In India, a Private Limited Company can be wound up in one of two ways: compulsory winding up or striking off. When a company fails to meet a number of statutory compliances, it is compelled to close. It is therefore wiser to close a company if it has been unable to operate for a long period of time and there is no reason to believe that it will soon be able to resume operations. Closing a Private Limited Company can be done in a number of ways:

1. Compulsory Company Dissolution

This type of winding up is the responsibility of the Tribunal. The causes behind this could be as follows:

• Unlawful conduct committed by a firm or its management;
• Fraudulent act or misbehaviour on the part of the Company or those under its control;
• The Tribunal believes that the Company should be ended up.
• 5 consecutive years of failure to file an annual return or financial statements with the Registrar of Companies (ROC);
• Unpaid obligations of the company; a special resolution for winding up was passed;

PROCEDURE

• File a petition with the Tribunal, together with the Company's Statement of Affairs.
• The petition will be accepted or rejected by the Tribunal based on a number of factors.
• If a petition is filed by someone other than the Company, the Tribunal may order the Company to file an objection. Within 30 days, it is submitted with the Statement of Affairs.
• For the winding-up procedure, the Tribunal will appoint a Liquidator.
• The liquidator's responsibilities include supporting and supervising the liquidation process (taking over of assets, review, and examination of books of accounts, sale of assets, any other function, etc.). To be approved by the winding up committee, he/she shall provide a draught report.
• The liquidator must submit the final report to the Tribunal for a winding-up order once the draught report has been approved.
• A liquidator is a person who specialises in liquidating The liquidator must send a copy of the order to the ROC (Registrar of Companies) within 30 days. Failure to do so will result in a penalty.
• When the ROC is satisfied, it approves the Company's winding up and removes its name from the Register of Companies.
• The ROC issues a notice for publication in the Indian Official Gazette.

2. Company's Voluntary Dissolution

A special resolution or a resolution passed at a general meeting might be used to wind up the company in this way.

The causes behind this could be as follows:

• The Company voluntarily decides to wind up due to the occurrence of any event under the AOA (Articles of Association) providing for the Company's winding up.

PROCEDURE

• Pass a resolution at general meeting for the AOA events or a special resolution for a voluntary decision and a creditors' meeting;
• Make a declaration of the Company's solvency for the settlement of unpaid obligations;
• ROC must receive the declaration of solvency, as well as the auditor's report and the registered valuer's report (in the case of a valuation of the Company's assets).
• Appoint a Liquidator to complete the process. The process of winding up will begin on the date the resolution is passed.
• The liquidator is responsible for preparing a winding-up report and convening a general meeting of the Company to lay final winding-up accounts.
• A resolution will be passed if a majority of the members agree to it.
• In addition, a Liquidator must transmit a copy of the statements to ROC and submit a report to the Tribunal together with the statement.
• After reviewing the circumstances, the Tribunal will issue an order for the Company's winding up.
• Within 30 days, the liquidator must provide a copy of the order to the ROC (Registrar of Companies).
• A company's winding up is approved by ROC when it is totally satisfied. The name of the company is then removed from the Register of Companies.
• The notice is sent to the ROC for publication in the Indian Official Gazette.

3. Fast Track Exit Scheme (FTE)

This type of winding up is used to remove the names of defunct companies from the company registry.

Companies that have shut down:

• A firm that has neither assets nor obligations.
• Any company that does not start doing business after it is incorporated;
• When a company hasn't done any business for at least a year.

PROCEDURE

• Submit an application to the ROC (Registrar of Companies) using Form FTE and pay any applicable taxes (paid online).
• The ROC investigates the request and notifies the Company through email that the name of the Company has been removed from the Register of Companies. It further states that in the absence of information to the contrary, the winding-up processes will begin within 30 days.
• On the MCA portal, the names of applicants and the date of application are posted, providing stakeholders 30 days to lodge complaints.
• The ROC informs the Income Tax Department of the winding up application. It provides the department 30 days to raise any objections to the winding up of the company.
• A company's dissolution is approved by ROC when it is fully fulfilled, and the company's name is removed from the Register of Companies.
• The ROC issues a notice for publication in the Indian Official Gazette.