Winding Up A Private Limited Company | ₹ 25,000 *onwards | Legex | Close your company and protect yourself from liabilities, fines, unnecessary compliance and filings.

Overview

Closing a business is a tough decision, but a right one to make in case business isn’t working or you have any other reasons, to avoid paying unnecessary charges on compliance and audit. Our legal experts will help you complete any pending compliances, sell off stocks, pay the due amount to creditors, and give the remaining assets to shareholders or partners.

How to windup the company?

Conducting Board Meeting and passing a Board Resolution to wind up the company by ordinary majority or special resolution by ¾ majority.
Appointing an Insolvency professional or official liquidator.
Calculating and Liquidating all assets, finances, covering all debts, liabilities and recoveries. If creditors are majority owners, getting an approval from ¾ of the creditors.
Within 7 days of the Board Meeting, informing Insolvency and Bankruptcy Board of India (IBBI).
Sending acknowledgement to the Income Tax department and getting their No Objection Certificate.
Passing a public announcement within 14 days of Board Meeting in an official gazette, one english newspaper, and one local newspaper, where the company is located.
File certified copies of the resolution passed in the Board Meeting for winding up the company, within 30 days of the board meeting.
The liquidator or the insolvency professional then file a copy of the accounts and file application to wind up the company.
Company is winded up and usually takes about 12 months.

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Documents Required:

PAN card of the company
Company’s CoI, MoA and AoA
Company’s bank account statement and certificate of closure
Last audit report and Statement of accounts related to all assets and liabilities, audited by Chartered Accountant (CA)

FAQs

When does a company need to be winded up?

The company can be closed for a number of reasons. The prominent ones being-

Insolvency
Bankruptcy
Unwillingness to continue business operations

Are directors personally liable for company debts?

Usually, directors are not personally liable for company debts. Therefore, if the company fails to pay off its debts and the creditors move court, the company assets are put to risk only and not the personal assets of the directors.

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Why is it important to wind up a company? Why can’t I leave it as it is?

It’s important to wind up the company to protect directors and officials from any liabilities:

Once the liquidation process is over, the directors and other company officials are free from all creditor liabilities.
If the company directors pass a voluntary declaration, the company can avoid legal actions from a tribunal or a court.
The creditors are benefited as they will be eligible for default payment from the sale of assets

How long does liquidation of a company take?

In case of voluntary closure, it usually takes 3-9 months for the company to liquidate. In compulsory liquidation, it can take up to 2 years to complete, since the date of application. The duration varies from company to company, depending on the complexity of the process involved.

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What’s the liquidator's role and strategy?

As a company is winded up, a liquidator is appointed to look after the process independently. Liquidator assesses finances, sells assets to repay all pending liabilities. The remaining balance, if any, after repayment to the creditors, gets distributed among the shareholders of the company.

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How to windup the company?

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