Private Limited Company Winding Up by Tribunal
Private Limited Company Winding Up by Tribunal
A private limited company can be wound up by a Tribunal or by the members of the company voluntarily. The procedure for voluntary winding up of a company by covered in another article. In this article we look at winding up of a private limited company by a Tribunal.
Reasons for Winding Up of Company by Tribunal
A private limited company can be wound up by a Tribunal under the following circumstances:
- The company is unable to pay its debts;
- The company has, by special resolution, resolved that the company be wound up by a Tribunal;
- The company has acted against the interest of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality;
- The Tribunal has ordered the winding up of the company under Chapter XIX;
- The Tribunal is of the opinion that the affairs of the company have been conducted in a fraudulent manner or the company was formed for fraudulent and unlawful purpose or the persons concerned in the formation or management of the company have been guilty of fraud, misfeasance or misconduct in connection therewith and that it is proper that the company be wound up;
- The company has defaulted in filing with the Registrar the annual returns and financial statements for immediately preceding five consecutive financial years;
- The Tribunal is of the opinion that it is just and equitable that the company should be wound up.
Winding Up Committee
Within three weeks of date of passing of winding up order by the Tribunal, the Company Liquidator will make an application to the Tribunal for constitution of a winding up committee which shall comprise of:
- Official Liquidator
- Nominee of Secured Creditors
- A Professional Nominated by the Tribunal.
The winding up committee will assist and monitor the progress of liquidation proceedings by the Company Liquidator in the following activities:
- Taking over assets of the company;
- Examination of the Statement of Affairs;
- Recovery of property, cash or any other assets of the company including benefits derived therefrom;
- Review of audit reports and accounts of the company;
- Sale of assets;
- Finalisation of list of creditors and contributories;
- Compromise, abandonment and settlement of claims;
- Payment of dividends, if any.
Report from Winding Up Committee
The Company Liquidator will prepare a draft final report for consideration by the committee along with minutes of meetings of the committee on monthly basis. The winding up committee members will have the ability to review the draft final report from the Company Liquidator and provide approval for the same.
Once the winding up committee has provided approval for the report, the final report will be submitted by the Company Liquidator before the Tribunal for passing of a dissolution order in respect of the company. If acceptable, the Tribunal will pass the order for dissolution of the company thereby winding up the affairs of the Company.
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