Winding up is the process of dissolving a company. Winding up shall mean the company ceases to be operational or ceases to do business as usual.

The assets are disposed of, the liabilities are paid, and the surplus, if any, is distributed among the shareholders/ members in proportion to their shareholding in the company.

In India wind-up procedure of any company includes the shutdown of all business activities. Exchanges and auctioning to clear the organization’s financial arrears. When all obligations have been tidied up, the remaining benefits of the organization will be shared among investors with respect to capital contributed by them.

As per Section 425 of the Companies Act, 1956 there are the following modes of winding up.

  1. By the Tribunal (also known as compulsory winding up)
  2. Voluntary winding up


A company can be legally forced to wind up by a court order. In such cases, the company is ordered to appoint a liquidator to manage the sale of assets and distribution of the proceeds to the creditors.

Compulsory winding up of a company: An association or a partnership firm might be compelled to break down making it hard to continue with its chosen regime

The company might be broken down under one of the below situations.

  • Company debts are unable to be paid off in usual course of business.
  • An unlawful act done by a company or the management of a company
  • Special resolution passed by members for winding up.
  • The company involves in fraudulent act.

Voluntarily winding up of a company: When the company wiped out and cannot release its liabilities then voluntarily winding of a company happen.

Voluntary winding up may be of 2 types:

  1. Member’s Voluntary winding up
  2. Creditor’s Voluntary winding up

In the case of voluntary winding up, the entire process is done without court supervision. relevant documents are filed before the court for obtaining the order of dissolution.

A voluntary winding-up can be done by the members or creditors.

Following are the circumstances in which a company can be voluntary wind up:

  1. When the period fixed for the duration of the company expires which is stipulated in Articles of Association.
  2.  When an event on the happening of which the company is to be dissolved as per the articles of association of a company.
  3. The company at any general meeting resolves by passing a special resolution for voluntary winding up.


  1. Declaration of Solvency by Board
  2. Identify an Insolvency professional as liquidator
  3. Convene board meeting
  4. Convene General meetings of shareholders
  5. Filings with Registrars of Companies and IBBI
  6. Liquidator is in-charge of the company.
  7. Public Announcement
  8. No objection from tax authorities
  9. Realization of Assets
  10. Distribution
  11. Final report
  12. Filing by liquidator final report with the Registrar and the IBBI.
  13. Application to NCLT
  14. Order by NCLT
  15. Filing of order
  16. ­Preservation of records.


  • The first step is the filing of a petition for winding up of a company, and as already mentioned above, the petition can be filed by only selected categories of person. 
  • The petition, so filed, has to be accompanied by the Statement of Affairs of the Company. 
  • The petition should be advertised in the following manner;
    • The advertisement must be carried out under Form 6. 
    • The advertisement should be in a daily journal at least for 14 days. 
    • The language of the advertisement should be in the regional language of the respective area and in English.
  • The company needs to submit complete audited books of accounts. If the Tribunal finds that the accounts are in order and all the mandatory compliance has been complied with by the company, the Tribunal will pass an order for dissolving/winding up the company. 
  • The registrar will issue a notice, after the order of the tribunal, to the official gazette mentioning that the company is dissolved.  
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