Running a business is never an easy task and sometimes, things might not go according to plan which may result in the closure of the company. There are several reasons a Pvt. Ltd. The company may shut down, like selling of the company, mandatory or voluntary closure or even a defunct company wind up. However, whatever the reason, the directors must abide by certain legal rules and regulations, as per Companies Act, 2013.
There are two ways a Pvt Ltd company can face closure.
- Voluntary Closure: The voluntary closure of a Pvt. Ltd. company requires a long procedure of compliance filing. The circumstances can be anything like the passing of a special resolution signed by a majority of the shareholders or expiry of the duration for which the company was formed.
- Defunct Winding-Up: As per the Companies Act, 2013, if a company is declared as a Dormant Company, the government provides certain relief to wind up the company. This requires the filing of the STK-2 form with the Registrar of Companies.
The procedure of Closure:
- A resolution must be passed with at least 2/3 of the directors agreeing to it.
- The consent of the Trade Creditors is essential.
- The declaration of solvency is then issued.
- The liquidator will then make an application to the Tribunal. A final order must be filed with the ROC.
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While we are focusing on solving the legalities of the businesses, their owners can have more time and focus on their core responsibilities.