Winding up is the process of closing down a company and distributing its assets to creditors and shareholders. It marks the end of a company’s existence.
| Type | Description |
|---|---|
| Voluntary Winding Up | Initiated by shareholders when the company is solvent or insolvent. |
| Compulsory Winding Up | Ordered by the court due to insolvency or other reasons. |
Company unable to pay debts
Resolution by shareholders or creditors
Expiry of company’s term as per MoA
Court order due to misconduct or failure to commence business
Pass a special resolution to wind up the company.
Appoint a Liquidator to manage asset sale and distribution.
Liquidator pays off debts, settles liabilities.
Remaining assets distributed to shareholders.
File necessary documents with the Registrar of Companies (ROC).
Petition filed in the National Company Law Tribunal (NCLT).
Tribunal appoints a Liquidator.
Liquidator follows same steps as in voluntary winding up.
Company is dissolved after liquidation.
Board resolution or special resolution
Declaration of solvency (in voluntary winding up)
List of creditors and assets
Petition/application to NCLT (for compulsory winding up)
Reports by Liquidator
Winding up is a legal process requiring strict compliance.
Once wound up, company ceases to exist legally.
Directors and officers must cooperate with the Liquidator.
Creditors have priority in repayment.
