Winding Up of Company in India

What Is Winding Up?

When a Company thinks of dissolving or Winding up its assets, it ceases to do business and initiates to liquidate the assets. Where, its sole purpose is to sell off stock, pay off creditors, and distribute any remaining assets to partners or shareholders in LLP and PLC.

How Winding Up Works?

Compulsory Winding Up of a Company-A company can be legally forced to wind up by a court order.

The following can be the reasons for the same:

Company's unpaid debts;

1. A special resolution passed for winding up;
2. Unlawful act by a company or the management of the Company;
3. Fraudulent act/misconduct by the Company/ the control of the Company;

Voluntary Winding Up of a Company-A company's shareholders or partners may trigger a voluntary winding up, usually by the passage of a resolution.

The following can be the reasons for the same:

1. The occurrence of any event in AOA providing for winding up of the Company;
2. The Company voluntarily decides to wind up.

Fast Track Exit Scheme (FTE)-This kind of winding up is for striking off the name of Defunct companies from the register of companies.

The following can be the reasons for the same:

1. A company that does not have any assets or liabilities;
2. Any company that does not commence its business activity after the incorporation or has not carried out any business activity for at least one year.

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