There are many reasons to close their private limited company by Business owners. However, they follow particular laws when closing a private limited company.

Running a business has its challenges. A business may have to shut down if it does not work out as expected. A private limited company can be closed in by Selling the company, Mandatory Winding Up, Voluntary Winding Up, and Defunct Company Winding Up.

Selling a Private Limited Company is accomplished by selling the majority shares of the company. Here the stakes are transferred to another individual or entity, releasing the majority shareholders of their stocks and responsibilities.

Mandatory Winding Up will trigger if any company registered under Companies Act, 2013 does an unlawful act or if it has failed to meet the requirements of the company, it would be wound up mandatorily by the Company Law Tribunal. In this process, the company or any company’s contributors or registrar of the companies or trade creditors of the company or central or state government will file the petition. The CA would audit the supporting documents attached to the petition. Auditor’s view on the financial statement must be unqualified. The advertisement must be published in a daily newspaper at least for 14 days in English and in the regional language of that area of company should be done. Filing of Form 11 along with completed audited books of the accounts up to the date of the order, date of filing, place, and time for the company liquidator and Assets.

The tribunal would pass the order for dissolving the company within 60 days of receiving the claim if it finds that all the accounts are in order along with the fulfillment of mandatory compliance. Once the order is passed by the tribunal, the registrar will issue a notice to the Official Gazette confirming that such company is dissolved.

Voluntary Winding Up requires lengthy procedural compliance. The steps involved in this process are Board Resolution, as per the Companies Act 2013, along with the approval of the majority of directors, Special Resolution with 3/4th of the total Shareholders voting with approval, the approval of the trade creditors, and declaration of solvency along with the acceptance of the trade creditors of the company. Once the process is completed and filed, the company gets wound up.

In the case of Defunct Company Winding Up, there are no financial transactions that are carried out by the dormant companies and the government provides an accelerated process with the submission of STK-2 forms and this needs to be filled by the Registrar of Companies along with duly signed by the director of the company approved by its board to do so.

To make the Winding Up procedure simpler for small companies, the MCA has notified, The Companies (Winding Up) Rules, 2020, detailing certain classes of companies mentioned under Section 361 of the Companies Act, 2013, that can wind up without the referring it to the tribunal.

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.