A corporate person who intends to liquidate itself voluntarily and has not committed any default may initiate voluntary liquidation proceedings under Section 59(1) of Chapter 5 of the Insolvency and Bankruptcy Code, 2016.

The voluntary liquidation of the corporate person shall meet such conditions and procedural requirements as are specified under Section 59(2) of the Code.

Conditions:

As per section 59(3) of the Code, voluntary liquidation of a corporate person registered as a company shall meet the following conditions, apart from no default as mentioned in section 59(1), namely

       a.Declaration verified by an affidavit: A declaration from the majority of the directors verified by an affidavit that: They had a full inquiry about the company affairs and has formed an opinion that either the company has no debt or will be able to pay its debts in full from the proceeds of asset and the company is not being liquidated to defraud a person.

        b.Documents: The declaration to be accompanied by the following documents: Audited financial statements and Record of business operations

         Of the previous two years or period since its inception, whichever is later;

          and a Valuation report of the company’s assets.

         c.Contributories’ Resolution: Within 4 weeks of declaration: At the general meeting of the company, a special resolution is passed by the members regarding that the company is to be liquidated voluntarily and to appoint an insolvency professional who will act as a liquidator or at the general meeting of the company an ordinary resolution passed by the members requiring the company to be liquidated voluntarily because of the expiry of the period of its duration or occurrence of any event which as per articles requires that the company shall be dissolved and to appoint an insolvency professional who will act as the liquidator.

        d.Creditor’s approval: Where the company owes a debt to creditors who represent about two-thirds in value of debt of the whole company then the contributor's resolution is to be approved by them within 7 days from the date of passing of such resolution.

Notification of Contributories’ Resolution and Creditors approval: Company will notify about the passing of the resolution by contributors or subsequent approval by the creditors within 7 days of such resolution, to the Registrar and the Insolvency Regulator i.e. the Insolvency and Bankruptcy Board of India.

Commencement of Liquidation Proceedings: Voluntary liquidation will be deemed to be commenced from the date of passing of the contributors’ resolution.

Public Announcement by the Liquidators and Collection of Claims of Creditors: The liquidator will make a public announcement within 5 days of his appointment calling upon the financial creditors, operational creditors, employees, workmen, and other stakeholders to make their claims. He shall collect all the claims within 30 days from the date of commencement of winding up. He will also verify all the claims within 30 days of the last date of receipt of claims.

Realization of Assets and Distribution of Proceeds: The liquidator shall realize the assets of the company and within 6 months of receipt of proceeds the liquidator will distribute the proceeds to the various stakeholders.

Dissolution of the Corporate Debtor: The liquidator will make an application to the National Company Law Tribunal (NCLT) for the dissolution of the corporate debtor when the assets of the corporate debtor have been completely liquidated.

NCLT will on the application of liquidator order the dissolution of the company and from the date of that order, the company shall stand dissolved.

A copy of the dissolution order will be sent to the Registrar within 7 days of the date of the order.

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. Further, despite all efforts that have been made to ensure the accuracy and correctness of the information published, White Code Legal and Tax shall not be responsible for any errors caused due to human error or otherwise.