How to Close a Private Limited Company?
In simple terms, the winding up of a company refers to the process of putting an end to the life of the company. A proceeding by which the company is dissolved wherein the assets are disposed of debts are paid and if there is any surplus it is distributed to the shareholders in proportion of their holding. While winding up, the company ceases all its business activities.
Winding up can be compulsory or voluntary and can apply to publicly and privately held companies.
TYPES OF COMPANY WINDUP
1.Voluntary winding up of a company
2.Compulsory winding up of a company
1.VOLUNTARY WINDING UP OF A COMPANY
The Winding-up of a Company can be done voluntarily by the members of the Company, if:
The company passes a special resolution for winding up the Company.
The Company in general meeting passes a resolution which requires a company to wind up voluntarily because of the expiry of the period of its duration, and as per the Articles of Association or on the occurrence of any event in respect of which the articles of association provide that the company should be dissolved.
Procedure for voluntary winding up of a company-
In order to voluntarily wind up a company, the provisions of the COMPANIES ACT 2013 must be followed.
Ø Firstly, the organization must conduct a board meeting, wherein the directors must ensure if there are any non-existing third-party debts are to be paid off.
Ø Next the company must conduct a general meeting for the shareholders followed by the passage of a special resolution with a simple or special majority of 3/4th members.
Ø Followed by a creditor meeting wherein their opinions is taken into consideration as to whether the winding up of a company would be beneficial or not.
Ø Within 10 days, the company files a notice to the Registrar of Companies in order to appoint for an official liquidator to carry out the liquidation process as well as prepares a report of the winding-up assets and properties and kept forward in the general meeting for company’s approval for the dissolution.
Ø Next the official liquidator submits a copy of the company's final accounts along with the resolution to the Registrar of Companies.
Ø Within 14 days, the company submits a notice regarding the winding up of a company to the official gazette of India to advertise and publish through the newspapers.
Ø The official liquidator files an application with the tribunal and if satisfied, he passes an order for the winding up of a company within 60 days of application and the final copy is filed with the Registrar of Companies following the order received from the tribunal publishes a notice in the official gazette declaring that the company has been dissolved.
2.COMPULSORY WINDING UP OF A COMPANY
Tribunal (Court) is responsible for this kind of wind up of Companies. Here are the reasons for the same:
Unpaid debts of a Company
When a special resolution is passed for winding up
An unlawful act by a company or the management of the Company
If the company is involved in fraudulent acts or misconduct
If the annual returns or financial statements are not filed for five consecutive years with the ROC
The Tribunal is of the view that the company should windup.
Procedure for compulsory winding up of a company-
The company must file a petition to the tribunal along with the statement of affairs to dissolve the company.
Within 30 days the tribunal will either accept or reject if the person other than the company files a petition then the tribunal may ask the company to file for an objection.
Next, the liquidator is appointed by the tribunal to help in completing the liquidation procedures as well as prepares a report of the winding-up assets and properties and kept forward in the general meeting for the company’s approval for the dissolution.
The official liquidator must submit a copy to the Registrar of Companies within 30 days to avoid penalty.
If ROC is satisfied, then the company name is struck off from the register followed by a publication in the official gazette of India.