or even an organisation can get a dissolution by the court if it carries out its business by working with individuals regardless of being friends or relatives, and in situations when one or more partners may find it eligible under their circumstances to continue.
Compulsory winding up of a company Because Of Mental Instability: If a firm has an accomplice who is intellectually weakened or unable to manage the tasks at hand because of mental unsteadiness, a case can be made stating the sickness or insufficiency of an accomplice which could lead to winding up of the business.
Because Of Misconduct: If an accomplice of the firm has taken an interest in wrongful behaviour or is no longer sticking to the agreement of the firm for certain behaviours, they can be expelled through a legal dispute. If the accomplice has been cautioned multiple times and still doesn’t pay attention to it, the procedure is managed in court. The firm might be broken up through the court’s obstruction.
Advantages of Winding Up Of A Company
- No obligations after liquidation: Once the company is liquidated, all the organisation authorities are liberated from any lease liabilities and burdens.
- No lawsuit against the organisation: The company can evade a lawsuit and the executives can focus on other business openings instead.
- Low price for liquidation: The costs required for a liquidation procedure are low as the charges will be applicable on the offer.
- All lease/rent contracts are dropped: If the company owes rent, during the liquidation period, it will send all the terms of the rent. If there is any penalty, it will be deducted from the offer of assets.
- Favourable circumstances for loan lenders: Over here, banks will be at an advantage by the liquidation procedure as they will be qualified for a default instalment.
Procedure before winding up a company
Before winding up a company, you will need to do the following:
- Have executive meetings to authorize the winding up the company
- Initiate a regular gathering to pass a goal on the closing down process
- Assign an official liquidator or bankruptcy expert
- Acquire the NOC