Closure Of Private Limited
The private Limited Company initiates the process of liquidation to close its business. There are many reasons, such as insolvency, unwillingness to perform the activities related to the business, etc., because which a private decides to wind up. Liquidation means liquidating the assets of the Company, and by it, the corporate entity sells its assets to satisfy its responsibilities and repay the liabilities. When the Company is liquidated, then it is dissolved, and it ceases to exist.
Section 270 of the Companies Act 2013 states that a private company can go for winding up either by the National Company Tribunal (NCT) or voluntary.
Modes of Winding Up of a Company
Winding up of a private limited company can be done in 2 different ways. They are:
- • Voluntary winding up: Voluntary winding up can be commenced either by special resolution or a resolution taken during a general body meeting. By violating any of the terms and conditions of the Memorandum of Association (MOA), the winding up can be executed. Similarly, due to insufficient financial funds or the inability to clear debts, a company can be wound up. The company requires a resolution from the directors to sell off all assets of the company or to transfer the stakes to another entity.
- • Compulsory winding up: The compulsory winding up of a company can be executed upon the order of a tribunal or a court by passing a special resolution proposing a court intervention made by the directors during the company’s board meeting.
Documents required for winding up of the Company
The following checklist is required for winding up the Private Limited Company:
- Consent of all the creditors of the Company
- Indemnity bond notarized by directors of the Company
- A certified statement of all assets and liabilities of the Company by the Chartered Account
- Affidavit from the directors of the Company
- Duly signed CTC of a special resolution by directors of the Company
- Digital signature of all the directors of the Company
- The PAN and Aadhar Card of all the directors
- Consent letter of all the directors
- A statement related to pending litigation of the Company
- No Objection Certificate (NOC) from the Income Tax Department