Winding Up - Company
Company winding up, or liquidation refers to the formal process through which a company concludes its operations, ultimately leading to its dissolution. This process entails the systematic closure of the company's affairs, including the sale of assets, settlement of debts from the proceeds, and distribution of any remaining surplus to the shareholders according to their stake in the company. The initiation of winding up occurs either by a court order or through a voluntary resolution passed by the company. Once the winding-up proceedings are complete, the company is officially dissolved and ceases to exist, marking the end of its corporate existence through this legal procedure.
What is the Winding Up of a Company?
The term "winding up", as outlined in Section 2(94A) of the Companies Act, 2013, refers to the formal process of closing a company through the mechanisms provided by the Companies Act or by undergoing liquidation under the Insolvency and Bankruptcy Code, 2016. This process involves ceasing regular business activities, liquidating assets, and settling debts ultimately leading to the company's dissolution. Despite this, during the winding-up phase and until dissolution, the company maintains its legal entity status, allowing it to partake in legal actions within a Tribunal. The objective of winding up is to ensure an orderly closure and distribution of the company's assets.
For the voluntary winding up of a company, the following documents are required:
Special Resolution (Form-26): A document proving the company's decision to wind up.
Declaration of Solvency (Form 107): A statement showing the company can pay its debts.
Directors' Affidavit: A sworn statement verifying financial documents like the auditor’s report and accounts up to the most recent date before declaring solvency.
Liquidator's Consent: Agreement from the appointed liquidator to undertake the winding-up process.
Notice of Winding Up Resolution: A published notice in the Official Gazette about the company's decision to wind up.
Notice of Liquidator Appointment: A published notice in the Official Gazette about the liquidator's appointment.
Preliminary Liquidator's Report: An initial report from the liquidator outlining the winding-up plan.
Final Liquidator's Report and Accounts: The liquidator's comprehensive final report and financial statements were presented at the last shareholders' meeting.
Notice of Final Meeting: Announcement of the company's conclusive gathering.
Meeting Return: Documentation of the final report, accounts, and meeting minutes to be submitted to the company registration office.