A company can be closed by adopting the following ways:-
(A) Strike off a company under Section 560 :
(B) Winding up :
Section 425, of Companies Act, 1956, deals with modes of winding up. The winding up of a company may be either –
- By the Tribunal (also known as compulsory winding up)
- Voluntary winding up
- Subject to the supervision of the Court
Voluntary Winding up : You can get a general picture from the following steps of winding up which are summarized below (except Voluntary winding up)
- Issuing a written demand for debt payments to the target company.
- Present a winding up petition to the court and the company
- Court hearing for the petition
- Granting of winding up order by the court
- Meeting of creditors and other relevant parties
- Appointment of liquidator.
- Realization and distribution of company’s assets to the creditors
- Realize of duties for liquidator
- Dissolution of the company.
Voluntary winding up which may be:
- Member’s Voluntary winding up.
- Creditor’s Voluntary winding up.
In case of voluntary winding up, the entire process is done without court supervision. When the winding up is complete, relevant documents are filed before the court for obtaining the order of dissolution. A Voluntary winding up can be done by members or creditors. The circumstances in which company may be wound up voluntarily are:
- When the period fixed for the duration of the company in its articles has expired
- When an event on the happening of which the company is to be dissolved as per its articles happen.
- The company resolves by special resolution at any general meeting to be voluntary winding up.