Basic Facts on Winding up of a Company
Winding up is the liquidation of the Company’s assets which are collected and sold to pay the debts incurred.
When the Company winding up takes place, firstly, the debts, expenses and costs are paid away and distributed among the shareholders.
Once the Company is liquidated, it is formally dissolved, and the Company ceases to exist.
Winding up is the legal mechanism to shut down a company and cease all the activities carried on.
After the Company winds up, the existence of the Company comes to an end, and the assets are monitored so that the stakeholder’s interest is not hampered.
It is always better to wind up a company that has become inactive or where there are no transactions. The shareholders of the Company can initiate the winding up of the Company anytime.
If the Company fails to maintain these compliances, there are fines and penalties or even disqualification of the Directors from further incorporating a Company.
A Private Limited Company is an artificial judicial person and requires various compliances.
If secured or unsecured creditors or employees are on a roll, then all the dues need to be settled.
After settling the dues, closing all the Company bank accounts is necessary.
The GST registration must also be surrendered in case of Company wind up.
Once all the registration is surrendered, the winding up application petition can be filed with the Ministry of corporate affairs.