Termination of a company by a court
Hemlata Khandenwal / 2021-02-08 06:09:16

A Company never dies a natural death it is always dissolved. Today in this blog we are going to explain about winding of a company by a court and what to do after the termination of the company, function of the liquidator.
What is the liquidation of the company?
The liquidation of the company is a process through which the life of the company ends and the assets of the company are managed for the benefit of its members and creditors. A liquidator is appointed an administrator and takes control of the company, collects its assets, pays its debts, and finally distributes any surplus among the members according to their rights.
Who can apply for the winding up of the company?
  • Company
  • Director
  • Share payer
  • Creditor
  • Central and state government
  • ROC and Tribunal
How does the company wind up by court?
The company can be closed by the court as follows.
  • When it is written in the company's memorandum that the company will be closed by the court.
  • If the 3/4 directors of the company are ready for winding up by the court.
  • If the company's members fall below the minimum limit. Or else get away from the maximum limit.
  • If the company does not do its business for 1 year after the company is incorporated and the court feels that the company will not be able to start the business quickly.
  • If the company does not send its record ROC on time or it is found deficient.
  • When the tribunal feels that the company has been formed for cheating, etc., its completion is necessary.
  • When the company is unable to repay the debt and the court finds that the assets of the company are not sufficient to pay the creditor.
  • When the Court feels that the winding up of the company is justified.
What to do after the Termination of the company?
After the termination and dissolution of the company registration in India the company holder should follow the steps:
  • First of all, a board meeting will be held in which it will be explained how the closing will be done and details of accounts and necessary instructions will be made in it.
  • The company will elect a liquidator who will look at the accounts of the company.
  • How much salary or commission the liquidator will get will be decided in the House.
  • The liquidator shall report this to ROC within 10 days of closing.
  • After the liquidator is elected, the powers of directors and CEO, etc. will end.
  • The company should be closed independently if anyone finds it wrong then it can go to court.
  • If the closing takes more than 1 year, then the liquidator will hold a board meeting and give all the information and account details related to the closing and will also send it to ROC from time to time.
What are the Functions of a liquidator?
Functions of a Liquidator:
  • After the closing of the company, a meeting of all the people will be called in which the liquidator will give all the information related to the account, in which it will also be clarified how much the property was sold, how many creditors were there, and how much is left.
  • This meeting will be called by advertisement in which time, place, time, etc. will be written in advance.
  • If everyone feels that the closing of the company is not justified, then the government order or tribunal will disband it.
  • All reports must be filed to roc within 7 days of completion.
  • If the termination work is not done in the public interest, then the court will investigate it.
  • If the court finds that the director is not capable of doing this, then the liquidator gives the details to the roc.
  • The dissolution of the company may occur after the closing of the company.
  • If the company is liquidated by any method, then the payment of the obligations will be as follows.
  • Staff arrears first
  • Outstanding creditors
  • 4-month salary of employees
  • Central government and state government dues
  • Also, when the assets are not paid in full, and then pay in proportion to the creditors.

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