Closure of Private Limited Company in India
Closure of Private Limited Company in India brings you two options for such companies that you have formed but are not functional anymore.
Ways for Closure of Private Limited Company in India:
Mandatory Winding Up:
Any company registered under the Companies Act, 2013, which engaged in an unlawful or fraudulent act, or contributed to any fraudulent or unlawful activities, would be wound up mandatorily by the Tribunal (Closure of Private Limited Company in India).
Process of Mandatory Winding Up:
- The petition can be filed by the company, contributors to the company, registrar of the companies, trade creditors of the company, or central or state government.
- All documents supplemented by the petition will be audited by a practicing CA, and the Auditor’s view on the financial statement must be unqualified.
- The petition should be advertised in a daily newspaper for at least 14 days, in English and the regional language of that area.
- Form 11 is necessary for the order of winding up the company, including:
- Complete audited books of accounts up to the date of the order.
- Date, place, and time for the company liquidator should be provided.
- Assets and documents of the assets should be surrendered.
- If the tribunal finds all the accounts are in order and all necessary compliance has been fulfilled, it would pass the order for dissolving the company within 60 days of receiving the claim. After the passing of the order by the tribunal, the registrar will then issue a notice to the Official Gazette confirming the dissolution of the company.
Voluntary Winding Up
Voluntarily winding up of a private limited company requires a lengthy procedural compliance to follow. There are certain compulsory requirements that have to be fulfilled to close down a company voluntarily.
Process of Voluntary Winding Up:
- As per the Companies Act 2013, a Board Resolution is necessary to wind up the company voluntarily, with the majority of directors approving the winding up.
- A Special Resolution is necessary, where 3/4th of the total shareholders must cast their vote in approval of winding up the company.
- Approval of trade creditors is also necessary, confirming they don’t have any responsibility if the company gets wound up.
- Declaration of Solvency must be made by the company and accepted by trade creditors. The company’s credibility in the Declaration of Solvency needs to be demonstrated.
- All the above processes shall be presented and filed in the respective form. Even after the company gets wound up, the company’s name shall be prohibited for 2 years to be taken by any other company.
Defunct Company Winding Up
As per the Companies Act, 2013, a defunct company is a company that has gained the status of a Dormant Company. The government provides some relief to such defunct or dormant companies because there are no financial transactions carried out by these dormant companies.
Process for Winding Up a Defunct Company:
- A Defunct or Dormant Company can be wound up with an advanced process, requiring the submission of the STK-2 form.
- Form STK-2 needs to be filled by the Registrar of Companies and duly signed by the director of the company, approved by its board to do so.
