Company Dissolution & Liquidation Consultant, Procedure

A company is considered to be dissolved when it is no longer recognized as a legal entity. Upon dissolution, the Registrar will remove the company's name from the Register of Companies and arrange for the fact to be published in the Official Gazette. Thus, the dissolution marks the end of the company's existence. Broadly speaking, a company's label ends upon its dissolution. After the dissolution process is finished, the corporation will be unable to continue operating. The managerial duties assigned to the director will be removed. Following that, the administrator is replaced by a liquidator who takes over as head of the entire company.

Dissolution of a company can be brought about in the following two ways:

through assigning the company's project to a different business as part of a reconstruction or amalgamation plan. The transferor corporation will be dissolved by the NCLT order without being wound up.
by selling the company's assets and using the money to settle its debts in order to wind it up. The remaining sum will be given to the stakeholders following the settlement of the company's debts, and the NCLT will issue an order of dissolution.

An NCLT application concludes a business. The dissolution order is issued by the NCLT following the interested parties' permission and the satisfaction of compliance requirements under the Companies Act, 2013. Following a company's winding up, the dissolution order has the following effects:

The company's winding up process is finished.
The stakeholders' preferences are taken into consideration while allocating the assets and liabilities.
The company name is removed from the Companies Register.

The following effects flow from the dissolution order when the corporation is dissolved under the amalgamation or reconstruction scheme:

It is not necessary to complete the winding up procedure since the company is taken over under the reconstruction or amalgamation strategy.
The transferor company is dissolved upon its amalgamation or reconstruction, and no winding up application is required.

Dissolution and Liquidation

In the corporate sector, the terms "dissolution" and "liquidation" are occasionally used synonymously, but they refer to two different processes. Dissolution is a feasible choice when there is no debt or when any debt that does exist can be paid off in full within a year along with other obligations. A unique circumstance is liquidation. If a company is unable to pay its debts, liquidation is probably the best course of action. The process of liquidating a business involves removing its assets, selling them for as much money as is practical, and utilizing the money received to settle any outstanding debts. A licensed insolvency practitioner is the only person who may start a liquidation on someone else's behalf; they will oversee the entire procedure.

Modes of Dissolution of a Company

A company's dissolution can be accomplished in one of the following ways:

Merger, reconstruction, and amalgamation

These business strategies involve the transfer of a company's endeavor to another business through reconstruction, joining with other businesses, and amalgamation. In this case, a Tribunal decision will end a company's transfer instead of winding it up.

Voluntary dissolution of a company

At a general meeting or shareholders meeting, a company's shareholders may decide to dissolve it voluntarily. When a corporation voluntarily dissolves, its obligations are fulfilled and its assets are realized. After then, any excess is distributed among the company's members according to their respective rights.

Dissolution of a Company by Tribunal

Company dissolution mandated by a tribunal is covered by Section 302 of the Companies Act of 2013 (Dissolution of a Company by Tribunal). Dissolution of a Company by the Tribunal describes the procedure that the Tribunal uses to dissolve a company, and it is explained here:

Dissolution of a Company by the Tribunal describes the procedure that the Tribunal uses to dissolve a company, and it is explained here.
The Tribunal may, upon an application submitted by the Company Liquidator pursuant to sub-section (1), or it may, upon finding that an order for the dissolution of the company is appropriate given the circumstances of the case, issue an order directing the company's dissolution, which will take effect on the date of the order.
Within thirty days of the order's date, the Company Liquidator is required to transmit a copy of it to the Registrar, who will enter the dissolution of the company's minute in the relevant register.
The Company Liquidator may be subject to a fine of up to ₹5000 for each day that the default persists if the Company Liquidator fails to send a copy of the order within the time frame given in sub-section (3).

Registrar's removal of the company's name from the Register of Companies:

Under Section 248 of the Companies Act of 2013, the Registrar may remove a company's name from the Register of Companies under the following circumstances, provided that the Registrar has a good faith belief that:

A company that was incorporated has not started operations within a year.
A firm must have ceased all business operations for a minimum of two consecutive fiscal years and must have submitted no application during that time to be designated as a dormant company in accordance with section 455. He will notify the company and each of its directors in writing of his intention to have the company's name removed from the register of companies. He will also ask them to provide their comments and copies of any pertinent documents to him no later than thirty days from the date of the notice.
A statement to this effect has not been made within one hundred and eighty days of the company's incorporation under sub-section (1) of section 10A, indicating that the subscribers to the memorandum have not paid the subscription that they had agreed to pay at the time of the company's incorporation: This is available to companies that were incorporated after November 2, 2018. Companies that were incorporated before to this time frame are exempt from filing Form INC-22A requirements as stated in Section 10A(1) of the Companies Act of 2013.
After the physical verification required by sub-section (9) of section 12 of the Companies Act, 2013, it was discovered that the company is not doing any operations or business.

