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Closure Of Company
@ Rs. 5999/-
Are you willing to close your company for multiple reasons? Our experts can guide you through the
entire process of closure, ensuring all legal requirements are satisfied and the process is completed smoothly. Connect with us today for professional guidance.
HOW DOES IT WORKS?
Closure Of Company
Are you willing to close your company for multiple reasons? Our experts can guide you through the entire process of closure, ensuring all legal requirements are satisfied and the process is completed smoothly. Connect with us today for professional guidance.
What is closure of the company?
Company closure indicates the process of permanently closing a business, terminating all operations, and dissolving it as a legal object. This process is also known as liquidation or winding up and includes ending contracts, settling remaining liabilities, and potentially selling assets.
When Company can apply for closure?
Here, some of the common reasons are mentioned when a company can apply for its closure –
- When the company has not started its business within one year of its formation.
- When the company is not functioning as any business or activity for the previous two financial years and has not requested the status of Dormant or inactive Company under Section 455 of the Company Act.
- The members to the memorandum have not paid the subscription amount, and a declaration of this act has not been filed within 180 days of its formation.
Process of closing of a company
There are two different ways to close a company – voluntarily and permanently
Permanent closure of a company
- The company needs to file a petition to the Tribunal and display the declaration of affairs of the company.
- The company should appoint a liquidator to execute all the operations of company closure.
- The liquidator is responsible for drafting a report and waiting for the consent. When he receives the consent, then the report should be submitted to the Tribunal.
- When the Registrar of Companies seems the drafted report satisfactory, he will confirm the closing process of the company and remove the company name from the list of registered companies.
- At last, the Registrar of Companies will send a notice for the publication of this report to the Official Gazette of India.
Voluntarily closure of a company
- All board members should pass a board resolution regarding the voluntary closing of the company.
- Consent from the company’s shareholders should also be taken for proceeding with the closure of the company.
- Consent from the Trade creditors is also required that declares they do not have any obligations towards the liquidation of the company.
- A Declaration of Solvency should also be drafted.
- The appointed liquidator is responsible for drafting the ‘Creation of Report of Assets and Liabilities’ of the closing company.
- The liquidator should file an application of company closure to the Tribunal for liquidation.
- When the documents are verified, the tribunal will issue a resolution for the dissolution of the company under 60 days of the application.
- At last, an advertisement will be published in the newspaper and the company name will be removed from the list of registered companies.
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FAQ's
1. Can any company be closed down voluntarily?
Yes, any company can be closed down voluntarily if the shareholders decide to do so.
2. What is the process for voluntary closure of a company?
The process for voluntary closure of a company involves passing a resolution by the shareholders, filing necessary forms with the government authorities, settling all outstanding debts and liabilities, and obtaining approval from the relevant regulatory bodies.
3. Can a company be forced to close down by the government?
Yes, a company can be forced to close down by the government if it is found to be involved in illegal activities or if it fails to comply with regulatory requirements.
4. What happens to the assets of a company when it is closed down?
The assets of a company are typically liquidated and used to pay off any outstanding debts and liabilities. Any remaining assets may be distributed among the shareholders.
5. Are employees entitled to any compensation when a company closes down?
Employees are entitled to receive their salaries, benefits, and any other dues owed to them when a company closes down. In some cases, employees may also be eligible for severance pay or compensation for loss of employment.
6. How long does it take to close down a company voluntarily?
The time taken to close down a company voluntarily can vary depending on various factors such as the complexity of the business operations, the number of creditors, and compliance with regulatory requirements. It typically takes several months to complete the process.
7. Can creditors object to the closure of a company?
Creditors have the right to object to the closure of a company if they believe that they will not be able to recover their debts in full. In such cases, legal proceedings may be initiated to resolve any disputes.
8. What are the consequences of not following proper procedures for closing down a company?
Failure to follow proper procedures for closing down a company can result in legal repercussions such as fines, penalties, or even personal liability for directors or shareholders. It is important to seek professional advice and ensure compliance with all regulatory requirements.
9. Can directors be held personally liable for debts incurred by a closed-down company?
Directors can be held personally liable for debts incurred by a closed-down company if they are found guilty of fraudulent activities, mismanagement, or failure to fulfill their fiduciary duties. It is important for directors to act in accordance with their legal obligations at all times.
10. Is there any alternative option available instead of closing down an unprofitable business?
Yes, instead of closing down an unprofitable business completely, owners can consider options like restructuring operations, selling off certain assets or divisions, seeking investors or partners etc., before making final decision on shutting down entirely.