There may be numerous reasons for a company to shut down. There may be possibilities that the company is not able to perform well in their business and are planning to shut the company. Some other possible reasons are: business closure, heavy loss, the demise of the promoter or bankruptcy. The procedure could be initiated by some of the shareholders, tribunal or creditors. In this article we would assist, you with ways involved involuntarily closing the company. How to close a company in India is a big question which may arise in mind of some of the businessmen.
Winding up of a business has never been an easy task. There are always some terms and conditions that can be followed while preceding the winding up company procedure. This requires a lot of legal procedure.
A company can be dissolved by a tribunal under the following conditions:
- If the company is not able to pay its debts
- If the company has a special resolution based on the Tribunal
- If the company has acted against the law like, something against the sovereignty of the country, offensive words for some other country or much more such activities
- In such cases the tribunal orders to shut the company under the section XIX of the law.
- If the company has not filed any financial statement or any kind of other annual return for the consecutive five years from now
- If the tribunal considers that the act of the company is somewhat equivalent to that the company can be dissolved instantly
- If some conducts of the company are found out to be performing in a fraud manner, then also there are chances for winding up of a business.
Voluntary terms of winding up company:
- This could be done voluntarily by the member of the company
- If you get to know about any such resolution of the company
- If the company exceeds the time period of voluntary resolution time period
- If the conduct of the company is not good towards the employees
Steps involved in voluntary winding up company:
- Organise a meeting with the directors and circulate the whole agenda in front of them. Pass a resolution which lays queries regarding the company policies. Make sure that you fix an appropriate time and date for the meeting and fix the venue as well.
- Publish a notice so that everybody in the company is aware of the general meeting to be held in the company
- Pass the resolution in the ordinary form of circulation. The winding up of a business will be commenced from the date of resolution
- Right after passing the resolution, conduct a meeting with the creditors. If the two third of the majority are saying that the company should be resolved then in this case, it will definitely be shut down.
These were some of the possible tips for winding up of a business. This write up would be of great help to the one who is looking forward to shutting down their company.