The Ministry of Corporate Affairs (‘MCA’) vide notification dated 24 January 2020, has notified the Companies (Winding Up) Rules, 2020 (Rules). The Rules are applicable to companies going into ‘winding up for the circumstances mentioned u/s 271’ as well as ‘Summary procedure for liquidation u/s 361’ of Companies Act, 2013. The Rules comprise of 191 rules and 95 forms and shall become applicable from 1st April 2020.
The notification allows certain class of companies to close their business by making a winding up application to Central Government without having to go to National Company Law Tribunal (‘Tribunal’).
Notification of these rules is expected to reduce the burden at the level of NCLT as summary procedure for liquidation can now be filed with the Central Government and the said process is mentioned later in this article.
|Sr no.||Particulars||Form||Time period and mode of dissemination|
|1||Petition to tribunal Section 272 (1)||WIN 1 / WIN 2 (in triplicate)||–|
|2||Affidavit verifying Petition||WIN 3||–|
|3||Statement of Affairs
Affidavit in for concurrence of the statement of affairs
|WIN 4 (in duplicate) WIN 5||The statement shall be not more than 30 days prior to filing of Petition|
|4||Advertisement of Petition||WIN 6||Atleast 14 days prior to hearing (daily newspaper English and vernacular language widely circulated)|
|5||Order appointing Provisional Liquidator (PL)||WIN 8||–|
|6||Intimation of appointment to Provisional liquidator or Company Liquidator (CL) by Registrar||WIN 9||Within 7 days of passing of order through registered post or speed post or by courier service or by electronic means|
|7||PL / CL shall file declaration disclosing conflict of interest or lack of independence in respect of his appointment||WIN 10||Within 7 days from the date of appointment|
|8||The PL / CL as the case may be shall be appointed by the Tribunal from amongst the insolvency professionals registered under IBC, 2016 unless the official liquidator is appointed||–||–|
|9||Order for Winding up||WIN 11||–|
|10||Order for winding up to be sent to CL by registrar||WIN 12||Within 7 days from the date of receipt of order registrar|
|11||Order to be sent to ROC||WIN 13||Within 7 days from date of receipt of order by registrar|
|12||CL shall sent the sealed order to Company||–||As per section 20|
|13||Order to be filed to ROC by liquidator||INC 28||Within 30 days of receipt of Order from Tribunal|
|14||Advertisement of order||WIN 14||Within 14 days of Order (daily newspaper English and vernacular language widely circulated)|
|15||Company Liquidator to take charge of assets and books and papers of company on order of Winding up.||–||On order of Winding Up|
|16||Application under Section 279(1) for leave of the Tribunal to commence or continue any suit or other legal proceeding by or against the company.||WIN 15||–|
|17||Report to be submitted under Section 281(1) to Tribunal and Tribunal shall, within 7 days from the receipt of such report, fix a date for the consideration thereof by the Tribunal and notify the date on the notice board of the Tribunal and to the Company Liquidator.||WIN 16||–|
|18||Provisional list of contributories to be filed by CL to Tribunal||WIN 17||within 21 days after the date of the winding up order|
|19||Upon filing Provisional list of Contributories, CL shall obtain a date from the Tribunal for settlement and shall give notice of the date appointed to every person included in the list and informing such person by such notice that if he intends to object to his being settled as a contributory in such character and for such number of shares or interest as mentioned in the list, he should file in Tribunal his affidavit in support of his contention and serve a copy of the same on the CL not less than 2 days before the date fixed for the settlement, and appear before Tribunal on appointed date for settlement in person or by authorised representative.||WIN 18||Not less than 14 days before the date of settlement through mode as per Section 20|
|20||Person who posted notice as per point 19 shall file affidavit relating to dispatch||WIN 19||not later than 2 days before the date fixed for the settlement of the list|
|21||List when settled shall be certified by Tribunal under its seal||WIN 20||–|
|22||Upon receipt of certified by the Tribunal, the CL shall issue notice shall inform such person that any application for the removal of his name from the aforesaid list or for a variation of the said list, must be made to the Tribunal within 15 days from the date of service on the contributory of such notice.
Affidavit of service relating to dispatch
|Within 7 days from receipt of certified copy from Tribunal and same to be sent through pre paid registered post or speed post
Within 7 days of said dispatch
|23||As per Section 287(3) the meeting of creditors and contributories to determine the persons who may be the members of the Advisory Committee, shall be convened, held and conducted in the manner hereinafter provided in these rules for the holding and conducting of meeting of creditors and contributories||–||–|
|24||CL to report to Tribunal the result of the Meeting||WIN 23||Within 7 days of the conclusion of meeting|
|25||When the composition of advisory committee is not agreed upon the CL shall at the time of making report will apply to Tribunal for directions for composition, and thereupon fix a date for consideration of report of CL and notice of the date fixed shall be advertised||WIN 24||not less than 7 days before the date fixed|
|26||Notice of Meeting of Creditors and Contributories.
