2 of 8

Voluntary winding up

When a company is wound up by the members or the creditors without the intervention of Tribunal, it is called as voluntary winding up. It may take place by:

1. By passing an Ordinary Resolution in the General Meeting if:

the period fixed for the duration of the company by the articles has expired;
some event on the happening of which company is to be dissolved, has happened.

2. By passing a special resolution to wind up voluntarily for any reason whatsoever

3 of 8

WHO SHALL CARRY OUT THE WINDING UP PROCEDURE ?

The Company shall appoint one or more liquidators, in a general meeting, who shall look after the affair of winding up procedure, and distribution of assets. [490 (1)]
The liquidator so appointed, shall be paid remuneration for his services, which shall also be fixed in general meeting [490 (2)]
The Company shall also give notice of appointment of liquidator to the registrar within ten days of appointment (493)
Once the company has appointed liquidator, the powers of Board of Directors, Managing Director, and Manager, shall cease to exist. (491)
The liquidator is generally given a free hand, to carry out the winding up procedure, in such a manner, as he thinks best in the interest of creditors, and company.
In case, the winding up procedure, takes more than one year, then liquidator will have to call a general meeting, at the end of each year, and he shall present, a complete account of the procedure, and position of liquidator (496)

4 of 8

WHEN AFFAIRS OF THE COMPANY ARE FULLY WOUND UP�

The liquidator shall take the following steps, when affairs of the company are fully wound up : (497)

Call a general meeting of the members of the company, a lay before it, complete picture of accounts, wining up procedure and how the properties of company are disposed of.
The meeting shall be called by advertisement, specifying the time, place and object of the meeting.
The liquidator shall send to, the Registrar and official Liquidator (“OL”) copy of account, within one week of the meeting.
If from the report, official liquidator comes to the conclusion, that affairs of the company are not being carried in manner prejudicial to the interest of it’s members, or public, then the company shall be deemed to be dissolved from the date of report to the court.
However, if official liquidator comes to a finding, that affair have been carried in a manner prejudicial to interest of member or public, then court may direct the liquidator to investigate furthers.

5 of 8

DISTRIBUTION OF PROPERTY OF COMPANY ON VOLUNTARILY WINDING UP

Once the company is fully wound up, and assets of the company sold or distributed, the proceedings collected are utilised to pay off the liabilities.
The proceedings so collected shall be utilised to pay off the creditors in equal proportion.
Thereafter any money or property left may be distributed among members according to their rights and interests in the company

6 of 8

Steps for Voluntary Winding up of a Company

Step 1: Convene a Board Meeting with two Directors or by a majority of Directors. Pass a resolution with a declaration by the Directors that they have made an enquiry into the affairs of the Company and that, having done so, they have formed the opinion that the company has no debts or that it will be able to pay its debts in full from the proceeds of the assets sold in voluntary winding up of the company.

Step 2: Issue notices in writing calling for the General Meeting of the Company proposing the resolutions, with suitable explanatory statement.

Step 3: In the General Meeting, pass the ordinary resolution for winding up of the company by ordinary majority or special resolution by 3/4 majority. The winding up of the company shall commence from the date of passing of this resolution.

Step 4: On the same day or the next day of passing of resolution of winding up of the Company, conduct a meeting of the Creditors. If two thirds in value of creditors of the company are of the opinion that it is in the interest of all parties to wind up the company, then the company can be wound up voluntarily. If the company cannot meet all its liabilities on winding up, then the Company must be wound up by a Tribunal.

7 of 8

Step 5: Within 10 days of passing of resolution for winding up of company, file a notice with the Registrar for appointment of liquidator.

Step 6: Within 14 days of passing of resolution for winding up of company, give a notice of the resolution in the Official Gazette and also advertise in a newspaper with circulation in the district where the registered office is present.

Step 7: Within 30 days of General Meeting for winding up of company, file certified copies of the ordinary or special resolution passed in the General Meeting for winding up of the company.

Step 8: Wind up affairs of the company and prepare the liquidators account of the winding up of the company and get the same audited.

8 of 8

Step 9: Call for final General Meeting of the Company.

Step 10: Pass a special resolution for disposal of the books and papers of the company when the affairs of the company are completely wound up and it is about to be dissolved.

Step 11: Within two weeks of final General Meeting of the Company, file a copy of the accounts and file an application to the Tribunal for passing an order for dissolution of the company.

Step 12: If the Tribunal is satisfied, the Tribunal shall pass an order dissolving the company within 60 days of receiving the application.

Step 13: The company liquidator would then file a copy of the order with the Registrar.

Step 14: The Registrar, on receiving the copy of the order passed by the Tribunal then publishes a notice in the Official Gazette that the company is dissolved