Companies in india are governed by companies act 1956 and 20. Winding up subject to the supervision of court omitted by companies second amendment, act 2002 section 522527. Voluntary winding up of companies a genuine business strategy. Section 3 1 i of the companies act, 1956 defines a company as a company formed and registered under this act or an existing company. Section 25 companies under companies act 1956 corporate law. The winding up of a company is a proceeding in which the co business is closed down sell off its asset and the creditor are paid. The focal point of this research paper is to study the laws and procedures of voluntary winding up under the companies act, 1956. Act, 1956 manages the arrangements identifying with winding up by court.
Aug 18, 2017 guest post by anirudh gotety, who is a 4 th year student pursuing b. Winding up of a private limited company under companies act, 20. Section 3 1 ii of the act states that an existing company means a company formed and registered under any of the previous companies laws. Section 439 of companies act, 1956 deals with the persons who can file the petition for winding up of a company, the directors can make a petition in the name of the company with the sanction of general meeting by way of special resolution. Jul 15, 2016 section 425 to section 520 of the companies act, 1956 act, 1956 read with companies court rule, 1959, deals with the provisions of winding up.
The termination of its existence is affected by the law. Section 433 of the companies act, 1956 provides for circumstances in which a company may be wound up by the court and section 434 specifies when a com. Is winding up petition a tool for the recovery of debt. Section 433 to 483 of the companies act, 1956 manages the arrangements identifying with winding up by court. However companies act 20, has done away with creditors voluntary winding up. It defines a company, what shall constitute a company and how it shall be formed and the manner in which the affairs of the company shall be conducted. Sep 27, 2012 now, under section 399 of the companies act, 1956, members holding 10% shares or any hundred members can file an application under section 397398 of companies act, 1956 and the company law board can pass any orders under section 397398 of the companies act, 1956 in order to put an end to the matters complained of or in order to regulate the. Voluntary winding up with the intervention of the court i. According to the procedures mentioned in section 439481 of the companies act, the tribunal will move on upon the receipt of the petition. Registered according to the law relating to companies sec 31iof companies act 1956 winding up putting an end to its life all its affairs are closed or wound up assets and properties are realized and distributed among. The companies act 1956 governs and defines the law in relation to conduct of company affairs in the country.
A company can be wound up under section 560 of the companies act, 1956. Before the introduction of the insolvency and bankruptcy code, 2016 the code, the winding up of a company took place solely under the companies act, 1956 the 1956 act. Application for winding up of company or an order under section 397 or 398. Corporate restructuring winding up company laws ready. Winding up of the company under the new law authorstream. On winding up, the organization ceases to be a going. On dissolution, the companys name shall be struck off by the registrar from the register of companies and he shall also get this fact published in the official gazette. Winding up is a process defined under the companies act, 1956 by which the corporate. This entry was posted in chapter xx ca20, companies act 20 and tagged companies act 20, companies bill 2012, company liquidators, corpgov, corplaw, corporate governance, corporate law, debt, india, legal reforms, ministry of corporate affairs, petition for winding up, reforms, statement of affairs, winding up, winding up by tribunal.
Companies act, 2014 winding up readers of this document should note that the companies act 2014 is a significant and new piece of legislation whose interpretation and meaning is as yet untested. Thus winding up of a company is a legal procedure in which all the affairs of the company are wound up. Windingup of a company is a procedure of allocating the assets and concluding the existence of. When a resolution for the winding up of a company is passed inside the company, the court may make an order for the voluntary winding up to continue. Companies act 1956 section 447 effect of winding up order. Section 425 to section 520 of the companies act, 1956 act, 1956 read with companies court rule, 1959, deals with the provisions of winding.
Dec 19, 2009 winding up procedure under companies act, 1956. Dec 15, 2016 mca notifies effective dates for corporate restructuring, winding up provisions and several other sections of the companies act, 20. Voluntary winding up of the company by members a company may, voluntary wind up its affairs, if it is unable to carry on its business, or if it was formed only for a limited purpose, or if it is unable to meet its financial obligation, and etc. Section 448 of the companies acts 1956 deals with the appointment. Feb 22, 2016 the process of which the company is dissolved is known as winding up of a company. The winding up of a company by the order of court is called compulsory winding up.
The companies act, 1956 existing act contains 658 sections and xv schedules. Since the provisions of the companies act, 20 has not yet come into force, the provisions of the companies act, 1956 still governs the proceedings of winding up. Committee, a bill to enact the present legislation, namely, the companies act, 1956 was introduced in parliament. The dissolution, thus puts an end to the existence of the company. Business law honours at national law university, jodhpur. Section 433 of the act, 1956 envisaged the following circumstances under which the affairs of a company wound up by the tribunal. The companies act, 20 has been passed by lok sabha as well as rajya sabha and the president has given his consent to the same in august 20. Feb 07, 2014 winding up of a company is the process whereby its life is ended i. In this article, harshita punjabi of rgnul and pursuing cs does a comparative analysis of winding up of a company under the companies act, 1956, companies act, 20 and the insolvency and bankruptcy code, 2016. Section 433 of the companies act lays down the circumstances under which a company may be compulsorily wound up. The voluntary winding up can be either members or creditors.
