Winding up a company is the process of ending its existence, involving the dissolution of its affairs, collection of assets, and payment of debts. The Companies Act, 1956 outlines three modes of winding up: compulsory winding by the tribunal, members' voluntary winding up, and creditors' voluntary winding up, each necessitating the appointment of a liquidator to manage the process. Grounds for compulsory winding include inability to pay debts and just and equitable reasons, while voluntary winding includes procedures dependent on the type of voluntary winding chosen.

1. Company Law and Secretarial
Practice
Unit 7 – Winding Up Of Companies

2. Topics covered under this chapter
•Meaning
•Kinds of Winding Up

3. Winding Up - Meaning
• Winding-up of a company is a process of putting an end to the life
of a company. It is a proceeding by means of which a company is
dissolved and in the course of such dissolution its assets are
collected, its debts are paid off out of the assets of the company or
from contributions by its members, if necessary.
• Winding-up is the process by which management of a company’s
affairs is taken out of its directors’ hands, its assets are realized by
a liquidator and its debts are realized and liabilities are discharged
out of proceeds of realization and any surplus of assets remaining is
returned to its members or shareholders.

4. Winding Up
• Section 425 of the Companies Act, 1956 lays down the above
three modes of winding up and provides that the provisions of
the Act with respect to winding up shall apply, unless the
contrary appears, to the winding up of a company in any of these
three modes.
• In every winding up, a liquidator is appointed to administer the
property of the company and he or they must apply the assets of
the company, first, in the payment of the creditors in their
proper order, and then, in distributing the residue among the
members according to their rights.

5. Modes of Winding Up
A company registered under the Companies Act, 1956 may be
wound up by any of the following modes:
1. Compulsory winding up by the Tribunal
2. Voluntary winding up, which may be either
(a) Members’ Voluntary Winding Up
(b) Creditor’s Voluntary Winding Up

6. Compulsory Winding Up by Tribunal
Grounds for Compulsory Winding Up (Sec 271)
• Special resolution
• Inability to pay debts
• Just and equitable
• Default in filling P/L account and B/S or Annual Return
• Acted against Sovereignty and Integrity of India
• Sick Industrial Company

7. Compulsory Winding Up by Tribunal
Petition for Winding Up
The following persons can file a petition:
• The Company
• Any Creditor
• Any Contributory
• The Registrar
• Any person authorized by the Central Government under section 245
• By the Central Government or State Government

8. Voluntary Winding Up
1. Members’ Voluntary Winding Up
• Appointment of Liquidator
• Board’s power to cease
• Power to fill vacancy in the office of liquidator
• Notice of appointment of liquidator to registrar
• Duty of the liquidator to inform the Assessing Officer
• General Meeting at the end of each year
• Final meeting and dissolution

9. Voluntary Winding Up
2. Creditor’s Voluntary Winding Up
• Meeting of Creditors
• Notice of Registrar
• Appointment of Liquidator
• Committee of inspection
• Liquidator’s remuneration
• Power of board to cease
• Vacancy in office of liquidator
• Meeting at the end of each year
• Final meeting and dissolution