Company Liquidation
Liquidate your company without any hassles and without breaching any compliances. Talk to an expert from CADesk India right now!
- Start at just ₹499 and pay the remaining on the go
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Why Should I Use CADesk India For Company Liquidation?
With our help, you can easily dissolve your business and avert paying unnecessary fees and audit costs. That too in three easy steps.
Get in touch with experts
respond to all of your questions
regarding dissolving a private limited
company.
Complete the paperwork
CADesk India experts
throughout the
entire process.
Wind up your company
via courier within the
predetermined time
frames.
Get in touch with experts
Complete the paperwork
CADesk India experts
throughout the
entire
process.
Wind up your company
via courier within the
predetermined
time
frames.
Liquidation of a Company - an Overview
Liquidation, expressed simply, is the process through which a business ends its operations. The business may opt to shut down for a number of reasons, such as an unwillingness to carry on with business as usual, insolvency, and so on. Liquidation of a firm refers to the process of selling a corporation's assets to pay obligations and settle liabilities.
In the event that a business is liquidated owing to bankruptcy, the liquidator may sell the company's assets to satisfy all outstanding debts. Any money left over after paying the creditors is distributed to the company's shareholders. Liquidation of a company is a complicated process.
Checklist for Company Liquidation
Documents Required for Company Liquidation
- PAN card for the business
- Closing statement for the business's bank account
- A notarised indemnification bond that the directors must execute
- Most recent financial statement for the business
- Accounts that include all of the company's assets and obligations that have been reviewed by a Chartered Accountant (CA)
- Proof that at least 3/4 of the board members have approved the resolution
- Application to change the company's name.
Benefits of Company Liquidation
Free from debts after liquidation:
Directors and all other company personnel are released from all obligations to and pressure from creditors once the liquidation procedure is complete.
Avoiding legal action against the company:
Directors will disregard legal action taken by the court or tribunal if the resolution is approved willingly, giving them a chance to focus on other commercial prospects.
Comparingly low cost charged for liquidation:
The charges or expenses related to the liquidation procedure are fairly small because there will be fees related to the sale of assets.
All lease agreements will be cancelled:
Any lease that a corporation or other entity has signed for a set period of time will be terminated, together with all of its terms and conditions, during the liquidation process. If a fine is due, it will be subtracted from the proceeds of the asset sale.
Advantages for creditors:
After a protracted legal struggle, creditors will benefit from the liquidation process because they will be eligible for a default payment with relation to the proposition of credits supplied by all creditors.
Methods of Closing a Company
Voluntary winding up:
A voluntary winding up may be initiated by a special resolution or a resolution adopted at a general body meeting. To compel the winding up, the provisions and conditions of the Memorandum of Association (MOA) may be violated.
Compulsory winding up:
To carry out the compulsory winding up of a company at the command of a tribunal or a court, a specific resolution by the directors urging a court intervention may be passed during the firm's board meeting. Similar to this, the corporation must be forced to dissolve if any official files a petition with a court or a tribunal or if it engages in any illegal or fraudulent activity.
Top Reasons Why Companies Wind Up
A legal organisation created in accordance with the Companies Act is a private limited company. Therefore, throughout its life cycle, a corporation must keep its regular compliances.
For a company that is not functioning and wants to avoid compliance obligations, the winding-up process is used. Some of the reasons why companies may wind up is discussed below.
The company adopts a special resolution directing the tribunal to wind up the business
failure on the part of the company to file a required report with the registrar's office
failure of the company to launch its operations within a year of incorporation
A public company's or a private company's number of employees has fallen below 7 or 2, respectively
The business cannot afford to pay its debts
The court's decision to dissolve the company is just and equitable
The business is unable to submit its balance sheet or annual report for five consecutive fiscal years
The corporation violated the nation's integrity and sovereignty.
An application for the closure of a firm must be submitted to the ministry of corporate finances within three to six months. This entire process can be done online.
If a firm doesn't submit its compliances on time, it will be fined and penalised, and its directors will be barred from founding new companies. It is better to dissolve an inactive corporation in order to avoid future penalties or liabilities.
Why CA Desk India?
CADesk India will handle the entire process to your highest level of satisfaction. You will provide us with all the paperwork. Our attorneys will keep you updated on all the processes and keep you up to date with all the information. The best part is you can start the process in the most affordable range. All your documents are secure with us. Opt to our in-house Company secretary and chartered accountant to resolve all your queries regarding compliances. CADesk India is a one stop solution for all your needs.
FAQs on Company Liquidation
If a corporation is liquidating, it is out of business and its stockholders are almost certainly out of luck. If it’s trying to escape liquidation, it might succeed, and if it does, the value of its shares might increase along with it. In accordance with the legal process the organisation follows.
If the debt is not paid by the scheduled court date after a successful application and order have been made, the company’s accounts are blocked. During this procedure, assets are sold, and the money is subsequently divided among creditors.
There is little to no turning back after the choice to push a firm into liquidation has been made for the organisation and its directors.
The code specifies a 180-day time limit for the insolvency resolution procedure, which starts on the day the application is accepted by the tribunal (and may be extended a further 90 days).
The insolvent company is responsible for paying the liquidator’s costs. In the event that the corporation has no assets or funds, the directors are in charge. Remuneration, often known as the fees charged by the liquidator, must be approved by the creditors.
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