♣ Applicable Acts: Companies Act 2013 & Insolvency and Bankruptcy Code, 2016

♣ Applicable Sections & Regulations:

  • 59 of the Insolvency and Bankrutpcy Code, 2016
  • 173 & 117 (3) (f) of the Companies Act, 2013
  • Regulation 9, 12, 13, 14, 16, 17, 18, 19, 20, 21, 30, 31, 34, 35, 37, 38, 39, 41 of Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017

♣ Step 1 – Convene a board meeting to discuss and approve subject to the approval of Members in the General Meeting:

  • Voluntary winding up of the Company
  • Appointment of Liquidator (An insolvency professional shall be appointed who is independent from the company)
  • To consider and approve Declaration of Solvency and affidavit by the directors of the Company.
    • Declaration of Solvency duly verified by an Affidavit by Majority of Directors of the Company on Stamp paper of Rs.100/- stating they have made a full inquiry into the affairs of the company and they have formed an opinion that either the company has no debt or that it will be able to pay its debts in full from the proceeds of assets to be sold in the voluntary liquidation; and the company is not being liquidated to defraud any person;.
    • Affidavit to be accompanied by :
      • Audited Financial Statement of past two years
      • Records of Business Operations of past two year
      • Report by the Registered Valuer about the valuation of the assets of the Company, if any.
      • Latest Financial Position of the Company, if any.
    • To fix day, date, time and to send notice and agenda for General Meeting.
    • Within four weeks of a declaration under sub-clause (a), there shall be – (i) a special resolution of the members of the company in a general meeting requiring the company to be liquidated voluntarily and appointing an insolvency professional to act as the liquidator; or (ii) a resolution of the members of the company in a general meeting requiring the company to be liquidated voluntarily as a result of expiry of the period of its duration, if any, fixed by its articles or on the occurrence of any event in respect of which the articles provide that the company shall be dissolved, as the case may be and appointing an insolvency professional to act as the liquidator:

♣ Step 2 – Issues notices in writing for calling of a General Meeting proposing the resolution along with the explanatory statement.

♣ Step 3 – In General Meeting pass the ordinary resolution for the purpose of winding up by special resolution Voluntary Winding up of the Company and Appointment of Insolvency Professional to act as Liquidator.

♣ Step 4 – If the company owes any debt to any person, Conduct a meeting of creditors to approve the resolution passed in the General Meeting, if majority creditors are of the opinion that winding up of the company is beneficial for all parties then company can be wound up voluntarily. (Approval of the resolution within 7 days is needed by the creditors owing 2/3rd of the Value of the Debt of the Company).

♣ Intimate ROC in Form MGT-14 – For Board Resolution and Special Resolution & GNL-2 – For Declaration of Solvency & Appointment of Liquidator.

♣ Company to intimate IBBI regarding initiation of Voluntary Winding up within 7 days of approval of liquidation of Company /subsequent approval by the creditors owing 2/3rd of the Value of the Debt of the Company.

♣ Subject to approval of the creditors under sub-section (3), the voluntary liquidation proceedings in respect of a company shall be deemed to have commenced from the date of passing of the resolution.

♣ Public Announcement (PA) in Form A within 5 days from his appointment to be published in one English Newspaper and one Regional Language Newspaper having wide circulation where the registered office and the principal office if any, of the Company is situated and Insolvency and Bankruptcy Board of India (IBBI) regarding PA.

♣ Liquidator to open Bank Account within One month of passing of SR.

♣ Bank Account needs to be opened in the Name of the Company followed by the words ‘in voluntary liquidation’ in a scheduled bank.

♣ Intimation to Income Tax Department within One month of passing resolution regarding Voluntary Winding up of the Company and to obtain NOC for the same.

♣ Preparation of Preliminary Report by IP (To be submitted within 45 days from the commencement of the liquidation process to IBBI).

♣ Submission of Proof of Claim in Form B by Operational Creditors, in Form C by Financial Creditors, by single employee or workmen in Form D, by Numerous Employee or workmen by Authorized Representative in Form E and Any other stakeholder in Form F, by post or by Electronic means.

♣ The liquidator shall verify the claims submitted within 30 days from the last date for receipt of claims and may either admit or reject the claim.

♣ Liquidator to prepare list of stakeholders within 45 days from the last date for receipt of claims.

♣ Liquidator to value and sell the assets of the Corporate Person in the manner and mode approved by the Company.

♣ Liquidator to deposit proceeds of distribution in Bank Account.

♣ Distribution of Proceeds within 6 months from the receipt of amount to the stakeholders & Distribution of Assets that cannot be sold with the approval of Company.

♣ Before the order of dissolution is passed under section 59(8), the liquidator shall apply to the Adjudicating Authority for an order to pay into the Companies Liquidation Account in the Public Account of India any unclaimed proceeds of liquidation or undistributed assets or any other balance payable to the stakeholders in his hands on the date of the order of dissolution.

♣ Liquidator to maintain accounts for liquidation period and conduct audit for Liquidation period.

♣ The entire process to be completed within 12 months from the date of commencement of liquidation.

♣ To prepare Final Report with details consisting of – Details of Audited Accounts of Liquidation & A statement containing Disposal of Assets of the Company, Disposal of the debts of the Company to the satisfaction of creditors, Disposal of litigation pending against/Sufficient Provision for any obligation arising out of any pending litigation; Statement of Sale of Assets showing Realized value, Cost of Realization, Manner & Mode of Sale, Details of the person to whom the sale is made, Explanation stating reasons for shortfall if the value of sale realized is less than the value is assigned.

♣ The Final report needs to be send to the ROC by filing GNL-2, The IBBI via Courier/E-mail & The Adjudicating Authority i.e NCLT via Physical Filing.

♣ Where the affairs of the Company is completely wound up and its assets completely liquidated, the liquidator shall make an application to Adjudicating Authority for the dissolution of such Company.

♣ The Adjudicating Authority -NCLT shall on an application filed by the liquidator pass an order for the dissolution of the Company.

♣ Copy of such order to be filed within 14 days with the Registrar of Companies (ROC).

♣ The liquidator shall preserve all the reports, records, registers and books of accounts either in physical or electronic form for a period of 8 years after the dissolution of the Company either with himself or with an Information Utility.

Author Bio

Qualification: CA in Practice
Company: M N KHANDELWAL & CO.
Location: KOLKATA, West Bengal, IN
Member Since: 04 May 2018 | Total Posts: 9
CA Madhav Khandelwal is a young Chartered Accountant and the founder partner of the firm. He is a B. Com (H) graduate and a fellow member of The Institute of Chartered Accountants of India with 7 years of Post Qualification experience. He has handled vide variety of audits of various companies View Full Profile

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