Section 270 Companies Act 2013: Winding up by the tribunal

Section 270

Definition and Meaning

Winding up of a company is the process through which a company’s existence and operations comes to an end. Its property is evaluated at realisable value and distributed to the beneficiaries like its members and creditors.

A Liquidator is appointed to take control of the company who realises its assets, pays all its outstanding demands and finally distributes any surplus remained among the beneficiary members in proportion to their rights.

SECTION 270. MODES OF WINDING UP

Effective from 15th December, 2016

[1] The provisions of Part I shall apply to the winding up of a company by the Tribunal under this Act

Companies (Winding Up) Rules, 2020

Rule 2. Definitions.—In these rules, unless the context or subject matter otherwise requires, –

(a) “Act” means the Companies Act, 2013 (18 of 2013);

(b) “Form” means a Form annexed to these rules;

(c) “Registrar” means the Registrar of the National Company Law Tribunal or National Company Law Appellate Tribunal and includes such other officer of the Tribunal or Bench thereof to whom the powers and functions of the Registrar are assigned;

(d) “Registry” means the Registry of the Tribunal or any of its Benches or of the Appellate Tribunal, as the case may be, which keeps records of the applications and documents relating thereto;

(e) “Section” means section of the Act;

(f) words and expressions used and not defined in these rules but defined in the Act shall have the meanings respectively assigned to them in the Act.

Section 270. Modes of winding up.—

(1) The winding up of a company may be either—

(a) by the Tribunal; or

(b) voluntary.

(2) Notwithstanding anything contained in any other Act, the provisions of this Act with respect to winding up shall apply to the winding up of a company in any of the modes specified under sub-section (1).

Petition for Winding up

Subject to the provisions of Section 272, a petition to the Tribunal for the winding up of a company shall be presented by:

1] The Company;

2] Any creditor or creditors, including any contingent or prospective creditor or creditors;

3] Any contributory and contributories;

4] All or any of the persons specified in clauses (a), (b) and (c) together;

5] The Register;

6] Any person authorised by the Central Government in that behalf.

Powers of Tribunal

The Tribunal may, on receipt of a petition for winding up under section 272 pass any of the following orders, namely:

1] Dismiss it, with or without costs;

2] Make any interim order as it thinks fit;

3] Appoint a provisional liquidator of the company till the making of a winding up order;

4] Make an order for the winding up of the company with or without costs; or

5] Any other order as it thinks fit.

Voluntary Winding up of a company

The company can be wound up voluntarily by the mutual decision of members of the company, if:

1] The company passes a Special Resolution stating about the winding up of the company;

2] The company in its general meeting passes a resolution for winding up as a result of expiry of the period of its duration as fixed by its Articles of Association or at the occurrence of any such event where the articles provide for dissolution of company.

Steps for Voluntary Winding up of a company

The company can be wound up voluntarily by the mutual decision of members of the company, if:

1] Convene a Board Meeting with two Director or by a majority of Directors. Pass a resolution with a declaration by the Directors that they have made an enquiry into the affairs of the Company and that, having done so, they have formed the opinion that the company has no debts or that it will be able to pay its debts in full from the proceeds of the assets sold in voluntary winding up of the company. Also, fix a date, place, time agenda for a General Meeting of the Company after five weeks of this Board Meeting;

2] In the General Meeting, pass the ordinary resolution for winding up of the company by ordinary majority or special resolution by 3/4 majority. The winding up of the company shall commence from the date of passing of this resolution;

3] On the same day or the next day of passing of resolution of winding up of the Company, conduct a meeting of the Creditors. If two thirds in value of creditors of the company are of the opinion that it is in the interest of all parties to wind up the company, then the company can be wound up voluntarily. If the company cannot meet all its liabilities on winding up, then the Company must be wound up by a Tribunal;

4] Within 10 days of passing of resolution for winding up of company, file a notice with the Registrar for appointment of liquidator;

5] Within 14 days of passing of resolution for winding up of company, give a notice of the resolution in the Official Gazette and also advertise in a newspaper with circulation in the district where the registered office is present;

6] Within 30 days of General Meeting before winding up of company, file certified copies of the ordinary or special resolution passed in the General Meeting for winding up of the company;

7] Wind up affairs of the company and prepare the liquidators account of the winding up of the company and get the same audited. Call for final General Meeting of the Company;

8] Pass a special resolution for disposal of the books and papers of the company when the affairs of the company are completely wound up and it is about to be dissolved;

9] Within two weeks of final General Meeting of the Company, file a copy of the accounts and application to the Tribunal for passing an order for dissolution of the company. If the Tribunal is satisfied, the Tribunal shall pass an order dissolving the company within 60 days of receiving the application. The company liquidator would then file a copy of the order with the Registrar;

10] The Registrar, on receiving the copy of the order passed by the Tribunal then publishes a notice in the Official Gazette that the company is dissolved.