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Section 560 of the Companies Act, 1956, deals with winding up provisions of a defunct company. Winding up is the liquidation of all resources of a company to pay the debts, costs, and expenses incurred. After paying shareholders their due money, if there are excess resources left, then it is divided among investors as per the capital contributed by them in the company.
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After the liquidation process, all members of the company are liberated from obligations after liquidation.
If the resolution is passed willfully by directors, then they can skip the official procedure taken by the court or the tribunal.
It incurs minimal expense charges for winding up or liquidation.
In such an event, all terms and conditions of lease agreements are terminated. If any penalties are required to be paid, then it will be deducted from the sales of assets.
Benefits for creditors as they'll be qualified for a default payment with respect to their contribution to the overall credit amount.
Non-compliance to the customary filing of Income Tax and Annual Return, misrepresentation of financial statements for five successive years; Such events may lead to penalties or disqualification of the Directors or winding up.
Bankruptcy i.e., unable to pay its insurmountable debts
Failure to start operations within a year after incorporation
A special resolution is passed to wind up the company.
The existing number of members is below the required number
Internal disagreements or conflict or the company is not fulfilling its compliances
Involvement in fraudulent acts or against the integrity and sovereignty of the nation
When the court determines that winding up the corporation would be "fair and equitable."
As per Section 425, of Companies Act, 1956, deals with modes of winding up. The winding up of a company may be done by either
• The members of a company can decide to willfully wind up the company through a special resolution passed in the general meeting. The reason for the such act should be according to the provisions enlisted in the Articles of Association.
• A tribunal has the power to decide (through any finds or by Chapter XIX) to cease the operations of the company after hearing the order.
• In this case, a tribunal is set up, and a resolution is passed to wind up the operations of the company. Form WIN 11 is issued for Winding up.
Incorporation certificate
PAN Card of Partners
Id proof (Aadhar card) and PAN of directors
Utility bill
Consent of all creditors
DSC of directors
NOC from IT department
Statement of pending litigation (if any)
Certified statement of all assets of company
Affidavit from directors
Signed CTC of special resolution
Winding up of a private limited company may be necessary when the company is no longer viable, is unable to pay its debts, or its shareholders wish to dissolve the company.
A private limited company can be wound up through a court-supervised process or by passing a special resolution among the shareholders. The process involves appointing a liquidator, collecting and selling the assets of the company, and distributing the proceeds among the creditors and shareholders.
There are two types of winding up; Voluntary winding up and Compulsory winding up. Voluntary winding up is carried out by the shareholders, while compulsory winding up is carried out by the court.
The time taken to wind up a private limited company may vary depending on the complexity of the company's affairs and the court's schedule.
Yes, a private limited company can be wound up voluntarily by passing a special resolution among the shareholders.