Winding Up of a Company in India

Q: How to close a company in India?

Closing a company in India involves: Voluntary winding up (initiated by members/creditors) Compulsory winding up (by NCLT order) For defunct companies, a simplified Fast Track Exit (FTE) scheme. The specific process (mentioned earlier in the “How to Wind Up a Company” section) depends on the company's financial status and activity level.

Q: What are the types of winding up of a company?

There are three main modes of winding up: Compulsory Winding Up (by the Tribunal), Voluntary Winding Up (by members or creditors), and Winding Up Subject to the Supervision of the Court.

Q: Who can apply for the winding up of a company?

A petition for winding up can be filed by the company itself, its creditors, shareholders (contributories), the Registrar of Companies (ROC), or the Central/State Government.

Q: How Long Does It Take to Wind Up a Company?

The timeline varies: Voluntary liquidation under IBC typically takes 6-12 months. Compulsory winding up by the Tribunal can extend to 2 years or more. Fast Track Exit can take 60-90 days.

Q: What happens to employees during winding up?

Employees are generally made redundant when a liquidator is appointed. Their unpaid wages, severance pay, and other entitlements are treated as priority claims during asset distribution. Provident funds and gratuity are protected and should be paid.

Q: What is winding up under Section 271?

Section 271 of the Companies Act, 2013, specifies the circumstances under which a company may be wound up by the Tribunal (NCLT). Grounds include inability to pay debts, special resolution by the company, acting against national interests, fraudulent conduct, or default in filing financial statements for five consecutive years.

Q: What is the difference between liquidation and winding up?

Winding up is the entire process of closing a company. Liquidation is a specific activity within winding up, involving the sale of assets to settle debts.

Q: What Is the Difference Between Winding Up and Dissolution?

Winding up is the process of settling a company's affairs. Dissolution is the final act where the company's legal existence ends, and its name is removed from the register. Winding up leads to dissolution.

Q: Can a Pvt. Ltd. company be closed?

Yes, a Private Limited (Pvt Ltd) company can be closed through various methods, including voluntary striking off (Fast Track Exit), voluntary liquidation under IBC, or compulsory winding up by the Tribunal.

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Frequently Asked Questions (FAQs)

Why Does a Company Wind Up?

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Companies wind up for various reasons, including inability to pay debts, completion of a project, strategic decisions by shareholders, fraudulent activities, or consistent failure to file annual returns.

How to close a company in India?

What are the types of winding up of a company?

Who can apply for the winding up of a company?

How Long Does It Take to Wind Up a Company?

What happens to employees during winding up?

What is winding up under Section 271?

What is the difference between liquidation and winding up?

What Is the Difference Between Winding Up and Dissolution?

Can a Pvt. Ltd. company be closed?

Which companies are winding up?

Are directors liable for winding up?

What is a voluntary winding up of a company?

What are the consequences of winding up a company?

What are the grounds for winding up a company?

Why Choose Registerkaro for Winding Up a Company?

Here’s why many businesses trust RegisterKaro for a smooth and compliant closure:

Complete Winding-Up Support: From board resolutions to final ROC filings, we manage the entire process, be it striking off, voluntary liquidation, or tribunal-led closure.
IBC & NCLT Expertise: Our team is well-versed in IBC guidelines and NCLT procedures, ensuring legal accuracy and faster outcomes.
Clear Process & Timelines: No hidden steps, just a transparent, step-by-step roadmap with realistic timelines you can count on.
Legal Risk Mitigation: We help prevent personal liabilities, tax defaults, and documentation gaps, safeguarding directors and stakeholders.
Experienced Legal Team: Benefit from the guidance of professionals who have successfully handled hundreds of closures across India.
Post-Closure Assistance: Need help with tax clearance, NOC follow-ups, or final audits? We’re with you till the very end.

Why Choose Registerkaro for Winding Up a Company?

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