Windup of the company means liquifying the assets which are collected and sold to pay the debts of the company. The first step of winding up is to clear the debts, expenses, and costs that are paid away among the shareholders. Once all the company assets are liquidated, it is formally dissolved and ceases to exist.
Winding up is the legal procedure to shut down the company and the assets are monitored so that stakeholders interest is not hampered.
It is quite challenging to file all the complaints and maintain a private limited company. It is advisable to shut down an inactive company. Shareholders can initiate the winding-up process anytime they want. If there are secured or unsecured creditors, all dues need to be cleared before winding up the company. After clearing all the debts and dues, it is mandatory to close all the bank accounts of the company. Also, the GST registration must be surrendered during the wind-up process.
After surrendering all the registration, the wind-up petition can be filed with the Ministry of corporate affairs.
A company can be wound up in two ways that are: Voluntary Winding up of a company and Compulsory winding up.
1. Voluntary Windup
The voluntary windup of the company can be done when:
Voluntary Process of Winding up a Company
2. Compulsory Windup of LLP
Tribunal is responsible for closing the company. Here are a few reasons
Compulsory Wind Up Procedure
Winding up a company means to shut down the company by following the legal procedure usually via liquidation.
Winding up doesn’t remove the existence of the company. The company exists till its dissolution but as an entity. All the business is an administrator by liquidator during the liquidation.
If a company can’t clear the debts of £750 or more, and all the shareholders are ready, a director of the company can apply to the court for the winding up. That means a company should stop trading and be liquidated.
Using the same name of the company or a similar company name following the liquidation of your old company is a legal offense. One must inform all the creditors of the previous company that you are running a company with the same name.