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Note on Closure of the Company

Options Available:

Three options are available for closing down the Company as mentioned below:

Option I: STRIKING-OFF

Section 248, of the Companies Act, 2013 deals with strike off provisions of a defunct company. As per Section 248 (2) of the Companies Act, 2013 a company may, after extinguishing all its liabilities, by a special resolution or consent of seventy-five per cent. members in terms of paid-up share capital, file an application in the prescribed manner to the Registrar for removing the name of the company from the register of companies on all or any of the grounds specified in sub-section (1) and the Registrar shall, on receipt of such application, cause a public notice to be issued in the prescribed manner: Provided that in the case of a company regulated under a special Act, approval of the regulatory body constituted or established under that Act shall also be obtained and enclosed with the application.

Option II: VOLUNTARY WINDING-UP (UNDER THE COMPANIES ACT, 2013)

As per Section 272 of the Companies Act, 2013, subject to the provisions of this section, a petition to the Tribunal for the winding up of a company shall be presented by –

  1. The Company;
  2. Any contributory or contributories;
  3. All or any of the persons specified in clauses (a) and (b);
  4. The Registrar
  5. Any person authorized by the Central Government in that behalf; or
  6. In a case falling under clause (c) of subsection (1) of section 271, by the Central Government or a State Government.

As per subsection (4) of section 272, a petition presented by the Company for winding up before the Tribunal shall be admitted only if accompanied by a statement of affairs in such form and in such manner as may be prescribed.

As per subsection (5) of section 272, a copy of the petition made under this section shall also be filed with the Registrar and the Registrar shall, without prejudice to any other provisions, submit his views to the Tribunal within sixty days of receipt of such petition

Option III: VOLUNTARY LIQUIDATION OF CORPORATE PERSONS (UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016)

The provisions relating to voluntary liquidation of a company were earlier covered under the Companies Act, 2013. After the notification of Insolvency and Bankruptcy Code, 2016 (hereinafter referred as “IBC”) the voluntary liquidation of a company is now governed by the provisions of section 59 of IBC and relevant regulations issued under IBC.

In accordance to IBC regulations, a corporate entity can opt voluntary liquidation, if it fulfils two mandatory conditions: –

  • Either the company has no debt or that it will be able to pay its debts in full from the proceeds of assets to be sold in the voluntary liquidation;

and

  • The company is not being liquidated to defraud any person.

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