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.

INCORPORATION OF A PRIVATE LIMITED COMPANY AS A WHOLLY OWNED SUBSIDIARY COMPANY BY A FOREIGN COMPANY

Incorporating a private limited company as Wholly owned

 subsidiary company by a foreign company

The following requirements need to be fulfilled before incorporating Private limited company.

Under Indian Companies Act, 1956

For incorporating a private limited company, minimum two directors are required and 2

members/shareholders also known as Promoters/subscribers are required. Other

requirements are given below:

1. To obtain Director Identification Number (DIN) from Ministry of Corporate Affairs for each person who intends to become the First Director of the new company. This is mandatory requirement.

Incorporating a private limited company as subsidiary company by foreign company

The following requirements need to be fulfilled before incorporating Private limited company.

Under Indian Companies Act, 1956

For incorporating a private limited company, minimum two 

directors are required and 2

members/shareholders also known as Promoters/subscribers 

are required. Other requirements are given below:

1. To obtain Director Identification Number (DIN) from Ministry of Corporate Affairs for each person who intends to become the First Director of the new company. This is mandatory requirement. 

Documents required

a. A valid Pass Port

b. For Address proof - a valid driving license or latest credit card,statement or latest bank statement or any latest utility bill.

c. Passport size colour Photographs for each Director 2 copies

 

Other requirements

The above documents are to be notarized or chief executive officer of the company has to certify the documents and attest on the photographs.

2. Digital Signature for filing the documents on-line

An application form has to be signed for obtaining the digital signature for the purpose of

signing the forms with Ministry of Corporate Affairs. This is mandatory for one of the Directors

Documents required

a. A valid Pass Port 

b. For Address proof - a valid driving license or latest credit card 

statement or latest bank statement 

c. Passport size colour Photograph of the Applicant 2 copies 

Other requirements

  The above documents are also to be notarized.

  

Name availability - Six names in order of preference

Documents required

 a. Corporate/board resolution by the foreign company duly signed by an

Authorized Signatory

b. Power of attorney from the Authroised Signatory in favour of a

person to perform acts in India

To be notarized and attested by Indian Embassy

Other requirements

Board resolution by the Foreign company giving no objection for incorporating the company in India with foreign company's name.

To be notarized and attested by Indian Embassy.

Drafting the Memorandum and Articles of Association  

Information required

1. Proposed objects of the company

2. Proposed authorized capital of the company.

3. Place of registered office in India

Signing of Memorandum of Association and Articles of Association can be done only

after name is approved by the Registrar of Companies.

Documents required

If the documents are signed by the Authorized Signatory in the foreign country it should be notarized and attested by Indian Embassy/Consulate.

If the documents are signed in India it should be signed by the power of attorney holder in India authorized by the foreigners. 

Incorporation of company and obtaining Certificate of Incorporation 

Documents required

Signed copies of Memorandum of Association, Articles of Association, and declarations and power of attorney.

 Obtaining Certificate of Incorporation from Registrar of Companies.

The entire incorporation can be completed within 7 days

Under Foreign Direct Investment

 1. To check whether the investment by the foreign company is coming under automatic

route or approval route. If it is approval route to apply to Ministry of Commerce, Government of India, and obtain approval for investment.

2. To open the bank account after the company is incorporated.

3. To remit the money which was agreed by the Promoters at the time of incorporation

for the share capital of the company

4. To intimate the bank in annexure 6 regarding receipt of foreign remittance by the

Indian company along with KYC particulars of remitter.

5. To obtain Unique Identification Number from Reserve bank of India

6. To allot the shares within 6 months from the date of receipt of money

7. To file FCGPR with Reserve bank of India within 30 days from the date of allotment and obtain approval from the Reserve Bank of India.

 

Income Tax requirements under Income Tax Act.

When a company earns income after all expenses even if it is one rupee tax has to be paid to the Government. The Current income tax for the corporate is 30%.

Labour Laws:

Incorporated Company has to comply with  Labour Laws like Factories Act,1948 ,Provident Fund Act.

Central Excise and Service Tax and Commercial Tax:

The Incorporated company has to comply with Central Excise, Service Tax, Value Added Tax  wherever applicable.

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CONVERSION OF PARTNERSHIP FIRM INTO A LIMITED COMPANY UNDER SECTION 565 OF THE COMPANIES ACT,1956.

Conversion of Firm under Part IX  of the Companies Act, 1956

The firm may be converted into a company by following the provisions of Part IX of the Companies Act, 1956. Sections 565 to 581 deal with conversion of firms into a company under the Companies Act, 1956.

For the purpose of Part IX so far as it relates to the registration of companies limited by shares, a joint stock company means a company having a permanent paid up or nominal share capital of fixed amount divided into shares, also of fixed amount, or held and transferable as stock, or divided and held partly in the one way and partly in the other, and formed on the principle of having for its members the holders of those shares or that stock, and no other persons. Such a company, when registered with limited liability under the Companies Act, 1956 shall be deemed to be a company limited by shares.

A company cannot be registered under part IX unless the assent of majority of its members as are present in person or where proxies are allowed, by proxy, at a general meeting summoned for the purpose is obtained.

Since the liability of the members of the firm is unlimited, when a firm desires to register itself as a company under Part IX as a limited company, the majority required to assent as aforesaid shall consist of not less than ¾ of the members as are present in person or where proxies are allowed, by proxy, at a general meeting summoned for the purpose.

Registration of Company:

1.Resolution by the Partners. 

• On obtaining the approval of name , file the following documents with the registrar of Companies within 60 days from the date of name approval 

                    Memorandum of Association
                    Articles of Association
                    Revised Partnership Deed.
                   
Thereafter these documents are required to be executed by the promoters in their own hand in the presence of professionals after the date of Stamping of Memorandum & Article of Association in duplicate stating their full name, father’s name, residential address, occupation, number of shares subscribed for & Signature etc.

• However, if any director is foreigner and not present in India after the date of Stamping of the Memorandum & Article of Association, in that case, his signature should be attested in Indian Embassy located in his home country.
• Form No. 1 – This is a declaration to be executed on a non-judicial stamp paper by one of the directors of the proposed company or other specified persons such as Chartered Accountants, Company Secretaries, Advocates, etc. stating that all the requirements of the incorporation have been complied with. (Annexure 2)
• Form No. 18 – This is a form to be filed by one of the directors of the company informing the ROC the registered office of the proposed company. (Annexure 3).
• Form No.: 32 – This is a form stating the fact of appointment of the proposed directors on the board of directors from the date of incorporation of the proposed company and is signed by one of the proposed directors. (Annexure 4).
• Power of Attorney signed by partners authorizing one of the subscribers or any other person to act on their behalf for the purpose of incorporation and accepting the certificate of incorporation.
• Form No. 37 along with Form No. 39 (Annexure 5 & 6).
• Declaration by two partners verifying the particulars set forth in the above mentioned documents.
• Consent letters from Directors
• Filing fees as may be applicable
• Other information to be submitted:

i) A list showing the names, addresses and occupations of all persons who on a day named in the list, not being more than 6 clear days before the date of registration were members of the company, with the addition of the shares or stock held by them respectively, distinguishing, in cases where the shares are numbered, each share by its number.

ii) If the company is intended to be registered as a limited company, a statement specifying the following particulars :-

a) the nominal share capital of the company and the number of shares into which it is divided or the amount of stock of which it consists

b) the number of shares taken and the amount paid of each share

c) the name of the company, with the addition of the word “Limited” or “Private Limited” as the case may be, as the last word / words, in case the company is being registered with limited liability.

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