Normally, there are 4 ways to Closing down a business.
Sell the Company
Selling a Company is also a type of Voluntary wind up of a Company. A company can be sold by selling the majority shareholding of the company. Technically it is not winding up but a relief from the responsibilities of the person who is willing to winding it up
Defund Company Winding Up
Defund Company can be wound up with a fast-track procedure which is through STK-2 form. Defund Companies are those companies which has gained the status of a Dormant Company. The government gave relief to those who made the dormant companies because there is no financial transaction in dormant companies.
Hence, Form STK-2 is required to wind up a Dormant Company and there is no further procedure for that.
Voluntary Winding Up
Voluntary Winding Up the company is a long procedure. There are few mandatory things which has to be done to close down a company voluntarily.
Steps:-
Board Resolution is required for the Winding up the company. In which Majority directors should agree for winding up.
Special Resolution is also required to get passed for the winding up of the company. And at least 3/4th Shareholder must agree for winding up the company.
Creditors consent is also required for winding up the company. Creditors has to give their consent that they do not have any obligation if the company gets wound up.
Declaration of Solvency is also required to be made by the company and that should be accepted by the creditors of the company. In Declaration of Solvency, Company shows the creditability of the company.
The liquidator of the company will make a report the assets, liabilities, capital, reserves, etc.
All the above following points shall be filed in a prescribed form and even after the company gets wound up then also company's name shall be prohibited for 2 years to be taken by any other applicant.
Compulsory Winding up
As per the Companies Act 2013, Any Company, who did any fraudulent act or unlawful act or even if they contributed some action in some unlawful or fraudulent act then that company shall be compulsorily wound up by the Tribunal.
Procedure:-
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Petition shall be accompanied with Statements of Affairs in Form 4
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Advertisement of Petition for at least 14 days
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Proceedings in the Tribunal
1. Petition will be filed-
Petition will be filed by the following parties
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Creditors of the Company or
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Any Contributors or contributory of the company or
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Central Government or State Government or
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2. Petition shall be accompanied with Statement of Affairs-
While filing the documents under Form 4. All the documents should be audited by the Chartered Accountant and Auditor should give an unqualified opinion for the Financial Statement.
3. Advertisement for at least 14 days
The Petition should be advertised in a daily newspaper and the language of the advertisement should be in English and Regional Language of the area. The Advertisement must be carried out under Form 6
Proceedings in the Tribunal
Form 11 will be required for the order of winding up the company and footnote contains the prescribed duties.
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Submit the complete audited books of accounts up to the date of the order
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Provide the date, time and place for the Company Liquidator
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Surrender the assets and the documents of the assets