Procedure of Dissolution

The following steps should be followed when dissolving a company:

Owners' approval: The owners of a corporation must provide their consent before it can be dissolved. In the case of corporations, the shareholders must give their approval. The resolution to dissolve must be drafted and approved by the board of directors in accordance with corporate regulations. After the board of directors has approved the resolution, shareholders cast their votes. Both actions ought to be recorded and maintained in the business's records.
Getting a state-issued Certificate of Dissolution: After a member or shareholder vote in favor of the dissolution, the company's base state must receive the necessary paperwork. The corporation must file paperwork in the states where it has business licenses.
Documentation related to federal, state, and local taxes: When a business closes, its tax obligations do not. Formal notification of a business's closure must be sent to state and local tax authorities as well as the appropriate authorities.
Bring everything to a close: Upon approval of the dissolution, the corporation must conclude its business. further than what is necessary to shut its accounts and dispose of its assets, it is unable to conduct any further activity. During this period, the following activities are possible:

Clear the debts
Notifications should be sent to vendors, landlords, suppliers, insurance, and customers.
Workers ought to be informed.
All registrations, licenses, and permits ought to be cancelled.
Leave states where skilled foreign workers are employed.

Notifying creditors of company closure and resolving outstanding debts: Prior to dissolving, the business must notify its current creditors of its impending closure and resolve outstanding debts. Creditor claims are up to the firm to accept or reject. Claims that are approved must be fulfilled, or suitable repayment plans must be worked out with creditors. For instance, a creditor might consent to settle the claim for a portion of the original amount—let's say 75% of it. In writing, creditors must be informed when their claims are denied by the company.

Effects of Dissolution

The repercussions of a firm dissolving are as follows:

You cannot continue conducting business once a company has been dissolved.
When a corporation is dissolved, its existence as a legal entity ends.
It simply means that the company's legal existence or entity is retained after winding up but prior to dissolution, enabling it to be sued in a court of law.
The term "dissolution" describes the end of a company's legal identity or existence.
After being dissolved, a firm is no longer a legal entity and cannot be sued.
Upon dissolution, the Registrar removes the company's name from the Register of Companies, and the Official Gazette publishes this information.

How SKMC Global can help ?

A company's dissolution is a difficult procedure with administrative, financial, and legal requirements. As a service provider, SKMC Global is responsible for overseeing and assisting this process to guarantee that it is completed effectively and in accordance with applicable laws. Here's how we get involved:

Consultation and Advisory:

We offer advice on the best kind of dissolution (voluntary, mandatory, or via court order) depending on the goals and circumstances of the business. Provide guidance on the legal and regulatory prerequisites for dissolution, taking into account adherence to both national and local regulations.

Documentation and Filing:

Help with the preparation and submission of the resolutions, statements of accounts, and deregistration petitions, among other papers, required for the dissolution process. Make sure that the Registrar of Companies (ROC) or other regulatory organizations get the proper submission of the necessary documentation.

Financial and Tax Compliance:

Assistance in resolving the business's debts, including unpaid taxes and other responsibilities. To guarantee correct reporting and compliance, prepare the company's final financial statements and tax returns.

Legal and Administrative Procedure:

Assist with any legal matters that come up throughout the dissolution process, such as resolving conflicts or creditor claims. Oversee the administrative duties associated with the company's shutdown, such as informing clients, staff, and stakeholders.

Regulatory Compliance:

Make sure that all legal procedures are met, such as filing dissolution documents and notifying regulatory bodies. If needed by law, publish the necessary public notices or advertising regarding the company's dissolution. Oversee the legal requirements for the preservation and storage of business records and papers, even after a dissolution. Provide a final report for the company's recordkeeping and compliance needs that summarizes the dissolution procedure and results.

Stakeholder Management:

Informing stakeholders of the dissolution and managing their interests will need communication with staff, creditors, and shareholders, among others. Deal with and settle any disagreements or claims made by creditors or other parties.

Tax and Legal Filings:

Acquire tax clearance certificates from the appropriate authorities to verify the settlement of all outstanding taxes. Submit to regulatory agencies the last set of paperwork and reports needed for the company's official closure.

Companies can successfully traverse the dissolution process by utilizing SKMC Global's experience, guaranteeing that all administrative, financial, and legal criteria are satisfied and reducing risks and complications.