Winding Up Of Company

Winding up of a company is the process of dissolving a company and terminating its legal existence. It involves selling off the assets of the company, paying off the creditors, and distributing the remaining surplus, if any, among the shareholders or members. Winding up can be done voluntarily by the company or compulsorily by the order of a court or tribunal.

There are different modes of winding up a company in India, depending on the circumstances and the applicable laws. Some of the modes are:

• Removal or strike off of the name of the company: This is a simple and fast mode of winding up a company that has no assets or liabilities, or has ceased to carry on any business. The company can apply to the Registrar of Companies (ROC) for removing its name from the register of companies, or the ROC can initiate the process suo motu, if it has reasonable cause to believe that the company is not functioning. The company has to file an application in Form STK-2 along with the prescribed fees and documents, such as a statement of accounts, an indemnity bond, a no objection certificate, etc. The ROC will then publish a notice in the official gazette and on its website, inviting objections from the public. If no objections are received within 30 days, the ROC will strike off the name of the company and issue a dissolution order.
• Winding up under the Companies Act, 2013 by the Tribunal: This is a mode of winding up a company by the order of the National Company Law Tribunal (NCLT), which is the authority for dealing with company matters in India. The NCLT can order the winding up of a company on various grounds, such as inability to pay debts, default in filing financial statements, fraudulent or unlawful activities, just and equitable reasons, etc. The winding up petition can be filed by the company, the creditors, the shareholders, the central or state government, or the ROC. The NCLT will appoint an official liquidator to take charge of the assets and affairs of the company, and supervise the winding up process. The liquidator will sell the assets, pay the creditors, and distribute the surplus, if any, among the shareholders or members. The liquidator will also file periodic reports and accounts with the NCLT. The NCLT will finally pass an order for the dissolution of the company, and notify the ROC.
• Liquidation of company under the Insolvency and Bankruptcy Code, 2016: This is a mode of winding up a company under the Insolvency and Bankruptcy Code (IBC), which is a comprehensive law for resolving insolvency and bankruptcy issues in India. The IBC provides a time-bound and creditor-driven process for the liquidation of a company, if it is unable to repay its debts or undergo a resolution plan. The liquidation process can be initiated by the company, the creditors, or the NCLT, if the company fails to implement a resolution plan within the specified period. The NCLT will appoint a liquidator to take custody and control of the assets and liabilities of the company, and conduct the liquidation process. The liquidator will form a liquidation estate, which will include all the assets and properties of the company. The liquidator will also verify the claims of the creditors and stakeholders, and rank them according to the priority of payment. The liquidator will sell the assets of the company in a transparent manner, and distribute the proceeds among the creditors and stakeholders, as per the order of priority. The liquidator will also file periodic reports and accounts with the NCLT. The NCLT will finally pass an order for the dissolution of the company, and notify the ROC.

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