Winding Up or Closing Down of a Private Limited Company in India
The Section 270 of the Indian Companies Act of 2013, contains provisions regarding the winding up of a company, either by the Tribunal or Voluntarily. This webpage offers exclusive information about the voluntary winding up or closing down of a private limited company in india, to help the concerned entrepreneurs or companies located in entire country.
The voluntary winding up of a private limited company may be made for anyone or few of the following purposes:
- To comply with certain provisions given in its AOA related with the winding up of the company.
- To pay off any debts or loans to creditors.
- To put an end to losing business of the company amid intense business competition.
- To stop making compliances with ROC and other relevant regulatory authorities.
- To release the assets and investments made in the company.
- To make an official/legal closure of the company.
- To meet any other objectives.
The voluntary shutting down of a private limited company may be initiated by its shareholders or creditors. The section below, gives separate information regarding how to close down a private limited company in india voluntarily, with or without support of our company/corporate lawyers.
Procedure to Close Down a Private Limited Company
Even in case of a voluntary shutting down of a private limited company, the directors and shareholders have to proceed strictly according to the prescribed provisions and steps, to land on the safest side.
What is the Procedure for Winding Up a Private Limited Company in India?
The procedure to close down a private limited company in India involves the following steps:
- The two directors of the private limited company must take a resolution in the Board Meeting in favor of the proposed winding up of the concerned company, stating that the company holds no debts, or if it has any debts, it will pay those off through sale of its assets after dissolution. Within Five Weeks of this board meeting, the company must conduct a General Meeting of its shareholders, and send notices (contained the fixed date and time of future general meeting) to shareholders with relevant explanations.
- On the day of General Meeting, an ordinary resolution with an ordinary majority, or a special resolution with the 3/4th majority, must be passed in favor of the winding up of the company. The process of winding up gets started from the date of passing such a resolution in the general meeting of the company.
- To go ahead with the winding up procedure, then the company requires to conduct a meeting with its creditors, and get consent of at least 2/3rd of them in favor of winding up.
- Within 10 days of passing resolution in support of the winding up of the company, the concerned ROC must be informed about the resolution, requesting the appointment of an official liquidator.
- Within 14 days of taking the winding up resolution, the company then publish a notice related with winding up in the Official Gazette and an Advertisement in a newspaper read widely in the district where the registered office of the company is situated.
- Within 30 days of the passed resolution in general meeting as well as the meeting with creditors, the company is required to prepare the statement of accounts, affidavits from the directors, indemnity bonds, and documents related with share capital and assets, profits, debts, liabilities, etc. Calling of a general meeting for taking a special resolution regarding the disposal of accounts.
- Lastly, within Two Weeks, filing of the accounts and the special resolution with the concerned ROC will be made. If satisfied, the ROC will then pass an order regarding closure of the company within 60 days.