Close PVT LTD Company

What Are The Reasons For Closing A Private Limited Company?

Members and creditors of the company may apply for the company's closure for the following
reasons:

The procedure of voluntarily winding up of a private limited company is as follows –

1 If the ROC finds that the company has engaged in any fraudulent or unethical conduct.
2 If the company has been failed to file financial statements for the last five years.
3 If a company is unable to pay its creditors.
4 If the management of the Company is gridlock and there is no prospect of winding up.


Voluntary Winding Up

The Voluntary winding up of a private limited company is a long procedure. Voluntary winding up of a
company means winding up of a company by its members voluntarily. Winding up of a company can be done voluntarily by the members, if –

 The company passes a special resolution to wind up the company.

 The company passes a resolution in the general meeting to wind up voluntarily as a result of the
expiry of the period of its duration as per articles of association, or an event occurred with respect
to which articles of association declare that the company should be dissolved.


Procedure Of Voluntarily Winding Up Of Private Limited Company

Step 1 – Firstly, conduct a board meeting with 2 directors to pass a resolution along with the
declaration that the company has no debts and the company is in a position to pay its creditors
after selling the company’s assets.

Step 2 – In the second step, the company issues a written notice to call a general meeting along
with an explanatory statement proposing the resolution.

Step 3 – In the third step, the company passes the ordinary resolution in the general meeting for
the purpose of winding up by the ordinary majority or 3/4th of the majority by passing the special
resolution.

Step 4 – After passing the special resolution in the third step, conduct a meeting of creditors. If
the majority of the creditors are having the same opinion that winding up of a company is
beneficial for all the parties, the company will be winded voluntarily.

Step 5 – After taking the decision in the creditors meeting to wind up the company, file a notice
with the registrar to appoint a liquidator within 10 days after the passing the resolution.

Step 6 – In the sixth step, the company has to give notice of the resolution in the official gazette
and also advertise the same in the newspaper within 14 days after the passing of the resolution.

Step 7 – In the 7th step, the company must file certified copies of resolutions (ordinary or special)
passed within 30 days of the general meeting.

Step 8 – In the 8th step, wind up the affairs of the company, prepare the liquidator account, and
auditors will audit the same.

Step 9 – In the 9th step, the company conducts a general meeting.

Step 10 – In the 10th step, the company passes a special resolution in the general meeting to
dispose of books and all other necessary documents after winding up the company's affairs.

Step 11 – In the 11th step, the company submits an account copy as well as an application to the
tribunal within 15 days of the first general meeting to pass an order for dissolution.

Step 12 – In the 12th step, If a tribunal found that all your accounts are in order and the company
has followed all the necessary compliance's, the tribunal will pass the order for dissolving the
company within 60 days of receiving the application.

Step 13 – The appointed liquidator submits a copy of the order with the registrar in step - 13.

Step 14 – In step – 14, the registrar publish a notice on the official gazette declaring that the
company is dissolved after receiving the order passed by the tribunal.


Compulsory Winding Up

According to the companies act 2013, a company has done any fraudulent or illegal activity or involvement in any unlawful or illegal act. The company will be mandatory wind up by the tribunal.


Filing Of A Petition

 The Company, or
 Company trade creditors, or
 Any contributory or Contributors to the company or
 Any of the three categories mentioned above
 The Central or State Government or
 By the Companies registrar

The petition should be submitted in triplicate in Form WIN 1 or WIN 2. A petition shall be accompanied by an affidavit prepared in accordance with Form WIN 3.

Procedure For Compulsory Winding Up The Private Limited Company

 Filing of petition
 The Petition followed by the statement of affairs in form WIN4 in duplicate.
 Petition to be advertised for at least 14 days
 Proceedings in the tribunal.

Filing of petition – Petition will be filed by the following parties -

1 Company
2 Central government or state government
3 Creditors of the company
4 Registrar
5 Any contributions or contributory of the company.


The Petition followed by the statement of affairs – Petition should be accompanied by a
statement of affairs in form-4. All the documents filed under form-4 should be audited by the
chartered accountant, and the auditor should give a qualified opinion regarding the financial
statements.

Advertise for at least 14 days – The petition should be advertised in the daily newspaper in both
languages – English language as well as in the regional language of the area. Form-6 is filed for
advertisement purposes.

Proceedings in the tribunal – Form-11 is needed in order to wind up the business, and
footnotes contain the prescribed duties –

1 Submit the complete updated audited books of accounts.
2 Provide the date, place & time for the company liquidator.
3 Surrender the assets and their documents.


Defunct Pvt. Ltd. Company Winding Up

STK-2 form is used to wind up defunct Pvt. Ltd. company. Defunct companies are those companies where no financial transactions take place. It is also called dormant companies. The form STK-2 needs to be filled with the Registrar of Companies, and the same needs to be duly signed by the director of the company
authorized by its board to do so.

For the purpose of this scheme, a defunct company refers to a company that has:

 Not having any asset or liability, and
 not engaged in any business activity after its incorporation, or
 Not engaged in any business activity for the previous year before applying FTE (Fast Track Exit
Scheme).