Professional Documents
Culture Documents
2013
LEGAL FORUM
The winding up process is the last stage in the life of a company, wherein its
existence is dissolved and all its assets are used to satisfy the creditors and
shareholders. Jyoti Srivastava gives a brief overview of the process of
winding up under the provisions of the Companies Act, 2013
A company is a juristic person that comes into existence by way of incorporation and can be dissolved by undertaking
a winding-up process as per the provisions of the Companies Act, 2013 (New Act). The winding up process is the
last stage in the life of a company, wherein its existence is dissolved and all its assets are used to satisfy the creditors
and shareholders.
Reasons for Winding Up
The reasons for compulsory winding up under the Companies Act, 1956 (Old Act) and the New Act remain same,
except that the following grounds stand deleted as reasons for compulsory winding up under the New Act:
a. Suspension of the business for one year from the date of incorporation or suspension of business for a whole year;
or
b. Reduction in number of members of a company below two (in case of a private company) and seven (in case of a
public company).
However, a new ground has been added for compulsory winding up under the New Act. On the application by the
Registrar or any other person authorised by the Central Government by way of notification under the New Act, if the
Tribunal is of the opinion that the affairs of the company have been carried out in a fraudulent manner or unlawful
purpose or any person concerned or involved in the management or affairs of the company has acted in a fraudulent
manner or misfeasance or misconduct, that it is better to wind up the company.
Winding Up Process
Chapter XX, Part-I of the New Act deals with the compulsory winding up process. The petition for compulsory winding
up can be presented to the appropriate authority by:
a. The company; or
b. The creditors (contingent/ prospective creditors1/creditors); or
c. Any contributory or contributories; or
d. All or any person specified in (a) (b) (c) together; or
By
the
Registrar
or
any
person
authorised
by
the
Central
government
for
that
purpose.
form
no
1,
or
3,
whichever
is
applicable
and
is
to
be
submitted
in
three
sets.