Home Business & Management Winding up of a Startup - How to Close a Startup

Winding up of a Startup – How to Close a Startup

Insolvency is the state of being unable to pay the money owed, by a person or company, on time; those in a state of insolvency are said to be insolvent. End result winding up of startup

Index

  1. The procedure of winding up
  2. Board meeting
  3. Publishing
  4. Conclusion
  5. FAQs

The Procedure of winding up

Converting a board meeting by giving notice to call director for winding up

As per the provision of section 173 of Company Act 2013 ,

And making a declaration of solvency by the directors of the company in Form 149.

Verified an affidavit that they have made a full inquiry into the affairs of the company, and in their opinion,

The company has no debts or else it will has to pay its debts

In full within a period of three years.

from the commencement of the winding up Section 488);

Ensure that the requisite Quorum

(one third of the total strength or two directors, whichever is higher)

is present in the board meeting as required under section 174 of Companies Act, 2013.

Board meeting

Board meeting approve the resolution for putting the company into member’s voluntary winding up,

appointment of liquidator and fixation of his remuneration and approve

The notice of general meeting for passing of resolution by the members

for winding up of the company Sections 484 and 490

Ensure that a body corporate is not appointed as a liquidator of the company Section 513):-

Filing of declaration of solvency with the registrar along with the financial statements of the company

As on last practicable date before the date of declaration of solvency,

The report of auditor and a statement of assets and Habilities at least five weeks

Before the date of general meeting [Section 488(2)]

Calling of general meeting by giving not less than twenty one clear days notice in writing or through electronic mode proposing

The ordinary or special resolution, as the case may be, with suitable explanatory statement Section 484(1)(a) and 484(1)(b)];

Passing of ordinary resolution by ordinary majority or special resolution by 3/4th majority

the general meeting for voluntary winding up of the company, for appointment of liquidator and for fixing the remuneration of the liquidator.

Date of passing of resolution in the general meeting is to be considered as the date of commencement of voluntary winding up.

In case of listed companies, notify the stock exchange about passing of such resolution under regulation 30 of SEBI (Listing obligations and Disclosure Requirements) Regulations, 2015;

• Give notice to the registrar for appointment of liquidator and for passing of special resolution

in the general meeting within ten days and thirty days,

Respectively from the date of general meeting Submit to the liquidator a statement on company’s affairs

In duplicate duly verified by an affidavit within twenty one days of commencement Of winding up:-

Publishing

publishing notice of resolution for voluntary winding up within fourteen days of the date of general meeting

the official gazette and also in a newspaper, circulating in the district where the registered office of the company is situated [Section 485(1)]

Ensure that the liquidator has, within thirty days of his appointment published a notice of his appointment in the official gazette

And has given a notice of his appointment to the registrar (Section 516 .

Ensure that the liquidator has given a notice of his appointment to Assessing Officer having jurisdiction over the company

Within 30 days his appointment (Section 178 of Income Tax Act, 1961),

• If vacancy occurs by death, resignation or otherwise in the office of the liquidator, company in general meeting may, subject to any arrangement with the creditors, fill up the vacancy and also notify various authorities in the manner as provided above [Section 492);

Calling of meeting of the creditors if the liquidator is of the opinion

That the company will not be able to pay its debts in full or that period has expired without paying the debts in full within the period as mentioned in the declaration of solvency and laying before them a statement of assets and liabilities of the company [Section 495(1)

If the winding up continues for more than a year, calling of general meeting and creditors’ meeting (if applicable),

Within three months from the end of each year and laying before the members and the creditors (if applicable) by the liquidator an account of his acts and dealings and of the proceedings of winding up [Section 496);

If winding up is not concluded within one year after its commencement, liquidator shall file a statement with respect to proceedings in and position of the winding up duly audited by an auditor of the company with the registrar twice in every year in e-form GNL 2 [Section 551 read with rule 327 of Companies Court Rules, 1959’];

The first year’s statement as mentioned above should be duly audited for the full year

at is for the period commencing from the appointment of the liquidator up to the end of twelve months

And shall be filed within one month from the expiration of twelve months

Thereafter subsequent statement in every 6 months.

The statement is required to be filed even if the company does not have any receipts or payment [Rule 327 of Companies Court Rules, 1959); Complete the winding up proceedings by realising all assets and paying all liabilities and distributing the surplus among the members.

The provisions of sections :-

426 to 432, 452, 487, 491, 494,511,511A, 512514515517 to 520, 528 to 549 and 553 and prescribed forms and rules of Companies (Court) Rules 1959 should also be noted in this respect;

As soon as affairs of the company are fully wound up, liquidator to prepare an account of the winding up showing how the winding up has been conducted and property of the company has been disposed of and get the same audited.

The audit report should be in the format suggested by ICAT(Section 497)

General meeting

General meeting and creditors meeting (if applicable), by advertisement published in the official gazette and also in a newspaper,

The district where the registered office of the company is situated, at least one month before the date of meeting and laying before count of winding up

And pass a special resolution for disposal of books and papers of the company Section 497)

Filing of copy of the accounts of winding up and a return of holding the meeting and date there after

With the registrar and the official liquidator, within one week from the date of meeting

Filing of copy of special resolution passed for disposal of books and papers of the company with the registrar within thirty days of passing of resolution: –

The registrar on receiving the accounts of winding up and the return

Will forthwith register them and the official liquidator on receiving

High court

The accounts and return will make a security of the books and affairs of the company and make a report to the High Court

And from the date of submission of the report to the High Court, the company shall be deemed to be dissolved.

On receipt of the report of official liquidator, High Court may pass an order that the company shall stand dissolved

If on such scrutiny, the Official Liquidator makes a report to the High Court that the affairs of the company have been conducted in a prejudicial manner,

The Court shall by an order direct to the Official Liquidator to make further investigations of the affairs of the company

And for that purpose shall vest him with all such powers as the Court may deem fit Section 497(6A)

Conclusion

winding up

however, On receipt of the report of the Official Liquidator on such investigation, the Court may either make an order that.

The company shall stand dissolved with effect from the date to be specified by the Court therein or make such other order accordingly, as per the circumstances of the case brought out in the report [Section 497(6B)];

Similarly, The Court may in a fit case declare the dissolution to be void within two years of the date of dissolution

On application by the liquidator of the company or by any other interested person;

A person who obtains the said order of the Court shall file the certified copy of the said order

With the Registrar f office within 30 days or such further time allowed by the Court.

FAQs

1) what is insolvency?

Insolvency is the state of being unable to pay the money owed, by a person or company, on time; those in a state of insolvency are said to be insolvent. … Balance-sheet insolvency is when a person or company does not have enough assets to pay all of their debts.

2) what is the high court?

The supreme court is the highest court within the hierarchy of courts in many legal jurisdictions. Other descriptions for such courts include court of last resort, apex court, and high court of appeal. Broadly speaking, the decisions of a supreme court are not subject to further review by any other court.

3) what is law?

the system of rules which a particular country or community recognizes as regulating the actions of its members and which it may enforce by the imposition of penalties.

4) what are board directors?

A board of directors is a group of people who jointly supervise the activities of an organization, which can be either a for-profit business, nonprofit organization, or a government agency

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