Business exit process
Winding up is the process of closing down the legal existence of a company or LLP as per Indian company’s law. During this process, the value of an entity’s possessions is revealed and its debts are paid off with any excess being given to those who helped create it. Winding up refers to how the dissolution of a company may happen and its assets can be redistributed in the process of paying off all its debts. Once all debts are satisfied, any money left over goes back to members based on what they contributed towards the capitalization of said company.
Once the adjudicating authority is convinced that these processes are completed, the entity is dissolved.
When it comes time for winding up, or dissolution, the responsibility for managing the company falls squarely on the shoulders of its liquidator. However, the assets and liabilities still belong to the company until dissolution takes place. On dissolution, the entity loses its legal existence issued under the law.
Section 270 of the Companies Act, 2013 about how a company can be wound up (i.e., liquidated) was removed from this Code when it was enforced. It has been substituted by Winding up of company and llp by Tribunal.
Step 1: Submission of declarations to ROC, stating that the company will be able to pay its dues and is not. being liquidated to defraud any person.
Step 2: Proposal for initiating a liquidation process with voluntary approval from shareholders (Voluntary Liquidation Process) will require at least two-thirds shareholder approval. If a corporation has debt, then there will also need to be at least two-thirds creditor approval before initiating the Voluntary Liquidation Process
Step 3: Public announcement inviting claimants of all stake holders, within five days of such approval, through newspapers as well as on the website of the company.
Step 4: Notification to the ROC and Board about an Approval, sent within seven (7) days after it has been granted.
Step 5: Preparation of preliminary report about the financial state, estimations of assets and liabilities, proposed course of action etc., and submission of the same to a corporate entity within 45 (forty-five) days after said approval.
Step 6: Verification of Claims – Within thirty (30) days form the last date for receipt of claims and preparation of list of Stakeholders, within forty-five (45) days from the last date for receipt of claims.
Step 7: In order to open an account with my bank, I had to fill out paperwork listing my company’s name and what type of business we are. This way, when people come in for us being involuntary liquidated, they know where to find our money.
Step 8: In order to open an account with my bank, I had to fill out paperwork listing my company’s name and what type of business we are. This way, when people come in for us being involuntary liquidated, they know where to find our money.
Step 9: Distribution of the proceeds from realization within six months from the receipt of the amount to each stakeholder.
Step 10: After submitting the final report to the company along with an application to NCLT for its dissolution, it will be up to them whether they want to pursue or withdraw that appeal.
Step 11: The NCLT order related to the dissolution will be submitted to the appropriate Regional Office (ROC) within fourteen days of receiving it.