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5 Simple Steps to Company Wind up

Preparation of Special resolution
Consent of Trade Creditors
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Meaning of winding up of a company

Winding up is a means by which the dissolution of a company is brought about and its assets are realized and applied in the payment of its debts. After satisfaction of the debts, the remaining balance, if any, is paid back to the members in proportion to the contribution made by them to the capital of the company.

Types of closures of a company:

  • Compulsory Winding Up
  • Voluntary Winding Up
  • Defunct Company Winding Up

Basic Information

Procedure for Voluntary Winding Up

  • Board Resolution is required to wind up the company voluntarily. However, the majority of directors must agree for winding up.
  • A Special Resolution is required to wind up of the company where 3/4th the total Shareholders must cast their vote in favor of winding up the company.
  • The consent of the Trade Creditors is also required to wind up the company. Trade Creditors has to give their approval that they don’t have any obligation if the company gets wound up.
  • The Company has to make a Declaration of Solvency and the same must be accepted by the trade creditors of the company. The Company must show the Company’s credibility in Declaration of Solvency.
  • The liquidator so appointed will make a report of the assets, liabilities, reserves, capital, etc.

Procedure for Defunct Company Winding Up

  • A Defunct or Dormant Company can be wind up with a fast-track procedure which requires submission of the STK-2 form.
  • Hence, Form STK-2 is required in order to wind up a Defunct Company and there is no additional procedure for that.
  • The form STK-2 needs to be filled with the Registrar of Companies and the same needs to be duly signed by the director of the company authorized by its board to do so.


All Inclusive Fees

  • Under fast track exit mode with only two Directors
  • No Transaction since Incorporation


All Inclusive Fees

  • Under fast track exit mode with only Two Directors
  • Transaction Less than 10 Lakh


All Inclusive Fees

  • Under fast track exit mode with only Two Directors
  • Transaction Less than 50 Lakh

Basic Feature

Compulsory Winding Up

There are certain grounds upon which a company can be wound up compulsorily. A company’s inability to pay its debts is a common ground for presenting an originating summons for compulsory winding up. A company is deemed to be unable to pay its debts.

Members’ Voluntary Winding Up

For this to happen, a company must be in a position to pay its debts in full within 12 months after the commencement of winding up. The directors of the company are required to file a declaration of solvency to the above effect. The liquidator will be appointed by the company.

Defaulting in filling Financial Statements or Annual returns

If a Company has made a default in filling with the register its Financial Statement or annual returns for Immediately preceding five Consecutive Financial Years, the Tribunal may order for the winding up the Company.

Company acting against the National Interest

If the Company has acted against the interests of Sovereignty and integrity of India it may be ordered to be wound up by the Tribunal.

Affairs of the Company being Conducted in a Fraudulent Manner

If the Tribunal is of Opinion that the affairs of the company have been conducted in a fraudulent manner the company was formed for Unlawful Purposes. 

Loss of Substratum

If the Company has failed to fully achieve its objective or objects become impossible to carry out the company may be ordered to be wound up on just and equitable grounds.

Bubble Company

Where a company does not carry any Business nor does not it own any property it may wound up by tribunal order. In other words, a set of circumstances in a company that occurs when speculation exceeds the fundamental value of an organization. People purchase stocks expecting them to increase in value, which builds the bubble. The bubble eventually bursts, and the purchased stock does not realize the potential value and losses significant value.


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