Company is a voluntary association that is formed and managed by owners to run a business successfully. A company is an entity that focuses on running a business smoothly. It is important for a company to survive in the market. A company produces a huge amount of products and sell them in the market in order to earn revenue. This revenue helps the company to establish from a small scale to a large scale only if the company earns sufficient profits. And as we all know that risk is the major factor that is to be considered before starting a business or a company and to overcome the losses one should be efficient enough to run the business smoothly.

These days a number of companies are being established in the markets and as more and more companies are coming into existence, the competition is rising at an alarming rate. Now the question which arises here is that what is the possible reason behind shutting down a company? Well, a company chooses to implement a shutdown of production if the revenue being earned by it does not cover the costs being incurred on the production of various products and services. So if a company or a firm does not choose to implement shutdown, it will eventually have to face higher losses.

According to the Companies Act 2013, a company can be wound up through Tribunal on the following conditions:

1. If the company is unable to pay the debt.
2. If there is a special resolution issued for winding up a company.
3. If the company violates the terms and conditions mentioned in the Companies Act.
4. If the Tribunal itself orders the company to wound up under chapter XIX.
5. If the company has somehow failed to file returns and financial statements for the preceding five continuous years.
6. If the company has done any fraudulent exercise.

If a company wishes to wound up voluntarily then the following steps can be followed:

• STEP 1: Company needs to conduct a Board Meeting that must include two directors or a majority of directors who will then approve the resolution for winding up a company. The directors will also declare that the company has no more debts and in case the company has some debts then they will be paying it off by selling the assets of the company. Another General Meeting is to be fixed (date, time and place of meeting) soon after five weeks of Board Meeting.

• STEP 2: Next step is to issue a notice regarding the General Meeting. You are then required to propose the resolution with explanatory statement for winding up of the company.

• STEP 3: During the General Meeting you are required to pass the general resolution by general majority or you are required to pass a special resolution by 3 to 4 majorities.

• STEP 4: Soon after the General meeting gets over, you are required to organize a meeting with the Creditors. If the company fails to meet all its liabilities on winding up of the company then Tribunal has to be involved in the winding up of the company.

• STEP 5: An appointment notice of liquidator has to be sent to the registrar within ten days of passing the resolution for winding up of the company.

• STEP 6: An advertisement is to be given in a newspaper and a notice of the resolution in the Official gazette within 14 days of passing the given resolution.

• STEP 7: You are then required to file certified copies of the special or ordinary resolution that was passed in the General Meeting. This is to be done within 30 days of General Meeting.

• STEP 8: You are now required to wind up all the affairs and produce the liquidators account and get the same audited.

• STEP 9: You are now required to conduct a final General Meeting.

• STEP 10: As soon as the affairs of the company are completely wound up and the company is about to get dissolved you need to pass a special resolution for disposal of the books and papers which belong to the company.

• STEP 11: In the next two weeks after conducting the final General Meeting you have to submit a copy of the accounts and file an application to the Tribunal. The application will be a request application for passing an order in accordance to dissolution of the company. In case the Tribunal is satisfied, a dissolution order will be passed within 60 days of receiving the request application.

• STEP 12: In the next step the company liquidator will file a copy of the order with the registrar.

• STEP 13: The Registrar then will publish a notice in the Official Gazette which will state that the company has been dissolved.

So it is important to choose the right ways to shut down a company as it will save a lot of money and there is a possibility that you get compensated for the losses.

Please visit us at Taxmantra.com – Business Maintenance  for any query, support or feedback.

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