Shutting Down Your Company in India? 3E Accounting Can Help
Liquidation in India can happen for several reasons. One thing that is certain, however, is that you need a team of professional consultants to guide you through the process.
What Does Liquidation Mean?
Liquidation in India is when a company needs to be shut down. Liquidation here refers to the procedure involved, the way the company is going to terminate. It also refers to how the assets of the company will be distributed.
Liquidation can be done voluntarily. In this case, the court will not need to intervene. Our team of professionals can help you handle the liquidation process with ease and grace.
How the Liquidation Process Starts
When you choose to pursue the liquidation process, you must file a petition for insolvency. This is the first step. This can be prescribed under the Insolvency and Bankruptcy Code. It can be done by the company’s creditors or owners. If liquidation is voluntary, a general board meeting must be held where all members must agree to the winding up of the company.
Liquidation in India is applicable to shelf companies too. Provided there is no business activity and the company has been dormant.
The company representative will then select a liquidator. The liquidator is responsible for handle the legal process, including notifying the Registrar of Companies. The 3E Accounting professionals can assist with the steps involved in voluntary liquidation.
A company can only be liquidated if it meets the following conditions:
- No default has been committed
- The board of shareholders and directors must agree to the dissolving of the company
- Creditors approve of the resolution (they must represent two-thirds of the company)
- The liquidation is not intended to defraud any person
What About Compulsory Liquidation?
This process falls under the Insolvency and Bankruptcy Code of India. Compulsory liquidation can be initiated by one of the company’s creditors. The creditor must request a debt payment of at least INR 100,000. This request can be made at the National Company Law Tribunal.
There will be a period of 180 days where recovery of assets cannot commence. This includes any enforcement of procedures once the application has started. If needed, extensions of 90-days can be granted.
Liquidation in India can take up to two years to complete. However, voluntary liquidation can be done much faster.
Need to Liquidate Your Company? We’re Here for You
The challenges of liquidating your company can be a lot to juggle. There are many affairs to set in order before this can happen. As such, appointing a professional team of experts who know the exact nature of the process can be beneficial. We will save you time, money, and man-hours involved by ensuring a smooth transition from start to finish. We put the needs of your business first and that is why 3E Accounting is the best in the business for all matters related to company incorporation, taxation, accounting, and more. For more information about our Company Liquidation Services, contact our team today.