winding up

Under the Companies Act, 2013, a company may be wound up by the National Company Law Tribunal on grounds listed in s.271, such as a special resolution of the company, acts against the sovereignty and security of India, fraud in the conduct of its affairs, failure to file financial statements for five years, or where the Tribunal considers it just and equitable. A Company Liquidator is appointed to take control of the assets.

Since 2016, inability to pay debts is no longer a ground under the Companies Act: an insolvent company goes through the corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016, and is liquidated under that Code if resolution fails. Voluntary liquidation of a solvent company is also under s.59 of the Code. After winding up, the company is dissolved and ceases to exist. Winding up and dissolution are separate stages.

Example

Because the company was unable to pay its creditors, the creditor had to file under the Insolvency and Bankruptcy Code rather than seek winding up under s.271.

In Indian law

• Section 271, Companies Act, 2013
• Sections 33 and 59, Insolvency and Bankruptcy Code, 2016 (liquidation; voluntary liquidation)

See also

insolvency · corporate personality · memorandum of association

Read more in the study notes

• Control over banking companies: management, accounts, lending, reconstruction and winding up (Banking Law)
• Need for ADR, international commitments and suitability of disputes (Alternative Dispute Resolution Systems)
• Control of the RBI over non-banking companies, financial and non-financial (Banking Law)
• The Deposit Insurance and Credit Guarantee Corporation Act, 1961 (Banking Law)
• Banker and customer: who they are and the legal character of the relationship (Banking Law)
• Rights of a banker: lien, set-off, appropriation and charges (Banking Law)