Private Limited Company: Winding Up Legalities
As per the provisions of Companies Act, 2013, a company which is incorporated under this Act or under the previous law relating to company shall be called as ‘company’.
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Introduction
As per the provisions of Companies Act, 2013, a company which is incorporated under this Act or under the previous law relating to company shall be called as ‘company’. There are various types of companies, for e.g.: private company, public company, one person company, foreign company etc. Formation of a company can take place for any lawful purpose:
- In case of a public company, then it must be constituted by 7 or more persons.
- In case of a private company, then it must be constituted by 2 or more persons.
- In case the company formed is a one-person company, then it must be constituted by 1 person.
What is a Private Limited Company?
A company that is not a public company and is held privately is called as private limited company. By virtue of the articles of a private limited company, there exists restriction with respect to transfer of its shares. In case of such a company no public invitation can be made for subscribing to its securities.
Minimum number of people required to start a private limited company is 2 which can reach up to the maximum number of 200. A private limited company must have at least Rs 1 lakh in paid-up capital. Also, it is a necessary requirement that all the private companies must make use of the word private limited after its name.
Read Our Blog: Private Limited Company Registration Online Process
Registration of a Private Limited Company
Registering a company instills in the customer a sense of confidence and reliability. It also creates a haven of stability and paves a way for easy procurement of bank credit and investment from many sources.
Consider the procedures outlined below to register a company that is privately owned.
- Firstly you need to apply for a Digital signature certificate and DIN.
- Secondly, you need to file to file an application for availability of a unique name.
- Thereafter file the company’s MOA and AOA.
- Apply for the PAN of the company.
Private Limited Company: Winding Up
Winding up by Tribunal
- A private limited company may be wound up following a petition, by the tribunal under the garb of circumstances given below:
- If payment of debts cannot be facilitated by the company.
- If by virtue of a special resolution, it has been asserted that the Tribunal would wind up the company.
- If due to the acts of the company, the integrity or sovereignty of India is threatened somehow.
- If an order has been made by the Tribunal as given under the chapter XIX of the companies Act for winding up.
- If the affairs of the company is known to be carried out in a fraudulent manner as per the opinion of the Tribunal on receipt of application by registrar or a person being authorized by the central government. Also, if the purpose of formation of company constitutes to be fraudulent or it is evident that misconduct or misfeasance has been conducted on part of the people deployed in the formation or managing affairs of the company, then the company would be wound up.
- If the company’s financial statements have not been filed with the registrar for preceding 5 consecutive financial years and a default has been made in this regard.
- If in the opinion of the Tribunal, it seems pretty obvious that the company must be wound up.
- For the purpose of winding up of the company, the petition in this behalf must be presented by the company itself, creditor, contributory, the registrar or through the authorization of any person by Central Government. Statement of affairs must be submitted along with the petition for its admissibility in the prescribed form and manner. Within a period of 60 days of the receipt of the petition, the Registrar must submit his views to the Tribunal following the filing of the copy of petition also with him.
- Within 90 days of receiving the petition, the tribunal can issue any of the outlined orders.
- Interim order may be passed as the Tribunal thinks fit
- Tribunal may dismiss the petition
- Till the time of making an order with respect to winding up, a provisional liquidator maybe appointed.
- An order to wind up the company maybe passed.
Voluntary Winding up
In the event of voluntary winding up of a company, a declaration has to be made by the directors of the company that full inquiry has taken place with respect to the affairs of the company and it is opinionated that the company entails no debt. For declaration to be effective, it must be made within immediate 5 weeks preceding the date of passing of the resolution with respect to company’s winding up and its purpose must not be to defraud any person as shall be declared. Further the declaration must be submitted together with the copy of auditors report containing the profit and loss account of the company and also the report pertaining to the valuation of assets of the company must be accompanied with it.
The notice of the resolution passed by the company must be advertised in the official gazette or in the newspaper that is circulated in the district where the company’s registered office is situated.
The commencement of the voluntary winding up of the company would be deemed to be initiated from the very date, the resolution is passed.
Defunct Company: Winding-up
A dormant company can be equated with that of the defunct company as provided under the provisions of the companies Act. STK-2 form must be submitted for the purpose of winding up a dormant company and filed with the registrar.
Read Our Blog: How to Wind Up Private Limited Company?
Conclusion
A private limited company is a company wherein the liability of the members is limited. There are two broad modes of winding up a private limited company, being; by tribunal or voluntary winding up.
About the Author
Vinay Singh
Co-founder & Fintech AdvisorRelated articles
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