Meaning of Liquidation and modes of Winding up or Liquidation
Liquidation or winding up is a legal term and refers to the procedure through which the affairs a company are around up by law. Winding up of a company has been defined in the companies Act 2013 as " the process whereby its life is ended and its property is administered for the benefit of its creditors and members.
A company being a creation of law, cannot die a natural death. It comes to an end by law through the process of liquidation or winding up.
The process of winding up of a company is that a liquidator is appointed who is ebtrusted with the following duties:
(a) Selling of the assets of the company.
(b) Paying off its liabilities.
(c) If there is any deficiency to pay to the creditors, the shareholders are called upon to pay unpaid amount on their shares.
(d) If there is any surplus after clearing off the liabilities, it may be distributed to the contributories according to their rights under the articles.
(e) After going through the above process, the registrar of companies removes the name of the company from the register of companies maintained by his office.
Liquidation of a company can take place under both the cases, namely when the company is insolvent and when the company is not insolvent.
MODES OF WINDING UP OR LIQUIDATION
As per section 270 of the companies Act 2013 the winding up of a comapny may be either:-
(a) by the tribunal or
(b) Voluntary
Not withstanding anything contained in any other Act, the provisions of this Act with respect to winding up shall apply to the winding up of a company in any of the modes specified under this section.
A company being a creation of law, cannot die a natural death. It comes to an end by law through the process of liquidation or winding up.
The process of winding up of a company is that a liquidator is appointed who is ebtrusted with the following duties:
(a) Selling of the assets of the company.
(b) Paying off its liabilities.
(c) If there is any deficiency to pay to the creditors, the shareholders are called upon to pay unpaid amount on their shares.
(d) If there is any surplus after clearing off the liabilities, it may be distributed to the contributories according to their rights under the articles.
(e) After going through the above process, the registrar of companies removes the name of the company from the register of companies maintained by his office.
Liquidation of a company can take place under both the cases, namely when the company is insolvent and when the company is not insolvent.
MODES OF WINDING UP OR LIQUIDATION
As per section 270 of the companies Act 2013 the winding up of a comapny may be either:-
(a) by the tribunal or
(b) Voluntary
Not withstanding anything contained in any other Act, the provisions of this Act with respect to winding up shall apply to the winding up of a company in any of the modes specified under this section.
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