Voluntary termination of a companyHemlata Khandenwal / 2021-02-02 08:10:01
What is the winding up/Dissolution/Termination of a company?
Termination of a company means in which the remainder of the property is distributed to the members of the company after returning their money to the company's creditors. It employs a liquidator who looks after the work part of the company.
The termination of the company means the closure of the company or the end of the life of the company, it is only when the company is not able to do its work smoothly, and there can be many reasons. For example, the company has high debt and is unable to meet it. Or the company could not do business or there could be some other reason.
Process of winding up of A Company:
A company holder that has obtained a company registration in India under the Companies Act with MCA can terminate its company in two ways.
It happens in 2 ways.
- Optional/voluntary Termination
- Termination by court
What is voluntary termination?
In this, any member of the company or the company itself can propose for winding up. According to which the closing of the company is beneficial for all. Both the members and the creditors meet and prepare for the meeting.
- According to this, the company has to prove that the company has so much money that it can meet all the creditors.
- The company can be terminated even when the company has been set up for certain work and that work has been completed.
- The company can also decide by the board meeting how to wind up the company. And the company can forward this proposal to ROC.
- This will be a meeting of all directors and members, in which the 4 parts must be agreed to be concluded.
- The roc will have to report it after the meeting is over. In addition to this, all the directors' consent and the solvent report has to be given in writing.
- It is necessary to have both members and creditors of the meeting and both have to give their consent.
- After the meeting, the company has to give the advertisement related to the termination of the company in the newspaper.
- A liquidator will have to be appointed within 10 days of the meeting. This will see the overall work of the company.
- The liquidator will pay the creditors money from the company's assets and distribute the rest to the members.
- Roc also has to report it.
- The liquidator periodically reports its report to the roc.
- Liquidation means that the company can resume it if it is terminated.
According to this, the court can go to the following reasons.
- Where there is confusion about the liquidator.
- Where more than one liquidator is to be selected.
- Where both the member, and the creditor are not ready to accept the decision of the liquidator.
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