The closure of a company is a proceeding in which the current Business of the company is closed down and to sell off its Assets and the creditor is paid and the Balance of Assets is distributed to the Members. Closure of the company can be adopting any of the below-mentioned ways:-
- Strike off a company under section 560:-It deals with a strike off provisions of a defunct company. Any such company which is desirous to strike off its name from the register of Registrar of the company can apply to strike off its name from the register maintained by Registrar of the company as per Recommendations for ‘FAST TRACK EXIT MODE’. ROC also holds the discretionary power to strike off any defunct company after satisfying himself of the need to strike off a defunct company and has reasonable cause.
Winding up of a company:- The winding up of the company can be either done in any of the following ways:
- Compulsory winding up: – Closing up a business by an order of the court is compulsory winding up. Circumstances under which court can compulsory wind up the company. They are:-
- If the Business by special resolution resolved that the Business may be wound up by the court.
- If the default is made in submitting the statutory report to the Registrar or in holding the statutory meeting.
- If the business does not start its business within a year from its existence or suspends it for a whole year.
- If the number of members is decreased, in the case of a public Company below seven, and in the case of a private company below two.
- If the Business is incapable of paying its debts.
- Voluntary winding-up – Voluntary winding-up occurs without the intervention of the court. Here the company and creditors settle their affairs without going to the court. Further voluntary winding up is of two types:-
- Member’s voluntary winding up: – when members mutually decide to close the business of the company. It occurs when a company has insolvent and requires a declaration of the company’s solvency at the meeting of the Board of Directors.
- Creditors winding up: – It occurs when the company is insolvent. Here creditors overpower the member in the mode of winding up. The liquidator must call both members and the creditors to lay account of his dealing and the conduct of winding up.
- Winding Up subject to the provision of the court: – Winding up subject to the provision of the court are ordered when voluntary winding up has already started. It is voluntary closing up but under the direction of the court. A court may approve such a resolution passed by the company for voluntary winding up but the winding up shall continue under the supervision of the court. The will issue such order under the following circumstances:-
- If the resolution for the winding up was obtained by fraud; or
- If the rules to winding up were not followed properly; or
- If a liquidator is found negligible in selling the asset of the company
How ASC Helps?
- Accommodating and compiling the procedural activities for the closure of the company.
- Appointment of a liquidator for the setting of all the liabilities.
- Calculation of the Remuneration to the liquidator.
- Accessing and fulfilling reporting requirements.
- Compiling the requirements for completing the ROC compliances.
- Assistance incomplete the legal proceedings with the court of law.