Voluntary Winding Up of Company

  • Blog|Insolvency and Bankruptcy Code|
  • 2 Min Read
  • By Taxmann
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  • Last Updated on 25 June, 2021

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Voluntary Winding Up Meaning:

Voluntary Winding takes place when a company becomes insolvent and is unable to discharge its liabilities. To carry out voluntary winding up of private limited company procedure, a winding up a meeting need to be called where a resolution is passed to carry out the winding up procedure of the company. The creditor’s winding up meeting should be held either of the days fixed for General meeting or on the very next day.

As per the procedure for winding up of a company in India, the notice for this creditor’s meeting should be sent by post to each of the creditor while one is sending the notice for general meeting. It should also be published in Official Gazette and two newspapers which are popular in the district where registered office of the company is located.
A Statement of Affairs and list of creditors with amount due for each of then should be prepared beforehand and should be laid during the meeting. In case the resolution is passed during creditor’s meeting, a copy of that resolution need to be filed with Register within ten working days from the date when resolution is passed.
 During same creditor’s meeting, a liquidator shall be nominated by the creditors. This liquidator shall be as per the Regulations set by IBC Code 2016 and shall carry out all the functions related to winding up of the company. He shall prepare the detailed list of assets and liabilities of the company and shall also propose the process and timelines for liquidation. As per the Insolvency and Bankruptcy Code, 2016 the fee to be paid to this liquidator is part of liquidation cost.
 
Liquidator shall value, sell, recover and realize all assets of the corporate person. He shall open bank account for purpose of receiving money from sale of such assets and will also administer the distribution of such proceed with the stakeholders within six months of receipt of these proceeds. He shall also keep an electronic copy of these reports and will save them for at least next eight years from the date of dissolution of the corporate person.
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Once the affairs of the corporate person are completely wound up, the liquidator shall apply with NCLT for its dissolution along with final report. The final report would consist of audited liquidation accounts and statementsshowing the details of disposed of assets and how they were sold. This Final Report also needs to be filed with ROC and Board.
Once this Final Report is submitted, NCLT shall pass the order for dissolution and the company shall stand dissolved from this date of NCLT order. A copy of this order needs to be forwarded to ROC within 14 days when the order was passed.
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