Did you know companies are closed down voluntarily when there is a great financial stress on it? Read the article to know more about Closing Up of Companies!
Closure of Company under the companies act 2013 is a process of liquidation, which is followed when the company has no more assets to pay off its liabilities. The procedure of company closure is governed by the Companies Act, of 2013.
Company closure is a procedure in which the company’s directors can appoint a voluntary liquidator to closing up the affairs of the company. The appointment of a voluntary liquidator does not necessarily mean that all or any part of the assets of the company will be sold at an ‘auction’.
In some cases, it may be desirable for creditors to receive some payment from proceeds from sale rather than having them distributed among shareholders. In such circumstances, it may also be appropriate for creditors to have their claims paid out before distribution takes place.
What Does It Mean By Closure of Company?
When a business is brought to an end because of certain reasons it is called company closure . If a company or business goes bankrupt or the business fails or there is a major loss the close company is initiated.
Closing a company means closing of a company. Before closing the company money has to be paid off to the creditors and assets are distributed among the authorities. The process of closure up includes a lot of documentation and legal procedures. There are multiple steps that have to be followed in order to close a business under Companies Act 2013.
Closing a company is an important process which involves the liquidation of the assets of a company. The purpose of closing a company is to protect creditors and other stakeholders in case the business fails or if it has been mismanaged.
Companies act 2013 is the latest legislation that governs the formation of companies in India. The Companies Act, 2013 was passed by parliament on December 13, 2012 and came into effect from April 1, 2013. It replaced the Companies Act, 1956 which had been in force since 1859. The new law has made several changes to the existing laws governing Indian companies.
- The Companies Act 2013 provides for two types of closing a company: voluntary and compulsory. In both cases, all members are given notice that they have certain rights under the act and must respond within 30 days with their intentions about whether they wish to be wound up voluntarily or compulsorily. If no response is received within this period, then either type will be taken over by the court automatically.
Closing of companies is a process where the company can be closed down by its directors under certain conditions. The main purpose of this process is to protect the creditors, shareholders and other stakeholders from any further losses or liabilities. It also allows the members to distribute their assets among themselves in a fair manner without any interference from third parties.
If you are thinking of voluntarily closing a company you can take help from Vakil search. They will help you with all the Lego procedures and documents. Vakil search will do all the necessary work that is required for the voluntary company closure to save your time and make the process Hassle-free.
Company Closure under the Companies Act
If you wish to move forward with the voluntary company closure then there are some documents that you will require in order to proceed further. The important documents that are required for voluntary company closure:
- For voluntary closing of companies, the PAN card of that company is required.
- A written declaration of the organization’s financial balance is required.
- A statement of accounts of the company that is being wound up is required.
- A return document in which all the records that are available are explained and reviewed by a chartered accountant.
- An application is also required in the name of the organization which will mention evacuation.
Advantages of Voluntary Closing a Company
Voluntary closing of companies are a great way to deal with your business problems. They help you get rid of all the debts and liabilities that would otherwise make it difficult for you to continue running your business. The process is very simple, and you can do it on your own at home or in a small office space.
The advantages of closing a company up are that it is cheaper and quicker than a compulsory closing. It also allows the company to continue trading while the liquidation process takes place, which means it can continue paying its creditors until they have been paid in full.
This will not be binding on creditors or employees if you did not give them notice of your intention to close your company prior to being served with a petition for administration. This means that all debts owed by the business will remain valid even after closing up has taken place.
Disadvantages of Company Closure
In the event that you are thinking about a voluntary closing, there are certain disadvantages to consider. The most significant disadvantage is that it will take time for your company to close down and liquidate. This can be especially problematic if you have customers or suppliers who rely on your business.
The disadvantage of companies closure is that the company will have to pay for the costs involved in closing up, such as legal fees, court expenses and administration costs. This can also lead to a lack of funds being available for the business owner to continue trading or pay off creditors. If there are any assets left after all debts have been paid, they may still need to be sold at a low price which will mean less money coming into the business owner’s pocket.
Conclusion
Voluntary closing up of the company is done when the company is under great financial stress or if the business has failed to generate revenue. This is a long process and requires legal assistance.
If you are about to liquidation of a company you can contact Vakilsearch. They have a team of expert lawyers and legal advisors who will help you through the entire process and tell you what documents are required to carry out this process. This will also help you with the application process and make things easier for you.
