VOLUNTARY WINDING UP OF A COMPANY
1. A company can be voluntarily wound up under the following circumstances:
a. If the period fixed for the duration of the company has expired and company passes a resolution for winding up in a general meeting.
b. If the company passes a special resolution to wind up voluntarily.
2. When a company has passed a resolution for a voluntarily winding up it shall within 14 days give a notice of the resolution in the official gazette and also in some newspaper. A voluntary winding up is deemed to have commenced from the time when the resolution of voluntary winding up is passed by the company. A company shall cease all its all business activities once a winding up process is commenced.
3. The directors of the company or the board of directors shall make a declaration to the effect that they have made a full enquiry into the affairs of the company and that the company has no debts or that it will be able to pay its debts within 3 years from the commencement of the winding up process. This declaration needs to be made within 5 weeks immediately preceding the date of passing of resolution for winding up and the same needs to be delivered to the Registrar for registration before the date of resolution. The declaration needs to be accompanied by a copy of the report of the auditors of the company.
4. The winding up where a declaration is made and delivered to the Registrar is known as “A Members voluntary winding up” and winding up in which the declaration is not made and delivered is known as “A creditors voluntary winding up”.
PROVISIONS APPLICABLE TO MEMBERS VOLUNTARY WINDING UP:
1. The company in general meeting shall appoint one or more liquidators for the purpose of winding up the affairs and distributing the assets of the company. On the appointment of the liquidator all the powers of the Board of directors and of the managing director and whole time directors shall cease, except for the purpose of giving notice of appointment of the liquidators to the Registrar.
2. The company shall give notice to the registrar of the appointment of the liquidator within 10 days of the appointment.
3. The Liquidator has powers to transfer whole or part of the business or property of the winding up company to another company.
4. If the Liquidator is of the opinion that the company is not able to pay its debts in full within the period stated in the declaration under Sec.488 than he shall summon a meeting of the creditors and shall lay before the meeting a statement of assets and liabilities of the company.
5. If the winding up process is continuing for more than 1 year, then the liquidator shall call a general meeting of the company at the end of each year and present an account of his acts and dealings and of the conduct of the winding up during the preceding year.
6. Once the affairs of the company are fully wound up, the liquidator shall make up an account of the winding up and call a general meeting of the company to lay the account before it. The meeting shall be called by advertisement published in the official gazette and in some newspaper. Within one week after the meeting the liquidator shall send to the registrar and the official liquidator a copy each of the account and shall make a return to each of them of the holding of the meeting. The registrar shall register the account and the returns forthwith.
7. The official liquidator on receiving the account and return shall make a scrutiny of the books and papers of the company and if found that the affairs of the company have not been conducted in the manner prejudicial to the interest of its members or to public interest than he shall make a report to that extent to the tribunal and the company shall stand dissolved. If the finding of the official liquidator is otherwise, the tribunal can direct the official liquidator to make further investigation into the affairs of the company.
8. On the receipt of the report of the official liquidator on further investigation the tribunal either make an order that the company stands dissolved or make such other order.