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Winding Up - Company


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Take your first step towards winding up your Business. A Company not commenced its business within one year from the date of incorporation/inactive for two years/not a Dormant Company.



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Winding up of a Company

Winding up is the process of liquidating a company’s assets, which are gathered and sold to settle its debts. During the winding-up procedure, debts, expenses, and costs are prioritized and disbursed among shareholders.

Upon the completion of the liquidation, the company is formally dissolved, and its existence comes to an end.

Winding up serves as the legal mechanism to bring closure to a company and terminate all ongoing activities. Post-winding up, the company’s assets are monitored to safeguard the interests of stakeholders.

A Private Limited Company, being an artificial judicial entity, necessitates various compliances. Failure to adhere to these requirements can result in fines, penalties, or even disqualification of directors from incorporating future companies. It is prudent to wind up an inactive company or one with no transactions.

Shareholders hold the authority to initiate the winding-up process at any time. Settlement of dues to secured or unsecured creditors and employees is paramount. Following the resolution of dues, the closure of all company bank accounts is mandatory. Additionally, in the case of company wind-up, surrendering the GST registration is essential.

Once all necessary registrations are surrendered, a winding-up application petition can be filed with the Ministry of Corporate Affairs.

Types of Company windup

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

A company can be wound up in two different ways-

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

1. 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

2. Compulsory winding up of a Private Limited Company

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: Filing a Petition to the Tribunal

The initial step involves filing a petition to the tribunal, accompanied by a detailed statement of the company’s affairs that is slated for winding up.

Step 2: Tribunal Evaluation and Response

Upon submission, the tribunal evaluates the petition and may either accept or reject it. If the petitioner is someone other than the company, the tribunal may request the company to file objections within 30 days, aligning with the submission of a statement of affairs.

Step 3: Appointment of Liquidator

The tribunal appoints a liquidator to oversee the winding-up process. The liquidator assumes the responsibilities of assisting and overseeing the proceedings of liquidation.

Step 4: Preparation and Approval of Draft Report

The liquidator prepares a draft report for approval. Upon approval, the final report is submitted to the tribunal, leading to the issuance of a winding-up order.

Step 5: Submission to ROC and Penalty Avoidance

It is imperative for the liquidator to forward a copy of the approved report to the Registrar of Companies (ROC) within 30 days. Failure to do so incurs penalties.

Step 6: ROC Approval and Striking off from the Register

The ROC reviews the submitted draft and, if found satisfactory, approves the winding up of the company. Subsequently, the company’s name is struck off from the Register of Companies.

Step 7: Publication Notice by ROC

The ROC issues a notice for publication in the official gazette of India.

Top Reasons for Company Winding Up

Why do companies wind up? A private limited company, governed by the Companies Act, is legally obligated to adhere to regular compliances throughout its life cycle.

The winding-up process is typically initiated for companies that are inactive, enabling them to avoid compliance responsibilities.

Closing a company can be accomplished by filing an application with the Ministry of Corporate Affairs, a process that takes approximately 3 to 6 months and can be completed entirely online through Bmcs.

Non-compliance by a company, leading to fines and penalties, including the disqualification of directors from starting another company, makes winding up an inactive company a prudent choice to avoid potential liabilities.

Compared to the maintenance of compliances for a dormant company, winding up with Bmcs is a straightforward process and can be done at an affordable cost.

A company that has diligently maintained proper compliances can be liquidated easily. In cases of compliance dues, regularization is necessary before initiating the winding-up process. Additionally, all registrations must be duly surrendered as part of the procedure.

Frequently Asked Questions

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To get started with BMCS India, simply reach out to us through our contact information on our website. We will be glad to schedule an initial consultation to understand your business requirements and discuss how our services can benefit you. From there, we will work together to develop a tailored plan to drive your business success.