A private limited company necessitates to be closed, or windup, meanwhile there are no changes or the Directors of the company, is not willing to continue its services. Any private limited company usually can be shut by both 'voluntary' and 'compulsory elements'. Winding up of a company is a pursuit which involves bargaining all the assets, paying off the bankers and administering the remaining assets to the shareholders of the company. It is always challenging to start a business/ company.
The Ministry of Corporate Affairs has notified rules 2020, for winding up small businesses without having to go to a tribunal, under a provision in the Companies Act that offers an alternative to the commonly used liquidation procedure under India’s bankruptcy code. The scope of Company Law in India is unrestricted and extensive; it carries into account the depth of winding up of a business and liquidation of its assets. While 'winding up of a company' if its representatives fail to comply with the laws and regulation, they can get held civilly or criminally liable.
Key Obligations
- Fill an ordinary resolution in the Board of Directors conference.
- There should be no marketing project in action from the day when the resolution is passed.
- Constitution by members stating there is no debt pending on company and the required forms are filed.
Benefits
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1
Released From Duties/Debts After Liquidation
Once the liquidation method is over, the administrators and all company leaders are free from all lender accounts and pressure.
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2
Withdrawing Legal Action Upon The Company
If the recommendation is passed deliberately by directors, they will ignore legal action brought by the court or the tribunal, and provide a program to company directors to focus on other business possibilities.
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3
The Low Cost Required For Liquidation
The price or duties expected in the liquidation method is relatively small, as rates will apply to the sale of assets.
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4
Lease Agreements Will Be Cancelled
If any company or entity has entered into a lease for a prescribed time, during the liquidation process, it will eliminate all the terms and conditions of the contract.
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5
Protection For Creditors
Following a continued struggle, creditors will benefit from the liquidation method as they will be available for a failed payment, concerning the statement of credits given by all creditors.
Documents required while filing appeal
- Ultimately ITR and Returns Filed with ROC
- Winding up petition: Form Comp 1
- Declaration of truth: Form Comp 2
- Certification of service: Form Comp 3
- Announcement of winding up petition
- A list of people auditing the hearing: Form Comp 4
- Preparation of Preliminary Report by IP
- Submission of Proof of Claim in Form B, in Form C, Form D, Form E, Form F, by post or by Electronic means.
- PAN Card of the corporation
- Declaration of the termination of the company’s bank account with NIL contracts.
- An indemnity bond, which should be notarized by the directors
- Latest statement of company accounts.
- Statement of reports related to all assets and liabilities of the company, audited by Chartered Accountant (CA)
- Application for extracting the name of the company.
- Indemnity Bond from all the Directors
Diary of Forms: Latest
- WIN-1 Petition for Winding up other than Company
- WIN-2 Petition for Winding up by Company
- WIN-3 Affidavit verifying Petition
- WIN-4 Statement of Affairs
- WIN-5 Affidavit of concurrence in statement of affairs
- WIN-6 Advertisement of Petition
- WIN-7 Notice of application for appointment of provisional liquidator
- WIN-8 Order appointing provisional liquidator
- WIN-9 Notice of appointment of provisional liquidator
- WIN-10 Disclosure of conflict of interest by liquidator
- WIN-11 Winding-up Order
- WIN-12 Notice to Company Liquidator of winding up
- WIN-13 Notice to registrar for winding up
- WIN-14 Notice of winding up order
- WIN-15 Application for leave to commence or continue any suit or proceeding under section 279(1) of the Companies Act, 2013
- WIN-16 Report of the Company Liquidator under section 281(1
- WIN-17 Provisional list of contributories
- WIN-18 Notice to contributory of date fixed to settle list of contributories
- WIN-19 Affidavit as to the posting of notices fixrng a date for the settlement of the list of contributories
- WIN-20 List of contributories as settled by Tribunal
- WIN-21 Notice to contributory of final settlement of list of contributories and that his name is included
- WIN-22 Affidavit of service of notice on contributory
- WIN-23 Report of result of meeting of creditors and contributories under section 287(3)
- WIN-24 Notice to creditors and contributories
- WIN-25 Notice of meetings of creditors and contributories under section 287(3)
- WIN-26 Notice of creditors' meeting under section 287(5) of the Companies Act, 2013
- WIN-27 Notice of contributories' meeting under section 287(5) of the Companies Act, 2013
