• 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, etc. A company may voluntary wind up itself, under any of the two modes:

Members voluntarily winding up

Creditors voluntarily winding up

Compulsory Winding up as per section 433, company may be wound up by the High Court/Tribunal on:

• Passing a special resolution.

• Failure to hold statutory meeting.

• Failure to commence business.

• Reduction in number of members below minimum.

• Inability to pay its debts.

• Arrears of unpaid salary and the dues of an employee, is not a debt within the meaning of this expression in section.

• Default in filing with the Registrar the balance sheet or annual return.

• Acting against the interest of the country.

• If the company is a sick industrial company and is not likely to become viable in future.

The article discusses the procedure for Voluntary winding-up of the Company by Members.

• Board Meeting

To make Declaration of Solvency verified by an affidavit stating that-

They have made a full inquiry into the affairs of the company, and that, having done so, they have formed the opinion that the company has no debts or

That it will be able to pay its debts in full within such period not exceeding three years from the commencement of the winding up as may be specified in the declaration.

Financial Statement for the period commencing from the date up to which the last such account was prepared.

• Resolution

For passing Special Resolution.

The winding shall commence from the time when the resolution is passed and same is to be filed with ROC within thirty days.

• Publication of Resolution to Wind Up Voluntarily.

The company shall within fourteen days of the passing of the resolution, give notice of the resolution by advertisement in the Official Gazette, and also in some newspaper circulating in the district where the registered office of the company is situate.

• Appointment of a Liquidator.

The company shall appoint one or more liquidators and fix the remuneration in general meeting and the notice of his appointment shall be given to ROC within 10 days

• Creditors Meeting

On the same day or the next day of passing of resolution of winding up of the Company, conduct a meeting of the Creditors. If two thirds in value of creditors of the company are of the opinion that it is in the interest of all parties to wind up the company, then the company can be wound up voluntarily.

• Liquidator to Call Creditors' Meeting In Case Of Insolvency

If liquidator is of the opinion that the company will not be able to pay its debts in full within the period stated in the declaration, or that period has expired without the debts having been paid in full, he shall call a meeting of the creditors, and shall lay before the meeting a statement of the assets and liabilities of the company.

• Final Meeting and Dissolution

As soon as the affairs of the company are fully wound up, the liquidator shall make up an account of the winding up, showing how the winding up has been conducted and the property of the company has been disposed of; and call a general meeting of the company for the purpose of laying the account before it, and giving any explanation thereof.

Within one week after the meeting, the liquidator shall send to the ROC and Official Liquidator (OL) copy each of the account and shall make a return to each of them of the holding of the meeting and of the date thereof.

The ROC on receiving the account and either the return or the return shall register them. The OL on receiving the account and the return would make a scrutiny of the books and papers of the Company to ascertain as to whether the affairs of the Company has not been carried on in a manner prejudicial to the interest of its members or public, and makes a report to the concerned Tribunal. If the Tribunal is satisfied with the report of the OL, Tribunal may pass an order under which the company is deemed to be dissolved.

The Company shall then file the dissolution order with the ROC and the ROC shall then publish it in the Official Gazette.

Convene a Board Meeting with majority of Directors.

• Pass a resolution for proposal of Voluntary Liquidation of the Company

• Prepare a declaration from majority of the directors of the company verified by an affidavit stating that-

They have made a full inquiry into the affairs of the company and they have formed an opinion that either the company has no debt or that it will be able to pay its debts in full from the proceeds of assets to be sold in the voluntary liquidation; and

The company is not being liquidated to defraud any person – section 59(3) (a) of Insolvency Code, 2016.

• File the declaration with ROC in e-form GNL-2

Convene a General Meeting

Within 4 weeks of passing of above said declaration hold the meeting of Shareholders for the following purposes:

• Pass a Special Resolution for approving the proposal of Voluntary Liquidation of the Company.

• Appoint an insolvency professional to act as the liquidator. Resolution should contain the terms and conditions of the appointment of the insolvency professional, including the remuneration due to him.

• File the special resolution with ROC in e-form MGT-14

Approval of Creditors if company owes Debt:

• If the company owes any debt to any person, creditors representing two-third in value of the debt of the company shall approve the resolution passed above by the shareholders within seven days of passing of such special resolution.

• Approval can be by holding of Meeting, by Consent of 2/3 of creditors in writing. Company will place the copy of resolutions before the creditors for their approval.