The notice to each creditor shall be sent to the address given in his proof as referred to in rule 101 or, if he has not so proved, to the address given in the statement of affairs, or, as given in the books of the company, or as may be known to the person summoning the meeting, and the notice to each contributory shall be sent to the address mentioned in the books of the company as the address of such contributory or to such other address as may be known to the person summoning the meeting
|WIN 25 to 29||at least 14 days before the date of meeting through registered post or speed post or by electronic means.
where number of creditors or contributories, exceeds 500, the CL shall give 14 days notice of the meeting by advertisement in one daily English newspaper and one daily newspaper in principal language
|27||Notice of first or other meeting to officers of company
Affidavit by any person who sent the notice, shall be sufficient evidence of the notice having been sent to the person to whom the same was addressed
|before 14 days of the date of meeting|
|28||CL or some person nominated by him shall be the Chairman of the meeting||WIN 32||–|
|29||CL shall file in the Tribunal a copy certified by him of every resolution passed at a meeting and the Registry shall keep in each case a file of such resolution.||–||–|
|30||Minutes of the proceedings to be entered in the Minute Book within 30 days and the minutes shall be signed by him or by the chairman of the next meeting.||WIN 33||–|
|31||CL shall report the result of the meeting to Tribunal||WIN 34||Within 7 days of the conclusion of meeting|
|32||General proxy or Special proxy||WIN 35 or WIN 36||Shall be lodged not later than 48 hours before the meeting with the CL|
|33||CL shall make quarterly reports as referred to in Section 288(1) to the Tribunal with respect to the progress of winding up of the Company.||WIN 37||Quaterly|
|34||Declaration by Professional disclosing any conflict of interest or lack of independence in respect of his appointment with Tribunal forthwith.||WIN 38||–|
|35||Record book to be maintained by CL||WIN 38A to 38T||–|
|36||CL to file half yearly accounts to Tribunal||30th June and 30th September|
|37||Tribunal may permit the CL to straight away forward completed accounts of the Company in liquidation in respect of relevant period to the auditor for the purpose of audit in requesting that the accounts may be audited, and the certificate of audit shall be submitted to the Tribunal.
Accounts need not be got audited where the transaction during the period is for Rs. 10000 or less.
|WIN 42||Certificate of audit not later than 1 month from the date of receipt of the copy of the accounts|
|38||Statement of receipts and payments
Affidavit of CL
|39||The Accounts shall be audited preferably by one or more CA’s appointed by Tribunal from out of the panel to be maintained by Tribunal, the audit shall be complete check of accounts of CL.
Audit fees shall be decided by Tribunal
|40||Notice for proving debts||WIN 43||Within 30 days from order fix the date and give 14 days|
|41||Proof of debts and contents of proof||WIN 44||–|
|42||Workmen dues||WIN 45||–|
|43||CL shall within 30 days on an application by the Liquidator, examine every proof and if requires the creditor to attend investigation in person shall fix a day and send notice in prescribed form.||WIN 46||Notice to be send before 7 days of the date fixed by pre-registered post or speed post|
|44||Communication of Acceptance of Proof
Communication of Rejection of proof
|Within 14 days of conclusion of examination of debts through modes in section 20|
|45||Appeal by creditor supported by affidavit||WIN 49||not later than 21 days from the date of service of the notice|
|46||Proof and list of creditors to be filed in Tribunal||WIN 50|
|47||CL for purpose of acquiring and retaining possession of the property of the company, be in the same position as if he were a Receiver of the property appointed by the Tribunal.|
|48||Any contributory for the time being on the list of contributories, trustee, receiver, banker, agent, officer or other employee of a company which is being wound up, shall on notice from the CL and within such time as he shall by notice require, pay, deliver, convey, surrender or transfer to or into the hands of the CL any money, property or books and papers in his custody or under his control to which the company is or appears to be entitled and where the person so required fails to comply with the notice, the CL may apply to the Tribunal for appropriate orders.||WIN 51|
|49||Every property or asset belonging to Company shall be sold by CL after confirmation from Tribunal.|
|50||All sales shall be made by public auction or by inviting sealed tenders or by electronic bidding or in such manners as the Tribunal may direct.|
|51||Where property forming part of a company’s assets is sold by the Company Liquidator through an auctioneer or other agent, the gross proceeds of the sale shall, be paid over to the liquidator by such auctioneer or agent and the charges and expenses connected with the sale shall afterwards be paid to such auctioneer or agent in accordance with the scales, if any, fixed by the Tribunal.|
|> As per Section 361 (1) Where the Company to be wound up under this chapter-
i) Assets of book value not exceeding 1 crore; and
ii) Belongs to such class or classes of companies as may be prescribed,
The Central Government# may order it to be wound up by summary procedure provided under this part.
> The Winding Up Rules, 2020 has prescribed the class of companies eligible for Summary procedure for Liquidation which shall be as under, based on the latest audited Balance Sheet:-
a) the company which has taken deposit and total outstanding deposits is not exceeding 25 lakh rupees; or
b) the company of which the total outstanding loan including secured loan does not exceed 50 lakh rupees; or
c) the company of which turnover is upto 50 crore rupees; or
d) the company of which paid up capital does not exceed 1 crore rupees.
# Powers are delegated to Regional Directors at Mumbai, Kolkata, Chennai, New Delhi, Ahmedabad, Hyderabad and Shilong.