Are you thinking of your company closure? Read to know the legal formalities of how to Draft Legal Notice for Company Closure.
The process of closing a company is the procedure of bringing the company’s life in a way to an end. During the winding-up procedure, the firm’s assets are managed to benefit its creditors and members. A company’s closing procedure may be initiated at the discretion of shareholders or forced through a Tribunal or court by delivering a legal Notice. Let’s look at it more closely.
How Does a Company Close?
The liquidation of company’s assets, which are liquidated in order to pay its debts is called closing a business. When a business is going to close, the liabilities, expenses, and charges are settled first. Then the remainder of the assets are divided among shareholders. This that is the process of closing a business is about.
The Company Is Officially Dissolved and Ceases to Exist after Liquidating it
The legal procedure of winding down a business and ceasing operations is referred to as winding up. It ends after it is wound up, and the assets are managed to avoid any harm to the stakeholders.
The company’s shareholders can initiate the closure at any time by giving legal Notice. After the debts have been settled, all of the company’s bank accounts must be closed. In the event of a company’s closure, the GST registration must also be surrendered.
The application petition can be filed with the Ministry of Corporate Affairs once all registrations have been relinquished. In general, the The company can be wound up by one of two methods:
- Compulsory closure of a company
- Voluntary closure of a company
Legal Notice for Company Closure
A company is closed when a tribunal or court orders it to be wound up after it has been formed and established by the ordinance. The Tribunal can dissolve a business in certain circumstances. Compulsory closure is only feasible in the following cases, according to the Companies Act of 2013:
- When the corporation has passed a special resolution directing the Court or Tribunal to wind up the firm.
- Has acted detrimental to the country’s sovereignty and integrity.
- The company still needs to file its financial statements or annual returns for the past five years.
- The Tribunal or Court considers that the firm operates fraudulently or formed the corporation for a fraudulent/illegal purpose.
- The Tribunal or Court believes that the corporation’s closure is equitable.
People who are eligible to file an Application with the Tribunal A petition to request the closing of a company is required to be filed. the following persons are able to file an application:
- The company
- The creditors are owed money.
- Contributors or contributions of any kind.
- The registrar’s office.
- Any person who has been granted permission by the central government.
- Any person who has been granted permission by the state government.
Other relevant considerations:
- Prior to submitting the Petition for the closure of the company the registrar has to first obtain prior permission by the Central Government. Additionally the Central Government must provide the company with an adequate opportunity prior to granting such approval for the registry.
- The registrar will also receive a copy of the appeal, and he will have 60 days to submit his comments to the Tribunal after receiving it.
Actions Taken by the Tribunal Upon Receipt of the Petition
The Companies Act of 2013 further clarifies the steps that is the Tribunal will take after the request for the closure of the company is accepted.
The Tribunal would issue one of the following orders after receiving the Petition:
- Reject the proposal (with or without cost)
- Make a temporary arrangement as it sees fit.
- Appoint a preliminary liquidator for the firm until a winding up order is granted
- Pass an order for the corporation to be wound up (with or without a fee)
- It can adopt any other order it deems appropriate.
- The Tribunal will have 90 days following the date of the submission to the Petition to make an order.
- If an interim liquidator the Tribunal must send the company an official notice and an chance to hear.
- In the event that the Petition for the closure of the business was filed by a person not associated with the company the Tribunal will direct the company to make an opposition to the Petition together with an accounting of the business within 30 days.
- The liquidator is expected to file the company’s books of accounts (finished and inspected up to the order date) with the director and other officers.
Procedure for Compulsory Company Dissolution
- The first stage is filing a petition for a firm’s closure, which, as previously stated, can only be done by certain types of people.
- The Petition, when filed, must be supported by the Company’s Statement of Affairs.
- The following is how the Petition advertises:
- The announcement must be made following Form 6.
- The advertisement must be published for at most 14 days within a daily journal.
- The announcement writes in both the regional tongue of the area and in English.
- The company must prepare fully audited books of account
- Suppose the Tribunal decides that the business’s accounts are in order and that all of the company’s mandatory compliance requirements have been met. In that case, the Tribunal will issue an order dissolving/closing the company.
- In accordance with the Tribunal’s decision the registrar will release an announcement about that the company’s dissolution in official gazette.
A company ends for various reasons, but it is more complex than shutting the door to its offices or failing to show up for work. The procedure of closing is far more time-consuming than the organization itself.