Winding up is the liquidation of the Company’s assets which are collected and sold to pay the debts incurred. When the company winding up takes place firstly the debts, expenses, and costs are paid away and distributed among the shareholders.
Once the Company is liquidated it is formally dissolved and the Company ceases to exist.
Winding up is the legal mechanism to shut down a company and cease all the activities that are carried on. After the Company winds up existence the Company comes to an end and the assets are monitored so that the stakeholder’s interest is not hampered.
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.
A company can be wound up in two different ways-
Voluntary Winding up of a Company
The Winding up of a Company can be done voluntarily by the members of the Company, if :
Procedure for Voluntary winding up of a Company
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:
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
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.
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