A Private Limited Company is an artificial judicial person and requires various compliances if the company fails to maintain these compliances there are fines and penalties or even disqualification of the Directors from further incorporating a Company. It is always better to wind up a company that has become inactive or where there is no transaction.

The shareholders of the Company can initiate the winding up of the company anytime. If there are secured or unsecured creditors or employees on a roll then all the dues need to be settled. After settling the dues it is necessary to close all the company bank accounts. The GST registration must also be surrendered in case of Company wind up.

Once all the registration is surrendered the winding-up application petition can file with the Ministry of corporate affairs.

Types of Company windup

What are the different ways in which an individual can wind up a Company?

A company can be wound up in two different ways-

• Voluntary winding up of a Company
• Compulsory winding up of a company

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 that requires a company to wind up voluntarily as a result 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

• Convene a board meeting with the Directors in which a resolution should be passed with a declaration by the directors that they have inquired into the affairs of the Company and the company has no debts or the Company will pay from the proceeds of the assets sold in the voluntary wind up of the company.
• Notices should be issued in writing to call for the general meeting of the Company proposing the resolutions, with a suitable explanatory statement.
• Pass the ordinary resolution for winding up of the Company in the general meeting by ordinary majority or special resolution by 3/4 majority. The Winding up of the Company shall commence from the date of passing the resolution.
• A meeting of the creditors should be conducted on the same day or the next day of passing the resolution regarding winding up. If the 2/3rd value of the creditors thinks that it is in the interest of all parties to wind up the Company, then the Company can wound up voluntarily.
• Within 10 days of passing the resolution for the company winding up, a notice for the appointment of a liquidator must be filed with the registrar.
• Within 30 days of the general meeting for the winding up the certified copies of the ordinary or special resolution passed in the general meeting for the winding up of the Company.
• The affairs of the company need to be winded up and prepare the liquidator’s account of the Winding up account to get it audited.
• Call for the final General meeting of the Company.
• A special resolution should be passed for the disposal of the books and the papers of the company when the affairs of the company are completely wound up and it is about to be dissolved.
• Within two weeks of the general meeting of the Company, file a copy of the accounts and apply to the tribunal for passing an order for the dissolution of the company.
• The tribunal shall pass an order dissolving the company within 60 days of receiving the application.
• The company liquidator is required to file a copy of the order with the registrar.
• The registrar will then on receiving the copy of the order passed by the Tribunal then publish a notice in the official gazette that the Company is dissolved.

Compulsory winding up of a Private Limited Company

The tribunal 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 wind up.

Procedure for compulsory winding up of a Company

Step 1 Is to File a petition to the tribunal along with the statement of the affairs of the Company that is to wind up.

Step:2 The tribunal will either accept or reject the petition if a person other than the company files a petition then the tribunal may ask the company to file an objection. it goes along with the statement of affairs within 30 days.

Step 3 Liquidator needs to be appointed by the tribunal for the winding up process. The liquidator carries out the function of assisting and monitoring the liquidation proceedings.

Step 4 Liquidator is supposed to prepare a draft report for approval. when the draft report gets approved he shall submit the final report to the tribunal for passing the winding-up order.

Step:5 The liquidator must forward a copy to the ROC within 30 days, If he fails to do so then he will get a penalty.

Step:6 If the ROC finds the draft satisfactory he then approves the winding up of the Company and the name of the Company is struck from the register of Companies.

Step:7 ROC sends a notice for Publication in the official gazette of India

Top reasons why companies wind up

What are the top reasons why Companies wind up?

A private Limited Company is a legal entity established under the Companies Act. Therefore, a company is required to maintain regular compliance throughout the life cycle.The process of winding up is for a company that is not active and avoids compliance responsibilities.

A company can also be closed by applying with the ministry of corporate Finance in about 3 to 6 months. This process can happen online entirely. The process for closing a company is fast and easy if done through Tracequality.

If a company doesn’t file the compliances on time incurs a fine and penalty including debarring the Directors from starting another Company. In that way, it is better to wind up an inactive company and avoid potential fines or liability in the future.

As compared to the maintenance of compliances for a dormant company it is actually to wind up a company again when the time is right. With Tracequality winding up it can be done just at Rs.15899

A company that maintains proper compliance can be liquidated easily. In case of any over-dues of compliances, it is necessary to regularize them first. However, it is to be noted that all the registrations aslo need to be surrendered.