- WIN-28 Notice of Meeting (General Form)
- WIN-29 Notice of meeting (General Form)
- WIN-30 Notice to officers of company to attend meeting of creditors or contributories
- WIN-31 Affidavit as to the posting of notices of meeting
- WIN-32 Nomination of Chairman by Company Liquidator
- WIN-33 List of creditors (or contributories) present at a meeting
- WIN-34 Report of result of meeting(s) of creditors/ contributories held under order of Tribunal dated
- WIN-35 Form of general proxy
- WIN-36 Form of special proxy
- WIN-37 Quarterly Report with respect to progress of winding up under section
- WIN-38 Declaration disclosing conflict of interest or lack of independence
- WIN-39 Instructions regarding the preparation of the Statement of Account
- WIN-40 Affidavit verifying account
- WIN-41 Company Liquidator's Final Account
- WIN-42 Requisition for audit of account
- WIN-43 Advertisement of notice to creditors to prove their claim
- WIN-44 Affidavit of proof of debt
- WIN-45 Proof of debt of workmen
- WIN-46 Notice to a creditor to attend the investigation or produce further evidence
- WIN-47 Notice of rejection of proof of debt
- WIN-48 Notice of admission of proof
- WIN-49 Appeal by creditor
- WIN-50 Certified list of proofs tendered to, and admitted or rejected by, the Company Liquidator
- WIN-51 Notice by Company Liquidator requiring payment of money or delivery of property, books, etc., to the Company Liquidator
- WIN-52 Leave to make call
- WIN-53 Affidavit in support of application for leave to make a call
- WIN-54 Advertisement of application for leave to make a call
- WIN-55 Order giving leave to make a call
- WIN-56 Document making a call
- WIN-57 Notice to be served with order sanctioning call
- WIN-58 Application to enforce call
- WIN-59 Affidavit in support of application for payment of call
- WIN-60 Order for payment of call amount due from contributory
- WIN-61 Application for leave to examine person(s) under section 299
- WIN-62 Order for examination under section 299
- WIN-63 Summons to witness for examination under section 299
- WIN-64 Order directing examination
- WIN-65 Notice of examination
- WIN-66 Notice to attend examination
- WIN-67 Report to the Tribunal where person examined refuses to answer to satisfaction of the person or authority referred to in rule 147
- WIN-68 Warrant against contributory who fails to attend examination
- WIN-69 Warrant for keeping in prison
- WIN-70 Order to release prisoner on bail
- WIN-71 Requisition to Court in whose jurisdiction the contributory against whom a warrant of arrest has been issued is believed to be
- WIN-72 Summons under section 339(1) of the Companies Act, 2013
- Subject WIN-73 Summons under section 340(1) of the Companies Act, 2013
- WIN-74 Points of claim under section 339(1) of the Companies Act, 2013
- WIN-75 Points of claim under section 340(1) of the Companies Act, 2013
- WIN-76 Notice to Liquidator to elect whether he will disclaim
- WIN-77 Notice by Liquidator of intention to apply to Tribunal for leave to disclaim
- WIN-78 Summons for extension of time for giving notice of intention to apply for leave to disclaim
- WIN-79 Order extending time for disclaimer
- WIN-80 Notice of interest in property sought to be disclaimed
- WIN-81 Application for leave to disclaim
- WIN-82 Affidavit in support of summons for leave to disclaim a lease
- WIN-83 Notice to parties interested in the property in respect of which the application to disclaim is made
- WIN-84 Order giving leave to disclaim
- WIN-85 Disclaimer of lease*
- WIN-86 Notice of disclaimer of lease*
- WIN-87 Order requiring parties interested in disclaimed lease to apply for vesting order or to be excluded from all interest in the leasehold premises
- WIN-88 Order vesting lease and excluding persons who have not elected
- WIN-89 Advertisement as to declaration of dividend
- WIN-90 Notice of dividend
- WIN-91 Authority to Company Liquidator to pay dividend to another person
- WIN-92 Schedule of Contributors to whom contribution is to be paid
- WIN-93 Notice of return to contributories
- WIN-94 Statement of unclaimed dividends or undistributed assets,
- WIN-95 Request to deliver bill
Latest: 2020 MCA Winding Up Registration Procedure
The Companies (Winding-Up) Rules 2020 shall come into effect from the 1st April 2020. The new rules will reduce the burden of the National Company Law Tribunals (NCLTs) by enabling summary procedures for liquidation. Petitions for winding up of companies are subject to various conditions, including thresholds on turnover and paid-up capital.
Thorough Procedure: Cutting-Edge By The Companies (Winding Up) Rules, 2020
A Company Attempting To Wind Up Section 361 Should Adhere To The Below-Mentioned Requirements:
- The book worth of assets of the company does not exceed Rs 1 crore; and
- Any one of the below conditions based on the latest audited balance sheet:
- A firm which has taken deposits, the entire outstanding deposits do not exceed Rs 25 lakh or
- Company has outstanding loans, the undivided outstanding loan including secured loan does not exceed Rs 50 lakh; or
- Turnover of the company is up to Rs 50 crore; or
- Paid-up share capital of the company does not exceed Rs 1 crore.
