VOLUNTARY WINDING UP PROCEDURES UNDER THE COMPANIES ACT,1956.

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PROCEDURE FOR MEMBERS VOLUNTARY WINDING UP UNDER THE COMPANIES ACT, 1956

The Companies Act 1956 provides for Winding up of the company. The Winding up may be voluntary Winding up or Winding up under supervision of the Court.
The Voluntary Winding up may be members voluntary Winding up or creditors voluntary Winding up.  The procedure for members voluntary Winding up under Section 484 of the Companies Act, 1956, (”hereinafter called the Act”) is given below.

COMMENCEMENT OF WINDING UP

1.      First to convene a Board Meeting, the directors have to make a Declaration of Solvency in Form 149 of the Companies (Court) Rules and forms under section 488 of the Act in a non-judicial stamp paper of requisite value along with a duly verified affidavit which should be signed by two directors or a majority of them. A statement of assets and liabilities at estimated realizable values as on the date of Declaration of Solvency should also be prepared and signed as above. The Declaration should be accompanied by an audited Balance Sheet and Profit & loss account as on nearest practicable date before date of declaration along with Auditor’s Report. The Form 149 and affidavit should be duly notarized and
e-form 62 to be filed with Declaration of Solvency with ROC, the time limit for such filing being 5 weeks before the date of passing of the Special Resolution for winding up in a general meeting of members.

2.      Next, the Company has to pass at its General Meeting a Special Resolution called Resolution for Voluntary Winding Up and appointment of Liquidator(s).

3.       To Publish a Public notice regarding Voluntary Winding up (section 485) and the appointment of liquidator (s) and fix their remuneration.

4.      Publication of text of Special resolution and Form 151 (Notice of appointment of Liquidator) in the Official Gazette and in two newspapers circulating in the district, where the registered office of the Company is situated. One in English and another in regional language. Though the Act does not stipulate two papers, this has been the normal existing practice. This is required to be made with in 14 days of passing of Special Resolution.

5.      Form 23 to be filed for Special resolution passed and Liquidator appointment – 30 days;

6.      Form 62 [Others] category– Intimation of Liquidator appointment – Section 493 -- 10 days from appointment

7.      Form 62 – Form 152 – Intimation by Liquidator- 30 days from appointment date –

8.      In the above forms, Gazette notice copy, newspaper cuttings, EGM notice, true copy of SR passed have to be attached.

9.      To obtain a Statement of Affairs of the Company in Form-57  duly verified by Affidavit in form-58 from the Directors within 21 days of commencement of winding up to the liquidator.

The Statement of Affairs primarily includes:-

1.      Details of Assets, liabilities and debts due to the company. A liquidator to take steps determines the Creditors / liabilities of the company and discharges the same out of the funds available with the company and to call for a General Meeting. To do the process of collection from Assets and payments to Creditors.

2.      The liquidator is then required to do the following things namely speedy realization of assets, preparation of list of creditors, admission of proof, statement of list of contributories, making of such calls as are necessary, payment to secured creditors of costs including the liquidator’s own remuneration, payment of preferential claims and distribution of surplus after meeting all the claims of creditors and after adjusting all rights and claims.

3.      The Liquidator to intimate about the commencement of liquidation process of the company to the Income Tax department under section 178 of the Income Tax Act 1961.

4.      The liquidator has to file various forms under The Companies (Court) Rules, 1959 in connection with member’s voluntary winding up with ROC in form 62 electronically. The details of the forms are given below which are to be filed before Final meeting are:

          a. Form 149- Declaration of Solvency- Statement of Assets and Liabilities.

          b. Form 152- Notice of appointment of Liquidator

AFTER COMMENCEMENT OF WINDING UP

1.      Liquidator to realize all assets and pay of all liabilities possible and distribute the available surplus to all existing members proportionately.

2.      If winding up extends beyond one year of passing Special Resolution, Liquidator to file the following returns.

3.      Form 153- Statement of Accounts- to be filed only if winding up is not completed within a year

4.      Form 154- Affidavit verifying the account- only if required Form 153 is filed

FINAL MEETING 

After winding up is completed the liquidator should convene Final meeting of members to lay Liquidation Account, to dispose of books and accounts and to explain the winding up procedure to the members. Advertisement about the meeting shall be published not less than one month before the meeting in the official Gazette and also in some newspaper circulating in the district where the registered office of the company is situated(sec 497).

1.      Form 155- Notice for convening final meeting.- To be published both in Official Gazette and two news papers – English and regional language – at least 30 days before Final meeting.

2.      Form 156- Liquidator to prepare Statement of Account of the Winding up- Member’s voluntary winding up.

     Liquidator to hold the Final Meeting of members.

AFTER FINAL MEETING

1.      Form 62 – Form 156

2.      Form 62 – Form 157 – Return of Winding up

3.      Form 23 – Resolutions passed at the Final meeting along with Minutes of meeting

4.      In the above forms, Gazette notice copy, newspaper cuttings, have to be attached

5.      Liquidator has a duty in accordance with Section 496 of the act to call a General Meeting at the end of each year.

6.      To submit documents, books and accounts to official liquidator for verification.

7.      Official Liquidator has to verify the statements and submit his report to the court.

8.      The High Court will issue the order for liquidation of the company.

9.      To file copy of order of High Court in Form -21 with ROC Within 30 days from the receipt of order from the High Court and with this the liquidation process is over.

10.  To check the status of the company in MCA to find out and confirm the status of the company is changed to liquidated. 

Other points for information 

t was learnt  that as on 11-4-2013  that there were 4,988 companies awaiting dissolution in various High Courts out of which 1,046 companies are pending dissolution for more than 20 years. There were 728 companies which had no assets.

 Delay in winding up of companies and distribution of dues to claimants not only discourages further investment in the industrial sector domestically but also sends negative signals to investors abroad. He assured all help from the Ministry for providing skilled manpower, technical up gradation and capacity building of personnel assisting official liquidators for adoption of newer techniques like e-Governance and

 e Auctions.