SUMMARY PROCEDURE OF THE WINDING UP OF A COMPANY

The summary procedure of the winding up of a company is provided under Section 361 of the Companies Act 2013. The proceedings of the liquidation are carried out by an official liquidator which is appointed by the central government. This summary procedure provides the method for winding up other than winding up in a situation of an inability to pay debt.

1.Conditions for summaries winding up –

A company which wants to wind up under Section 361 should complete the conditions mentioned below-

The book value of the assets of the company shouldn’t exceed Rs. 1 crore and anyone of the conditions mentioned below based on the latest audited balance sheet-

  1. In the case of a form which has taken deposits , the total outstanding deposit do not exceed Rs 25 lakh or
  2. In the case the company possesses any outstanding loans, the total amount of the outstanding loans which include the secure loan do not exceed Rs. 50 lakh.
  3. The turnover of the company should be up to 50 crore
  4. The paid up share of the capital of the company does not exceed 1 crore.
  5. Appointment of an official liquidator-

This is provided under Section 502 of the Companies Act 2013.

As mentioned above, the central government appoints an official liquidator for the purpose of winding up a company under the Summary Procedure.

  • Procedure for summary liquidation-
  • Sale of assets on properties-

The official liquidator is responsible for disposing off all the assets of the property owned by the company after he obtains an approval of the central government. Every sale made should be with the conformation of the central government and the gross sale proceeds must be paid to the liquidator. Any expenses incurred in connection with the sale would be paid by the liquidator out of the amount of the gross proceeds of the sale.

  • Payment to creditors-

The official liquidator within a span of 30 days of his appointment calls the predators of the company to be disposed to prove their claims from the company. The claims hence made should be made in a prescribed manner within a time span of 30 days from the receipt of the call received from the liquidator. Then the liquidator shall examine the proof of debt by the creditors .Within 30 days from the expiry of the time which was allowed for making claims the liquidator shall file a list of creditors with the central government and then shall discharge the dues of the creditors.

  • Powers of the liquidator

The liquidators who are appointed shall take all the custody as well as the control of the assets and actionable claims to which the company is entitled. This shall include all the assets owned by the company as well as all the amount which is due to the company. For the purpose of executing the sale of the assets as well as properties owned by the company a liquidator can appoint an agent or auctioneer which is approved by the central government.

  •  Duties of the official liquidator

The liquidator so appointed shall be liable to investigate affairs of the company and then submit a report to the central government in a prescribed manner. This report shall mention whether any fraud was committed in the promotion, formation or the management of the company. This report should also be made if the liquidator is of the opinion that no fraud is committed. If on the receiving of the report of the liquidator the central government is satisfied that a fraud has been carried out by any member of the company, it might direct further investigation into the affairs of the company and another report will be submitted withing the time frame as specified.

  • Winding up order-

After considering the investigation repost which is to be submitted by the official liquidator the central government may order winding up of the company in the same manner in which the company is wound up by a tribunal.

These are the necessary steps for winding up.

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

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