Ritika
Topic- Winding up of Company
Roll no- 29012248217
COMPANY-
A company refers to an individual or group of individuals who conduct commercial business
practices to earn a profit.
The Companies Act 1956 was an Act of the Parliament of India, enacted in 1956, which
enabled companies to be formed by registration, and set out the responsibilities of
companies, their directors and secretaries. It was repealed and replaced by the Companies
Act 2013.
Winding up of Company
Winding Up of a Company means to bring an end to the life of the company. A distinct feature
of a company is Perpetual Succession which means that the longevity of the company does
not depend on its members or their financial status. Even if all the members of the company
go bankrupt or all of them die, the company will not dissolve on its own unless it is made to
dissolve on grounds which are laid out in the act. This article will go over how the operations
of a Company are shut according to the provisions of the Companies Act.
Types of Winding Up:-
Compulsory Winding Up under the Voluntary Winding Up
order of the Court
A company may be wound up at an order of
the Court. This is also called Compulsory i. Members’ Voluntary
Winding Up Winding Up
ii. Creditor’s Voluntary
Winding Up
Grounds
The grounds upon which an entity can apply to the court for an order of compulsory liquidation also
vary between jurisdictions, but normally include:
• The company has so resolved
• The company was incorporated as a corporation, and has not been issued with a trading certificate
(or equivalent) within 12 months of registration
• It is an "old public company" (i.e. one that has not re-registered as a public company or become a
private company under more recent companies legislation requiring this)
• It has not commenced business within the statutorily prescribed time (normally one year) of its
incorporation, or has not carried on business for a statutorily prescribed amount of time
• The number of members has fallen below the minimum prescribed by statute
• The company is unable to pay its debts as they fall due
• It is just and equitable to wind up the company, as for an example specified by an Insolvency Act
Documents are required for Winding up a Company
• Certificate of Incorporation of the company
• Memorandum of association and Articles of Association of the company
• Certificate related to the closure of bank account of the company
• Copy of the Board Resolution
• Copy of the resolution of the creditors stating that three-fourth of members have accepted
• Statement of Accounts of the Company
• Winding Up Petition Form WIN 1 or WIN 2
• Statement of Affairs of the Company in the Format of Form WIN 4
Consequences of winding up Order
When the order of winding up is made, and the provisional appointment is made, immediate intimation is
provided to the company liquidator, provisional liquidator, and Registrar.
After such an order is made, the company is obligated to submit a certified copy of the order within 30 days
to the registrar.
The order of winding up shall be adjudicated as the discharge of te company officials and employees. But in
the event where the company’s business is in operation, this rule will not apply. If the company has hired
employees for a specific period of time, and the term has not expired when the order of winding up is
passed, the company cannot discharge such employee. Upon such discharge, the company will be liable to a
branch of contract.
When the order has been made, no legal proceeding or suit shall be commenced except with the
Tribunal leave. Similarly, any pending suits cannot be activated except with the leave of the Tribunal.
When court grant such leave, all the circumstances of the case is taken into consideration. This is
done to secure the unsecured creditors and to preserve the assets of the company.
Conclusion
In conclusion, winding up of a company by a tribunal under the Companies Act 2013 is a complex and
significant process that requires a thorough understanding of the legal provisions and procedures. The
tribunal has the authority to order winding up on various grounds, such as failure to pay debts, just and
equitable causes, mismanagement, and fraudulent conduct. It is essential to take necessary steps to
ensure that the company’s assets are appropriately valued, creditors’ claims are settled, and the
remaining assets are distributed among the shareholders. It is important to note that winding up does not
necessarily mean that the company has failed or is incapable of running a profitable business. In some
cases, it may be the most practical solution for resolving issues that cannot be resolved through other
means. The process can be lengthy and complicated, requiring the involvement of various stakeholders
such as shareholders, creditors, and the liquidator. To avoid winding up by a tribunal, it is crucial for
companies to maintain proper financial records, fulfil their obligations towards creditors, and ensure
compliance with relevant laws and regulations. It is also essential to take timely measures to address any
issues that may arise, such as disputes among shareholders or management, financial difficulties, or legal
disputes. Overall, winding up of a company by a tribunal is a serious matter that should be approached
with caution and careful consideration. It is crucial to seek professional guidance and advice to ensure
that all legal requirements are met and the process is carried out smoothly and efficiently.
