Tribunal Winding Up: Your Path to Success
Table of Contents
Introduction
The process of winding up a company entails halting all activities and operations. The National Company Law Tribunal (NCLT) is a tribunal that can commence the winding-up process under the Companies Act, 2013.
A fair and orderly dissolution of the firm is ensured when the Tribunal commences winding up, which comprises judicial proceedings and obligations.
What is “Winding Up by Tribunal”?
A creditor or other outside party can begin a winding up by tribunal, a form of compulsory winding up, and the process is often carried out by a tribunal. The tribunal has the authority to dissolve a firm for multiple reasons, including:
- Debts are piling up and the corporation can’t pay them.
- The integrity and sovereignty of India, as well as public morals, state security, and cordial relations with foreign nations, have all been harmed by the company’s activities.
- There has been fraudulent or illegal activity on the part of the company in its operations.
- The firm has failed to file its yearly reports or financial statements for the past five fiscal years in a row.
- A tribunal under any other law currently in force has ordered the winding up of the corporation.
- In the view of the tribunal, winding up the corporation is fair and just.
- The Registrar of Companies, the federal government, a state government, or an individual authorized by the federal government can petition the tribunal to order the dissolution of a company.
To oversee the winding up by tribunal of the firm and its assets, the tribunal can choose either a provisional liquidator or a corporate liquidator. As it sees proper, the tribunal can also oversee the liquidator’s work and issue directives about the winding up procedure.
A number of further actions, such as dissolving the corporation, dividing up assets, settling claims, auditing finances, and disposing of records, can be ordered by the tribunal.
Procedures for the Tribunal to Start the Winding Up of a Company
There are two primary ways for the Tribunal to initiate the winding up of a corporation under the Companies Act, 2013. Two types of winding up by tribunal are available:
- Voluntary
- Compulsory.
When a corporation chooses to wind down of its own will, either by its shareholders or its creditors, this is called a voluntary winding up.
Conversely, the Registrar of Companies, shareholders, creditors, or any other interested party can petition the Tribunal to commence a compulsory winding up.
The Tribunal’s Voluntary Dissolution of a Company
The shareholders of the corporation must pass a special resolution to initiate the voluntarily winding up procedure. A general meeting of shareholders is required to pass this resolution by a three-quarters majority vote.
Within 30 days after the resolution’s passing, the business must notify the Registrar of Companies of the change. After this, the creditors will have a meeting, and the winding-up procedure will begin with the appointment of a liquidator.
Company Dissolution Ordered by the Tribunal
Filing an application with the Tribunal, accompanied by valid grounds for winding up, initiates the compulsory winding up. Any major default, incapacity to pay debts, or just and equitable causes may lead to compulsory winding up.
The applicant is obligated to furnish the Tribunal with the required paperwork together with the appropriate payment. The application is thereafter reviewed by the Tribunal, who, upon satisfaction, issues a winding-up order to initiate the winding-up procedures.
The winding-up process can be made easier for everyone involved if they follow the proper legal protocols and get some outside help.
A group of knowledgeable experts from Lawgical Adda is available to help you at every stage if you have any questions about the winding up of a company by the Tribunal under the Companies Act, 2013.
FAQ’s
- In what time frame may a tribunal dissolve a company?
A lot of things determine how long it takes to wind up a company through a tribunal. These include the firm’s size and kind, the amount and complexity of challenges, the stakeholders’ cooperation and consent, and the tribunal’s and liquidator’s efficiency and availability.
A few months to a few years is a reasonable estimate for how long the winding up process could take.
- I don’t want my business to be wound up by a tribunal. What can I do?
If you want to keep your business from being wound up by a tribunal, the best course of action is to make sure it’s solvent, follows all applicable laws, and acts ethically. Also, do your best to settle any claims or disputes with creditors, shareholders, employees, or government agencies in a timely and amicable manner.
Seek the advice of an attorney and move swiftly to protect your business or reach a settlement if you are served with a winding up petition.
