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Close a Company


Winding up is the legal process of closing down a company and ceasing all operations. After the Company is closed, the Company's existence ends, and the assets are monitored to ensure that the stakeholders' interests are not jeopardized.
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Overview

A Private Limited Company is an artificial judicial person that must adhere to a number of regulations. If the company fails to comply with these regulations, fines and penalties may be imposed, as well as the Directors' ability to incorporate another company.

Closing a company can be carried out anytime upon shareholders approval. If there are employees working in the company then all the dues need to be settled along with the secured and unsecured creditors.

There are two ways a company can proceed for closure
  1. Voluntary closing a Company
    A voluntary closing of a company can be carried out by its members if the following conditions are met:
    • If the board of directors approves a special resolution to dissolve the company.
    • The General Meeting of the Company passes a resolution requiring a company to wind up voluntarily as a result of the expiration of the period of its duration, any as provided in the Articles of Association, or the occurrence of any event for which the articles of association provide that the company should be dissolved.
  2. Compulsory Closing a Private Limited Company
    This type of company winding up is handled by the Court. Below are the reasons for the same
    • a company's unpaid debts
    • When a special resolution is passed for winding up
    • An illegal activity committed by the company or its management.
    • If the company is engaged in any type of fraud or misbehavior.
    • If you don't file your annual report or financial statements with the ROC for five years in a row.



Benefits of Closing a Company

Debt-free after liquidation

The directors and all company executives are free of any creditor liabilities and pressure once the liquidation procedure is completed.

Keeping the company out of legal trouble

If the resolution is passed by directors on a voluntary basis, the court or court will ignore legal action and provide corporate managers with a platform to focus on other commercial prospects.

Comparatively cheap liquidation costs

The liquidation process costs or expenses are generally short, as charges applicable for the sale of assets.

All leases shall be cancelled

When a firm or entity has entered a lease for a specified period, it shall terminate all terms and conditions of the lease during the winding-up procedure. If a penalty is payable, it is taken from the sale of assets.

Creditors' advantages

Creditors will profit from the liquidation procedure after a long struggle since they will be entitled for a default payment based on all creditors' credit proposals.

Checklist/Requirements

Documents required to close a company

  1. Indemnity Bond notarized by Directors (STK 3).
  2. Bank Account Closure Certificates.
  3. Statement of Accounts latest.
  4. Statement of Accounts containing assets & liabilities of the Company Audited by CA.
  5. Affidavit in Form STK 4 by every Company.
  6. Special Resolution or Consent of 75% Members.
  7. PAN and TAN of the company

Process of Closing a Company

Step 1: Passing the board resolution for closure of company
Step 2: Passing a special resolution by the shareholders to close the company
Step 3: Getting the approvals from the creditors
Step 4: Forwarding the declaration of solvency report to ROC
Step 5: Appointing of official liquidator
Step 6: Approval of liquidation report
Step 7: Submit the report with the ROC
Step 8: ROC approves the Closure

Close a company

Why Choose Us

Entrepreneur Friendly

We make the process so easy and fast that you will not even feel the headache of all the paperwork, and our professionals will provide you all the promised deliverable within a given span of time.

Experienced Professionals

All our professionals are qualified and specialized in that particular work. Making sure no mistakes are done at the time of filings with the authorities so that company won’t have to pay any penalties due to mistakes.

One Stop for All Your Requirements

We support you throughout the journey of your business, from the incorporation, Accounting and taxation support, Secretarial compliance support, and Legal support.

Cost-Effective

We believe that cost plays a vital role in any company’s growth stage, that’s why we do not surprise our clients with hidden charges, you pay what you see in the initial proposal.


Frequently Asked Questions


The importance of liquidation can be summed up as follows:
  • The directors and other company officials are free of all creditor liabilities after the liquidation procedure is completed.
  • The company can avoid legal action from a tribunal or a court if the directors sign a voluntary declaration.
  • The expense of liquidation is quite inexpensive when compared to other types of closure.
  • Creditors will benefit from the asset sale since they will be entitled for default payment.
Directors are usually not personally liable for the company's debts. As a result, if the company fails to pay its debts and the creditors file a lawsuit, only the firm's assets are at risk, not the directors' personal assets.
A director can, in fact, quit. However, resigning from a corporation that is in the process of liquidation is not recommended. This is especially true if a director has submitted a solvency declaration. If he resigns due to an unavoidable circumstance, he does not need to file the DIR-12 Form since the company is in the process of being liquidated.
Once the name is struck off from the from the company register, it can be used by other companies. But if there is any trademark registered with that name, in that it case you cannot use that name.
There will be no business continuity if the employer goes out of business, and the employees would be laid off. Employees, on the other hand, will be able to sue the corporation for unpaid dues (pay, allowances, and so on). If the insolvent company lacks the finances to pay its employees, they can turn to the National Insurance Fund (NIF) for assistance.