Commencement of voluntary liquidation

• A voluntary liquidation for a corporate person shall be deemed to have commenced from the date of passing of the resolution (after approval from the creditors of the Company).

Public Announcement by the Liquidator:

The liquidator shall make a public announcement in Form A of Schedule I within five days from his appointment (i.e. 5 days from the date of passing of Special Resolution).

• The public announcement shall-

Call upon stakeholders to submit their claims as on the liquidation commencement date; and provide the last date for submission of claim, which shall be thirty days from the liquidation commencement date.

• The announcement shall be published-In one English and one regional language newspaper with wide circulation at the location of the registered office and principal office, if any, of the corporate person and any other location where in the opinion of the liquidator, the corporate person conducts material business operations;

On the website, if any, of the corporate person; and

On the website, if any, designated by the Board for this purpose.

Proceedings by Liquidator.

• The liquidator shall submit a Preliminary Report to the company within 45 days from the liquidation commencement date.

• The liquidator shall maintain the register and books in relation to the voluntary winding up of the company.

• The liquidator shall keep receipts for all payments made or expenses incurred by him.

Verification of Claims

The liquidator shall verify the claims submitted within thirty days from the last date for receipt of claims

List of Stakeholders

The liquidator shall prepare the list of stakeholders within forty- five days from the last date for receipt of claims.

Deposit/ Receipt Money into the Designated Bank Account

The liquidator shall open a bank account in the name of corporate person followed by the words ‘in voluntary liquidation’, in a scheduled bank for the receipt of all moneys due to the corporate person.

Distribution

The liquidator shall distribute the proceeds from realization within six months from the receipt of the amount to the stakeholders.

Completion of Liquidator

The liquidator shall endeavor to wind up the affairs of the corporate person within one year from the voluntary liquidation commencement date.

• Shall present a status report indicating progress in liquidation.

• Status report shall enclose audited accounts of voluntary liquidation showing the receipts and payments pertaining to liquidation since the liquidation commencement date.

Preparation of Final Report/Application to NCLT

Where the affairs of the company have been completely wound up, and its assets completely liquidated, the liquidator shall make an Application to the NCLT for the dissolution of such company.

NCLT to pass order.

Where the Tribunal satisfied with the application. NCLT to pass an order that the corporate debtor shall be dissolved from the date of that order and the corporate debtor shall be dissolved accordingly

The order of the Tribunal shall be filed with the Registrar by the company within a period of 14 days of the receipt of the copy of order, or such other time as may be fixed by the Tribunal.

• Causing Public Announcement within 5 days of appointment of liquidator, Public Announcement to be published in one English newspaper and one Regional newspaper where the registered office of the company is situated, as required under the Code.

• Preparation of Preliminary Report within 45 days from the Liquidation Commencement date.

• Maintenance & preservation of registers and books of accounts and to complete and brought up-to-date, with all convenient speed.

• Receiving, collating the claims of Creditors within 30 days of liquidation Commencement date and verifying the claims within 30 days of receipt of claim.

• Valuation of Assets and sell the assets of the corporate person in the manner and mode approved.

• Submission of periodical reports to Adjudicating Authority (NCLT), Registrar of Companies (ROC) and Insolvency and Bankruptcy Board of India (IBBI).

• Liquidation of Business Assets, realization of uncalled capital of the corporate person and recovery in a time bound manner for maximization of value for the stakeholders.

• Distribution of proceeds from the realization of funds to pay debts/dues

• Repayment & closure of claims of creditors as per the claims admitted.

• Preservation of Records for 8 years after dissolution of the corporate person.

• Preparation and submission of Final report to NCLT on completion of the liquidation process.

As a Resolution Professional, for the remaining period of CIRP, we provide following services

• To convene and attend meeting of Committee of Creditors

• To take over control and custody of any assets over which Corporate Debtor has ownership rights.

• Assessing the books of accounts, agreements, returns, registers and records of the Corporate Debtor.

• Consultation and Co-ordination with Stakeholders

• Assistance in assessing the viability of the Corporate Debtor for formulating the Insolvency Resolution Plan

• Inviting prospective lenders, investors and other persons to put forward Insolvency Resolution Plan

• Implementation, Monitoring of Performance and submitting various periodical reports to the Committee of Creditors and Adjudicating Authority (NCLT).

• Submission of Resolution Plan to Committee of Creditors and Adjudicating Authority (NCLT).