Quick Summary
Winding Up is the process of closing a company by realizing assets, paying off creditors, and distributing the surplus among shareholders according to their rights.
Winding Up is the process by which a company is dissolved. It involves realizing the company's assets, paying off its debts, and distributing the surplus (if any) among shareholders. It is governed by the Companies Act, 2013 and Insolvency and Bankruptcy Code, 2016.
Modes of Winding Up
- Voluntary Winding Up: By shareholders/members
- Compulsory Winding Up: By Tribunal/NCLT order
- Voluntary under IBC: Fast track for startups
Voluntary Winding Up Process
- Board Resolution recommending winding up
- Special Resolution in General Meeting
- Declaration of Solvency (Form STK-2) - must be filed 5 weeks before meeting
- Appointment of Liquidator
- Publication of notice in newspapers
- Realization of assets and payment of debts
- Final Meeting and dissolution
- File STK-2 with ROC for striking off
Striking Off (Fast Track Exit)
- For defunct companies with nil assets/liabilities
- File Form STK-2 with ROC
- No need for liquidator
- ROC publishes notice for objections
- If no objections, company struck off
Compulsory Winding Up Grounds
- Company unable to pay debts
- Special Resolution for Tribunal winding up
- Acting against national interest
- Fraud in incorporation
- Default in filing financial statements/returns
- Just and equitable (Tribunal discretion)
Key Points
- Process of closing company
- Voluntary or compulsory
- Assets realized, debts paid
- STK-2 for striking off
- NCLT handles compulsory winding up