Any unregistered company may be wound up under this act, in such manner as may be prescribed, and all the provisions of this act, with respect to winding up shall apply to an unregistered company, with the exceptions and additions mentioned in subsections 2 to 4 of section 375. If the company itself, has passed a special resolution passed by threefourth of the. Winding up legal position under companies act, 20 vis. Expenses of winding up 1282 payment of expenses of winding up 1 in chapter 8 of part 4 of the insolvency act 1986 c. Winding up of a private limited company under companies act, 20 this articles simplifies the procedure for winding up a private limited company laid down under the amended companies act, 20. A company can be wound up by the court in following six situations as prescribed in section 433 of the companies act, 1956 a.
The major changes that the indian companies act, 1956 introduced over and above the act of 19 related to. The act also provides for rights and duties of the directors and gives to the company a d. A short analysis on voluntary winding up of companies taxguru. Winding up of company free download as powerpoint presentation. Feb 14, 2014 winding up of unregistered companies section 375. Since the act, has not yet notified the provisions relating to striking off or winding up, the same shall be governed by the provisions of the companies act, 1956, which. The creditors can make a petition if the company is unable to pay the debts. Modes of winding up according to sec 425 of the companies act, 1956 a company may be wound up in any one of the three ways, i compulsory winding up ie.
Voluntary winding up voluntary winding up is one of the simplest and time saving procedure for winding up of a company and section 484 of the companies act 1956 provides the enabling provisions for the same. Mar 01, 2017 prior to november 15, 2016, the term windingup was neither defined under the companies act, 1956 1956 act nor under the companies act, 20. Contributories in case of winding up of a body corporate which is a member. Winding up under section 433e of the companies ct grounds cases. Comparison of striking off and winding up of a company. Voluntary winding up is of two types members voluntary winding up, and creditors voluntary winding up.
Methods of winding up of a company company dissolvement. Ad category1 banks have been allowed to remit winding up proceeds of the companies in india which are under liquidation, subject to payment of applicable taxes. Business law winding up of a company tutorialspoint. The companies act, 1956, provides that in each high court there must be attached an officer known as the official. An analysis of winding up of companies under indian companies act. Winding up is the process by which the normal activities of the corporation or association of person is stopped and the assets and liabilities of the association is assessed and distributed among the shareholders as per the existing agreement. Apr 29, 2011 due to better laws, section 25 companies have the most reliable strongest organizational structure.
Winding up of company2310 liquidation business law. Voluntary winding up can again be subdivided into members voluntary winding up and creditors voluntary winding up. Winding up legal position under companies act, 20 visa. Introduction the entire procedure for bringing a lawful end to life of company is divided into two stages. As per section 432 of the companies act if a body corporate which is a contributory is ordered to be wound up, either before or after it has been placed on the list of contributories. A short analysis on voluntary winding up of companies.
A company is a juristic person that comes into existence by way of incorporation and can be dissolved by undertaking windingup process as per the provisions of the companies act, 20 new act. A members voluntary winding up is possible only when the company is solvent and is able to pay its debts in full. Prior to november 15, 2016, the term windingup was neither defined under the companies act, 1956 1956 act nor under the companies act, 20. Liquidation may be subject to any order of winding up issued by the court or the official liquidator in case of voluntary winding up under the provisions of the act, 1956. Points regarding winding up of company us 560 of companies act, 1956. The company act 1956, and company act, 20 provides the mechanism of the winding up of the company. Keeping in mind the foregoing contention, there are established laws available in india on various modes of winding up. This act, once again largely followed the english companies act, 1948.
Voluntary winding up in india a comparative analysis by. The process of striking off and winding up may either be done voluntarily by a company or can be initiated under the process of law, without any application by the company. This document cannot be relied upon to identify all changes from existing company law nor provisions which are new introduced by the companies act. Winding up of a company by an order of the court is called the compulsory winding up. Winding up of company us 560 of the companies act, 1956. Section 25 companies are those companies which are formed for the sole purpose of promoting commerce, art, science, religion, charity or any other useful object and have been granted a licence by the central government recognizing them as such. An application to the court for the winding up of a company shall be by petition presented, subject to the provisions of this section,by the company. Whats the provisions of voluntary winding up of a company. Apr 19, 2016 winding up of a company mean the end of the life of a company. Windingup under section 271a of the companies act and its. As per companies act 1956 there are two methods of winding up of a company, compulsory winding up and voluntary winding up.
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