Section 375: Winding Up Of Unregistered Company
Updated: May 9
Winding up is a process of putting an end to the life of a company. It is a proceeding by means of which a company is dissolved and in the course of such a dissolution its assets are collected. Its debts are paid off out of the assets of company or from the contributions of company. If any surplus is left that is distributed among the members. During the process of winding up the company still exists as has corporate powers until dissolution.
Provisions under Section 375 of Companies Act, 2013: Winding Up Of Unregistered Company
Subject to the provisions of this part, any unregistered company may be wound up under this Act, in such manner as may be prescribed, and all the provisions of this Act, with respect to winding up shall apply to an unregistered company, with the exceptions and additions mentioned in sub-sections (2) to (4).
No unregistered company shall be wound up under this Act voluntarily.
An unregistered company may be wound up under the following circumstances, namely:
(a) if the company is dissolved, or has ceased to carry on business, or is carrying on business only for the purpose of winding up its affairs;
(b) if the company is unable to pay its debts;
(c) if the Tribunal is of opinion that it is just and equitable that the company should be wound up.
4. An unregistered company shall, for the purposes of this Act, be deemed to be unable to pay its debts-
if a creditor, by assignment or otherwise, to whom the company is indebted in a sum exceeding one lakh rupees then due, has served on the company, by leaving at its principal place of business, or delivering to the secretary, or some director, manager or by otherwise serving in such manner as the Tribunal ma approve or direct, a demand under his hand requiring the company to pay the sum so due, and the company has, for three weeks after the service of the demand, neglected to pay the sum.
if any suit or other legal proceeding has been instituted against any member for any debt or demand due from the company, or from him in his character as a member, and notice in writing of the institution of the suit or other legal proceeding have been served on the company by leaving the same at its principal place of business or by delivering it to the secretary.
if execution or other process issued on a decree or order of any Court or Tribunal in favour of a creditor against the company, or any member thereof as such, or any person authorised to be sued as nominal defendant on behalf of the company, is returned unsatisfied in whole or in part;
if it is otherwise proved to the satisfaction of the Tribunal that the company is unable to pay its debts.