What is the procedure for voluntary winding up of a solvent company?

Question

My company has no debts but the shareholders want to close it down and distribute the remaining assets. What is the voluntary winding up procedure? Before I spend money on it, I want to know whether Insolvency and Bankruptcy Code 2016, Section 59 gives me a remedy here and what proof I would need. Any Section numbers I can quote when I write to them would be useful.

MyVakeel Legal Desk · Accepted Answer

Insolvency and Bankruptcy Code 2016, Section 59, Companies Act 2013, Section 59 and Companies (Winding Up) Rules 2020, Rule 3 is what decides this question in India. Read it alongside the provisions named, because the relief available to you turns on the facts you can prove on paper.

Section 59 of the Insolvency and Bankruptcy Code 2016 governs voluntary liquidation of a corporate person that is solvent and wishes to liquidate itself voluntarily, replacing the earlier voluntary winding up provisions of the Companies Act.

The process begins with a declaration of solvency by a majority of directors verified by an affidavit stating that the company has no debts or will be able to pay its debts in full within a period not exceeding one year from commencement of liquidation.

Within four weeks of the declaration of solvency, the company must pass a special resolution approving voluntary liquidation and appointing an insolvency professional as liquidator, and if it has creditors, obtain approval of two-thirds in value of creditors.

The Companies (Winding Up) Rules 2020 prescribe the detailed procedural forms and reports the liquidator must file with the Registrar of Companies and the Insolvency and Bankruptcy Board of India during the process.

The liquidator realises and distributes the company's assets, and the company stands dissolved once the NCLT passes a dissolution order after the liquidator submits the final report.

What this means for you: 1) Obtain the directors' declaration of solvency supported by an affidavit and audited financial statements; 2) Pass the special resolution appointing an insolvency professional as liquidator within the prescribed timeline; 3) Complete asset realisation and creditor payment, filing periodic reports as required; 4) Apply to the NCLT for a dissolution order once liquidation is complete.

Where the facts are disputed, what usually decides a voluntary winding up company india matter is the paper trail — dated complaints, acknowledgments and written replies under Insolvency and Bankruptcy Code 2016, Section 59. You can post the details on the MyVakeel forum for a practising advocate to review, or book a paid consultation with a Bar Council verified lawyer in corporate law.