A company pay off the creditors, sell all their assets, and distribute the remaining assets to the shareholders of the company when they decide to wind up the company. There are 2 models of winding up of the company, the first is compulsory winding up of a company, and the second is voluntary winding up of a company.
When a court or a tribunal order's a company that is formed and registered under the ordinance, it is known as compulsory winding up of a company.
Many persons are allowed to apply for winding up of a company as a form of a petition to the tribunal, the persons that are allowed to file such petition are the creditors, the registrar, any contributor or contributors, the company itself, any person who is authorized by the state, or any person authorized by the central government.
A registrar will need the prior sanction of the central government before he files "an application" for the closure of the company in a form of a petition to the tribunal. There needs to be a reasonable opportunity given to the company before the central government grants the sanction to the registrar. The Registrar needs to submit his reasons within 60 days of the receipt of the petition.
A company can only wind up when a special resolution affecting that the company would be wound up by the court or tribunal has been passed by the company itself. Another possible scenario when a company has to wind up is when the company has acted against the interest of integrity and sovereignty of the country. If the financial statement and annual return for 5 consecutive financial years of a company have defaulted, then the company has to wind up. When a tribunal has an opinion that it is equitable to just wind up the company, then the compulsory winding up of the company takes place, or if the Court believes that there have been fraudulent affairs going on in the company or the objective for the formation of the company walls for an unlawful purpose then the tribunal can direct the company to wind up.
To wind up a company, one needs to file a petition, and this petition can only be filed by the selected categories of a person. A statement of affairs of the company has to be filed with the petition. Form 6 needs to be filled and an advertisement should be carried out through it. This Should be advertised for at least 14 days in a daily Journal and the language of the same should be in English and the regional language of the respective area. The audited books of the counts need to be submitted before the tribunal and once all the mandatory compliance es has been made the tribunal will pass an order for winding up of the company. After the order of the court or tribunal, the registrar will issue a notice to Official Gazette which will state that the companies dissolved.

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.