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Winding Up of a Company – Legal Advisory by Nd Salva
Winding up, or liquidation, refers to the legal procedure through which a company ceases to operate and is ultimately dissolved. This involves selling assets, settling debts, and distributing any remaining surplus to shareholders. The process can be initiated either voluntarily by the company or compulsorily by the Tribunal, depending on the circumstances.
At Nd Salva, we offer specialised legal assistance for company winding up, ensuring every step—from compliance to dissolution—is executed transparently and efficiently.
What is Company Winding Up?
As per Section 2(94A) of the Companies Act, 2013, winding up is the process of legally ending a company’s existence, either through provisions under the Companies Act or the Insolvency and Bankruptcy Code (IBC), 2016.
During this phase:
Business activities cease
Assets are liquidated
Debts are settled
Surplus (if any) is returned to shareholders
Important: The company retains its legal identity until formally dissolved, and may still participate in legal proceedings.
Modes of Winding Up Under the Companies Act
Under Section 270 of the Companies Act, 2013, company winding up can occur via three routes:
1. Compulsory Winding Up (By Tribunal)
Initiated by court order, typically for reasons like:
Inability to pay debts
Fraudulent activities
Persistent non-compliance
Acts against public/national interest
“Just and equitable” grounds
The Tribunal appoints an official liquidator to oversee the winding-up.
2. Voluntary Winding Up
Initiated by the company’s members or creditors, this route is used when the company is:
Solvent and chooses to close operations, or
Insolvent, and creditors initiate winding up
A liquidator is appointed to manage the process without court intervention.
3. Winding Up Under Court Supervision
Starts as voluntary winding up, but the Tribunal assumes supervisory jurisdiction to safeguard stakeholder interests. This hybrid method blends private resolution with court oversight.
Voluntary Winding Up of a Company
This process allows solvent companies to close operations lawfully, either:
By special resolution of the members, or
Upon expiry of a fixed term or triggering of conditions as per Articles of Association
Documents Required:
Form 26: Special Resolution
Form 107: Declaration of Solvency
Directors’ Affidavit: Confirming solvency and financial records
Liquidator’s Consent: Formal acceptance by the appointed liquidator
Notice of Resolution: Gazette publication
Notice of Liquidator’s Appointment
Preliminary & Final Reports by Liquidator
Notice & Minutes of Final Meeting
Meeting Returns submitted to ROC
Step-by-Step Procedure: Voluntary Winding Up
1. Declaration of Solvency
Directors assess the company’s financials
File Form 107 along with auditor’s report and asset valuation
2. Board Resolution
Call for a General Meeting
Propose voluntary winding up and appointment of liquidator
3. Special Resolution by Shareholders
Passed in General Meeting
Formalises the winding up
Appoints a liquidator (dissolving the powers of the Board)
4. Notification
Publish resolution in Gazette & newspapers within 10 days
File with ROC as per Section 361
5. Liquidator’s Appointment Notification
Notify ROC within 10 days of appointment or changes
6. Public Announcement
Liquidator announces appointment using Form 110
Published within 14 days
7. Creditors’ Meeting (if applicable)
If debts exceed realisable assets, liquidator must hold a meeting
Present updated statement of affairs
8. Documentation of Creditors’ Meeting
File return and supporting documents with ROC within 10 days
9. Annual General Meetings
If the process continues over a year, hold annual meetings and seek Tribunal approval for time extensions
10. Final Report & Meeting
On completion, the liquidator calls a Final Meeting
Presents audited accounts using Form 111
11. Publication of Final Meeting
Must be published at least 10 days in advance
12. Filing of Final Documents
File Form 112 with ROC within 1 week of the final meeting
This concludes the voluntary winding-up process.
Compulsory Winding Up by Tribunal
This is a court-supervised winding up initiated for serious non-compliance or insolvency.
Common Grounds:
Unpaid debts
Special resolution by members
Fraudulent/unlawful activities
Failure to file returns with ROC for 5 consecutive years
Tribunal finds it just and equitable
Procedure:
Petition Filing – By company, creditors, ROC, or others
Tribunal Review – Reviews financials and responses
Appointment of Liquidator
Report Preparation – Submitted for Tribunal approval
ROC Filing – Liquidator files winding-up order
Dissolution by ROC
Notice in Gazette – Final publication of dissolution
Winding Up Under Supervision of the Court
In this mode, although the process is initiated voluntarily, the Tribunal exercises oversight to ensure fairness.
Applicable when:
Stakeholders request supervision for transparency
Court deems it necessary to protect interests
Key Implications of Company Winding Up
| Stakeholder | Impact |
|---|---|
| Company | Continues as legal entity until formal dissolution. Management powers cease and pass to the liquidator. |
| Shareholders | Cannot transfer shares. May become liable as contributors. |
| Creditors | Must register claims with liquidator. Cannot sue company without Tribunal approval. |
| Management | Board loses authority post-liquidator appointment. Limited to procedural roles. |
| Company Assets | Cannot be disposed of without liquidator or Tribunal’s consent. |
Role & Powers of the Liquidator
The liquidator (or official liquidator in Tribunal cases) oversees:
Control and custody of company assets
Debt recovery and asset liquidation
Settlement of creditor claims
Final distribution of surplus (if any)
The liquidator operates under Tribunal guidance and must maintain detailed reports and compliance records throughout.
Timeline: How Long Does It Take to Wind Up a Company?
| Phase | Estimated Duration |
|---|---|
| Preparation (resolutions, filings) | 2–3 months |
| Liquidation & Distribution | 6–12 months (can vary based on complexity) |
| Final ROC Dissolution | 1–2 months post-liquidation |
Why Choose Nd Salva for Company Winding Up?
At Nd Salva, we offer comprehensive legal support across all types of company closures:
✔️ Strategic Assessment – We advise on the most suitable mode of winding up
✔️ Documentation & Resolutions – From solvency declarations to final reports
✔️ Legal Representation – Before the Tribunal, ROC, and other authorities
✔️ Liquidator Support – Guidance and coordination for compliance
✔️ End-to-End Compliance – Timely filings, public notices, and stakeholder communications
Our approach ensures your company’s closure is legally sound, compliant, and efficient
Ready to Wind Up Your Company?
Whether voluntary, court-supervised, or due to insolvency, Nd Salva ensures a clear and compliant exit strategy for your company.
🔗 Contact our legal team today to get started with a confidential consultation.
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