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The provisions relating to voluntary liquidation of a company were earlier covered under the Companies Act, 2013. After the notification of Insolvency and Bankruptcy Code, 2016 (“IBC”) the voluntary liquidation of a company is now governed by the provisions of section 59 of IBC and relevant regulations issued under IBC. The corresponding provisions under the Companies Act, 2013 in this regard have been repealed.
A corporate person will be eligible to opt for voluntary liquidation under IBC provided it fulfils the following two mandatory conditions:
The broad steps involved in the voluntary liquidation are summarised below:
In view of above provisions, voluntary liquidation is an expeditious process for winding up the affairs of a company without much complications or compliances.
Solvent private li,ited company with immovable assets disposed of, movable assets disposed and all creditor dues, obligatory expenses for ” winding ” fully settled but cash reserves from disposing immovable assets [sold legally ] is available for any contingency expenses, ITR filed upto AY 18=19 -board decides liquidation, delisting from RoC as comkpany is dormant for past two years Now with no infrastructure, no employee but alive in name only. Accumulated LOSSES app. Rs 60 lac with subscribed capital of Rs 3.76 kacs.** What will be the ” cost ” under this program – fees, for proffessional liquidater, submission and other cost demanded by RoC to approve our application
Cost involved in liquidating a solvent company with no assets [ movable , immovable ] no employees , dormant for past two years with accumulated losses of Rs 60 lac app., subscribed capital Rs 4.76 lacs. but RESERVES created by sale of immovable assets and after disposing all, every debts, statutory dues, employee settlement etc. BUT is stumped by the costs involved under RoC IBC code 2016.Liquidater fees, liquidation costs demands of RoC seem to be ‘ out of the world ” claims.Can I have possible expense details ? Vasudevan , Director
Dear Mr. Vasudevan,This is with reference to your comments on the exit option.If there are no assets or liabilities in the company then it will be a much speedier process to go for voluntary liquidation provided the company is solvent. To have a better perspective of the cost involved, the cost of various statutory compliances on annual basis like audit of accounts, auditor’s fee, filing of returns with the ROC and Income Tax office etc. should be considered vis-à-vis the liquidation cost. Further, even in case of a dormant companies, directors will continue to be liable for all statutory compliances/obligations.The liquidation cost would broadly include liquidator’s fee, advocate fee for appearance before NCLT after completion of liquidation process, auditor’s fee for auditing the final accounts of the company, newspaper notice, filings with the ROC, etc. If there is not much activity involved then the total cost may be in the range of Rs. 6 to 8 Lacs.In case of dormant company, another option of striking off the name of the company may be explored, where overall cost should be lesser compared to liquidation cost.
Hello,Does the declaration of solvency need to be a single document signed by all directors or does it have to be issued individually by each director?Does your answer change if there is a foreign director involved?Thanks, Yagnesh
Dear Yoegsh,Declaration of Solvency will have to be given individually by the directors including foreign director. It will suffice if such declaration is given by majority of the directors.
It appears that the NCLT has been permitting voluntary liquidation even in cases where the company is not solvent..under Section 10 of IBC. Recent case of Eolane Electronics by NCLT Bangalore is one of them
Dear Sitaram,Section 10 proceedings are different from voluntary liquidation, which will be under section 59 of IBC. Under section 10, solvency of the company is not a criterion for initiating the process. In the case cited by you, liquidation was ordered as no resolution plan was submitted within the specified time and please note that this was not a voluntary liquidation.”
SirWhether order from NCLT is required for voluntary liquidation of unlisted company with no debt?
You have stated only the option under IBC 2016 but did not address with regard to Sec.271/272 of the Companies Act.
Dear Sir,Can a Company Shift its registered office under Voluntary Liquidation, under the circumstances where its GNL-2 has been approved by ROC and the time period of 30 days for inviting claims has been exhausted but the status of the same has not been changed to Under Liquidation on the Website of Ministry of Corporate Affairs
Dear Shalini ChauhanIn the absence of any specific provision in this regard, the company may not be able to shift its registered office after the commencement of voluntary liquidation.”
Dear Shalini,As far as my knowledge you cannot change the registered office of the Company even if the time period of receiving the claims has expired because you may receive the claims even after expiry of 30 days. But yes you can do so with the prior approval from NCLT.
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