Approval of an Official Liquidator
The central government delegates the Official Liquidator of the company attempting winding up under the review procedure for liquidation.
Plan for Summary Liquidation: 2020 Rules
Sale Of Assets And Properties
The Official Liquidator shall dispose of all the assets or property belonging to the company after obtaining the previous approval of the central government. The funds collected by the Official Liquidator shall be discharged into the public account of India in the Reserve Bank of India (RBI) as specified in section 349.
Returns To Creditors
The Official Liquidator has to in thirty days of his nomination call upon the creditors of a company to determine their claims from the company. Within 30 days from the expiry of the time allotted for making claims, the liquidator shall arrange a list of creditors with the Central Government.
Commands: Power and Duties of the Sanctioned Liquidator
- The Official Liquidator appointed shall take administration or control of all the assets, results and actionable requirements to which the company is entitled or appears to be qualified.
- The Official Liquidator shall examine into the affairs of the company and tender a report to the Central Government in the designated manner. The report shall consider whether any fraud has been committed in elevation, formation or supervision of the affairs. The announcement should also be made in case the liquidator finds there is no fraud perpetrated.
Winding-up Order
After examining the investigation report submitted by the Official Liquidator, the Central Government may direct that winding up may be initiated in the same manner in which a company is folded up by the Tribunal.
Additional Procedural as under:
- The Controls lay down the method for a meeting of creditors and contributories of the Company, and define the scenarios in which creditors can and cannot vote
- The Laws make it necessary for all the money lying in the bank account of Company Liquidator which is not immediately required for winding up, to be spent in government securities or interest-bearing securities in any registered/scheduled bank
- The Laws lay down the method for maintenance of registers and 'books of accounts' by the Company Liquidator
- The Rules also outline the process for creditors to prove their debts and claims against the Company and if the proof of such debt gets rejected by the Company Liquidator, there is also a provision and process for a creditor to appeal to Tribunal
- The Companies (Winding-Up) Rules, 2020 provides rules for filing of petition by (i) the Company; (ii) any contributory or contributories; (iii) the Registrar; (iv) any person authorized by the Central Government in that behalf; and (v) Central or State Government in case the Company has acted against the interests of the sovereignty and integrity of India, the security of the state, friendly relations with foreign states, public order, decency or morality on matters including but not limited to the following:
- Winding up by Tribunal;
- Appointment of Provisional Liquidators;
- Appointment of official/ Company Liquidator;
- Winding-up Order;
- Application for stay of suits etc. on winding up order;
- Report by Company Liquidator under section 281;
- Settlement of list of contributors;
- Advisory Committee;
- Meetings of Creditors and Contributories;
- Proxies in relation to meetings of creditors and contributories;
- Registration and Books of Account to be maintained by Company Liquidators;
- Banking Account of Company Liquidator;
- Investment of Surplus Funds;
- Filing and Audit of Company Liquidator’s Account;
- Collection and Distribution of Assets in Winding up by Tribunal;
- Examination of directors and promoters;
- Summon of persons suspected of having property of company, etc.;
- Application against Delinquent Directors, Promoters and Officers of the Company;
- Compromise or Abandonment of Claims;
- Sale by Company Liquidator;
- Dividends and Returns of Capital in Winding up by Tribunal;
- Termination of Winding-up;
- Payment of Unclaimed Dividends or Distribution of Assets and Summary Procedure for Liquidation.
Note: The prominent feature of this notification is the summary procedure for liquidation proposed through Part V of the Companies (Winding-up) Rules, 2020. An indispensable factor for such summary winding up is that the Central Government will implement required permissions to such companies for the standard winding-up process which is otherwise undertaken through the Tribunal, thereby decreasing the burden on Tribunal and significantly curtailing the overall winding up timelines.
Winding-up Committee VS Stakeholders’ Consultation Committee
- Winding-up Committee as per Winding up Rules, 2020
- Company Liquidator has to file an application for constitution of committee
- Minutes of the meetings of winding-up committeemonthly filing of minutes until final report is filed
- CL must call the meeting when need be; or on request of min. 1/3rd members
- Must be constituted within 30 days of order
- Max cap of 12 members;
- Resolution passed by simple majority
Stakeholders’ Consultation Committee under the Code
- Liquidator is required to form the committee under reg. 31A of Liquidation Regulations
- No mandatory filing of timely minutes
- Liquidator must call the meeting when need be; or on request of atleast 51% members
- Must be constituted within 60 days of LCD
- Max cap of 15 members
- Resolution passed by , assent of min. 66% members (in value), present and voting