Winding up of a company is the process whereby the company’s life comes to an end and its assets are administered for the benefit of its creditors and members. An administrator, called liquidator is appointed and he takes control of the company assets pays debts and finally distributes any surplus among the members in accordance their respective rights.
Winding up of a company can be due to a number of reasons such as hardship, bankruptcy etc. The winding up of a company can be initiated intentionally by the shareholders or creditors or by a Tribunal.
“Winding up is a means by which the dissolution of a company is brought about and its assets are realised and applied in the payment of its debts. After satisfaction of the debts, the remaining balance, if any, is paid back to the members in proportion to the contribution made by them to the capital of the company.”
“The liquidation or winding up of a company is the process whereby its life is ended and its property is administered for the benefit of its creditors and members. An Administrator, called a liquidator, is appointed and he takes control of the company, collects its assets, pays its debts and finally distributes any surplus among the members in accordance with their rights.”
As per Section 2(94A) of the Companies Act, 2013, “winding up” means winding up under this Act or liquidation under the Insolvency and Bankruptcy Code, 20 Thus, winding up ultimately leads to the dissolution of the company. In between winding up and dissolution, the legal entity of the company remains and it can be sued in a Tribunal of law.
A company is said to be dissolved when it ceases to exist as a corporate entity. On dissolution, the company’s name shall be struck off by the Registrar from the Register of Companies and he shall also get this fact published in the Official Gazette. The dissolution, thus puts an end to the existence of the company.
|S. No.||Winding Up||Dissolution|
|1.||Winding up is one of the methods by which dissolution of a company is brought about.||Dissolution is the end result of winding up.|
|2.||Legal entity of the company continues at the commencement of the winding up.||Dissolution brings about an end to the legal entity of the company.|
|3.||A company may be allowed to continue its business as far it is necessary for the beneficial winding up of the company.||Company ceases to exist on its dissolution.|