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Winding up is the process wherein a company sells all of its business assets for paying off its creditors and distributing the remaining assets if any, among its members or shareholders and then dissolving the business. Here we are discussing Winding up Process of a Company in details.
In Voluntary Winding up of Companies, the process for winding up is triggered by the shareholders. In this kind of winding up, it is not necessary that the company has to be insolvent. The company may or may not be insolvent. If it is solvent, the shareholders may pass a resolution for winding up if they are of an opinion that their objectives have been reached and that it is time to shut down the company down and distribute its assets. If the company is insolvent, the shareholders may trigger a winding up in order to avoid bankruptcy or personal liability for the company’s debts.
Winding up by Tribunal occurs when a company is forced by law or by a court’s order, to sell off its assets and distribute the proceeds to its creditors. The process is usually initiated by the company’s creditors when they are unpaid or when the company becomes insolvent.
The process for winding up of a company for the above-mentioned reasons (except where the company is unable to pay off its debts) shall be made to the Tribunal in accordance with the provisions of 2013 Act[1].
Also, Read: Legal Analysis Winding up of a Company under Companies Act 2013.
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