How to Close a Private Limited Company?
Running a business comes with its own challenges. Sometimes when things do not work out a business may have to be shut down. There can be several reasons to close or wind up the company. Here are four ways in which a private limited company can be closed
Shutting down a private ltd. company is a challenging process. However, if you are the owner of an incorporated business in the form of a Private Limited Company, then it is even more so. A Pvt. Ltd. Co. can be shut down in several manners depending upon the
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The sections that deal with the closure of companies under the Companies Act 2013 have not yet been notified; hence Section 560, of the Companies Act, 1956, deals with a strike off provisions of a defunct private ltd company. Any defunct company who wants to strike off its name from the register of Registrar of Company can apply via Form FTE for strike off of its name from the register maintained by ROC. A private ltd company may be declared defunct and shut down by petitioning the Registrar of Companies.
Sell the Company
To sell off a Private Limited Company is also a kind of voluntary winding up. It can be done by selling shares of the company (selling the majority shareholding of the company). Technically speaking it is not an actual winding up but the stakes are transferred to another person or entity and the majority shareholders are discharged of their stocks and responsibilities.
Compulsory Winding Up
Any company registered in India under the Companies Act, which did an unlawful act, fraudulent act or even if they contributed any action in some fraudulent or unlawful activities then such company would be wound up compulsorily by the Tribunal.
Step 1 - Petition will be filed
The petition will be filed by the following: The Company or The Trade Creditors of the Company or Any contributory or Contributors to the company or Any or all of the above mentioned three categories or The Central or State Government or By the Registrar of the Companies The petition should be in the Form WIN 1 or WIN 2 and should be submitted in triplicate. The petition shall be accompanied by an affidavit in Form WIN 3.
Step 2- Petition shall be accompanied together with the Statement of Affairs of the Company
All the documents accompanied by petition should be audited by a practicing CA and the opinion given by the Auditor on the Financial Statement must be unqualified. The statement of affairs should be in Form WIN 4 in duplicate, which should be verified by an affidavit in Form WIN 5.
Step 3-Advertisement for at least 14 days
The Petition should be Advertised in a daily journal at least for 14 days and the language of the advertisement should be in the Regional language (Regional Language of the area) and in English. The Advertisement must be carried out under Form 6
Step 4-Proceedings of the Tribunal
The Tribunal will hear the petition on the date fixed for hearing, accept objections and replies from the petitioner and respondent. The Tribunal may appoint a provisional liquidator. The order appointing provisional liquidator shall be made in Form WIN 8. The order of winding up shall be made in Form WIN 11. The order of winding up shall prescribe: The duty of such persons to submit the complete audited books of accounts up to the date of the order. Provide the date, time and place for the Company Liquidator Surrender the assets and the documents of the assets to the Company liquidator. Upon a winding-up order, the Company liquidator shall take into custody all properties and effects, actionable claims and the books and papers of the company. The Company liquidator shall submit a report to the Tribunal within 60 days of the date of the winding-up order. After the affairs of the company have been completely wound up, the Company liquidator shall make an application to the Tribunal for dissolution of the company. If the tribunal finds it just and reasonable in the circumstances of the case that an order for the dissolution of the company should be made, make an order that the company be dissolved from the date of the order. The company shall be dissolved accordingly. The Company liquidator shall within 30 days of the date of the order, forward a copy of the order to the registrar. If the tribunal finds the accounts are in order and all the required compliance have been satisfied, the tribunal would pass the order for dissolving the company within a period 60 days of receiving the application. After the order has been passed by the tribunal, the registrar will then issue a notice to the Official Gazette stating that such company is dissolved.
Voluntary Winding Up
Winding up a company voluntarily require long procedural compliance to follow. There are certain mandatory requirements which have to be completed to close down a company voluntarily. A company can be wound up voluntarily in the situations mentioned below: – The company passes a resolution in its general meeting upon the expiry of the duration for which it is formed, or upon the occurrence of any event in respect of which the articles provide for its dissolution, or – The company passes a special resolution (with approval of at least 3/4th of the shareholders) for a voluntary winding up of the company. The voluntary winding-up commences from the date of passing of the resolutions mentioned above. The company should also appoint a Company liquidator in the same meeting. Such an appointment should also be confirmed by a majority of the creditors (in terms of value) of the company.