VOLUNTARY WINDING UP (Companies Act, 2013)

As we discussed as per section 270 of the Companies Act, 2013, the winding up of a company may be either –

1. by the Tribunal; or
2. Voluntary.

CIRCUMSTANCES IN WHICH COMPANY MAY BE WOUND UP VOLUNTARILY (SECTION 304):
A company may be wound up voluntarily,—

1. if the company in general meeting passes a resolution requiring the company to be wound up voluntarily:
   1. as a result of the expiry of the period for its duration fixed by its articles, or
   2. on the occurrence of any event in respect of which the articles provide that the company should be dissolved; or
   3. the company passes a special resolution that the company be wound up voluntarily.

DECLARATION OF SOLVENCY (SECTION 305):
In case of a proposed voluntary winding up, majority of its directors but not less than two directors, shall at a Board meeting make a declaration verified by an affidavit that they have made full inquiry into the affairs of the company and they have formed an opinion that the company has no debt or whether it will be able to pay its debts in full from the procddes f assets sold in voluntary winding up.
Conditions for Declaration of Solvency:
This declaration shall have effect only if:
(a) it is made within five weeks immediately preceding the date of the passing of the resolution for winding up the company and it is delivered to the Registrar for registration before that date;
(b) it contains a declaration that the company is not being wound up to defraud any person or persons;
(c) it is accompanied by a copy of the report of the auditors of the company prepared in accordance with the provisions of this Act, on the profit and loss account of the company for the period commencing from the date up to which the last such account was prepared and ending with the latest practicable date immediately before the making of the declaration and the balance sheet of the company made out as on that date which would also contain a statement of the assets and liabilities of the company on that date; and
(d) where there are any assets of the company, it is accompanied by a report of the valuation of the assets of the company prepared by a registered valuer.
Unreasonable Declaration:
Where the company is wound up in pursuance of a resolution passed within a period of five weeks after the making of the declaration, but its debts are not paid or provided for in full, it shall be presumed, until the contrary is shown, that the director or directors did not have reasonable grounds for his or their opinion while making declaration of solvency.
Punishment for wrong declaration:
Any director of a company making a declaration under this section without having reasonable grounds for the opinion that the company will be able to pay its debts in full from the proceeds of assets sold in voluntary winding up shall be punishable with imprisonment for a term which shall not be less than three years but which may extend to five years or with fine which shall not be less than fifty thousand rupees but which may extend to three lakh rupees, or with both.
MEETING OF CREDITORS (SECTION 306):
The company shall along with the calling of meeting of the company at which the resolution for the voluntary winding up is to be proposed, cause a meetings of its creditors either on same day or on the next day. The company shall cause a notice of the meeting to be sent by registered post to the creditors with the notice of the meeting of the company.
The Board of Directors of the company shall—
a) cause to be presented a full statement of the position of the affairs of the company together with a list of creditors of the company, if any, copy of declaration under section 305 and the estimated amount of the claims before such meeting; and
b) appoint one of the directors to preside at the meeting.
Where two-thirds in value of creditors of the company are of the opinion that—
(a) it is in the interest of all parties that the company be wound up voluntarily, the company shall be wound up voluntarily; or
(b) the company may not be able to pay for its debts in full from the proceeds of assets sold in voluntary winding up and pass a resolution that it shall be in the interest of all parties if the company is wound up by the Tribunal, the company shall within fourteen days thereafter file an application before the Tribunal.
The notice of any resolution passed at the meeting of creditors shall be given by the company to the Registrar within ten days of the passing thereof.
If a company contravenes the provisions of this section, the company shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to two lakh rupees and the director of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than fifty thousand rupees but which may extend to two lakh rupees, or with both.

PUBLICATION OF RESOLUTION TO WIND UP VOLUNTARILY (SECTION 307):
Where a company has passed a resolution for voluntary winding up and a resolution by creditors is passed, it shall within fourteen days of the passing of the resolution give notice of the resolution by advertisement in the Official Gazette and also in a newspaper which is in circulation in the district where the registered office or the principal office of the company is situate.
If a company contravenes, the company and every officer of the company who is in default shall be punishable with fine which may extend to five thousand rupees for every day during which such default continues.

COMMENCEMENT OF VOLUNTARY WINDING UP (SECTION 308):
A voluntary winding up shall be deemed to commence on the date of passing of the resolution for voluntary winding up under section 304.

EFFECT OF VOLUNTARY WINDING UP (SECTION 309):

In the case of a voluntary winding up, the company shall from the commencement of the winding up cease to carry on its business except as far as required for the beneficial winding up of its business. The corporate state and corporate powers of the company shall continue until it is dissolved.