A business owner may depend on a number of ways while closing a private company. A private company can be closed by using following ways :
By selling the company if possible
By declaring the company obsolete and close it
Winding up and dissolve the company
What does it mean by Defunct Company?
Section 248 of the Companies Act 2013 includes the provisions to deal with striking of a defunct private limited company. If a defunct company wants to strike off its name from the register of Registrar of Companies then application can be made via Form FTE. Private company may be declared defunct and closed by requesting the Registrar of Companies.
Affidavit – Director of Producer Company (minimum 2) must submit a notarized affidavit that is duly signed by them. That affidavit must be about checking that the company did business for a time up to date and its operations are discontinued since then, provided that the company does not include any assets or liabilities.
Security Bond – A security bond will be notarized and duly signed by two directors, stating that any pending liability of the company shall be completely paid off by the applicant after the name of the company is struck off the register of companies.
Accounting Information – The financial statement of the company made up to a time that finished one month before the date of application needs to be filed by the company. Statement of accounts must include reasonable views of the company's financial position and to verify the same by a practicing Chartered Accountant.
Financial Statement – For filing the petition to the ROC for declaring the company as defunct, minimum one year has been passed after the date of incorporation. The audited financial statement requires to be submitted for the period in which business has been undertaken must be submitted with the application. In case of unsecured loans, a waiver letter must be submitted.
If the Registrar of Companies is satisfied with the offered application to strike off the company then it will strike off the name of the company and declare that company as defunct. A notice regarding the same shall be published by the Registrar of Companies in the official gazette. The approval of form FTE takes almost 1 month from the date of filing of the application.
According to section 270 of the Companies Act 2013, winding up of a company includes either :
Voluntary winding up
By the Tribunal or compulsory winding up
Voluntary winding up maybe :
Voluntary winding up of Member
Voluntary winding up of Creditor
Tribunal or Compulsory winding up
Any contributor or contributors
By the central or state govt.
By the registrar of any individual authorized by central govt. for that purpose
In case of voluntary winding up, the procedure is performed without court supervision
A Board Meeting shall be organized in which minimum 2 directors need to be present and a resolution must be passed concerning declaration offered by the directors of the company that company is under no debt or that it will pay off its debts by selling its asset.
Once a due notice and an explanatory statement are issued, a general meeting shall be organized for proposing a resolution. For winding up a company in general meeting with an ordinary majority, an ordinary resolution must be passed and in case of the 3/4th majority, a special resolution should be passed. The winding-up will be effective from the date on which resolution is passed.
After passing the resolution in General Meeting, a Creditors Meeting must be done and if the majority of the creditors opine that winding up of the company is useful for all the parties then the company should be wound up voluntarily.
Once winding up of the company took place, a Liquidator's Account shall be made and the same shall be audited as well.
The tribunal includes the power either to make an interim order or dismiss after getting the petition for winding up. It has also the authority to appoint the provisional liquidator of the company till the passing the order of winding up.
It will be taken only after removal of compounding application by the expert authority.
NRIs and Foreign nationals may get their Indemnity Bond and Affidavit notarized according to the law of their respective country.