Shutting Down Your Business? 10 Things You Cannot Ignore

Sep 09, 2023 Girish Khurana

Winding up or closing a business involves the closure of all business operations and clearing off the company’s debts by selling its assets

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Unless you have been mandated to shut the business, here’s how you can close the business if it is likely to become unviable ahead:

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A resolution has to be passed by the company in a general board meeting seeking consent from the majority of its directors

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A special resolution seeking approval of three-fourths of its shareholders has to be passed

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Consent is needed from trade creditors that they don’t have any responsibility if the company is closed

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As a private limited company, a Declaration of Solvency has to be prepared and accepted by the trade creditors

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Get a liquidator to implement the procedure to wind up the business and also to prepare a report on assets, debts, and properties

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The report has to be shared in the general meeting and a resolution has to be passed for dissolving the company

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The liquidator will make an application to the National Company Law Tribunal (NCLT) for dissolving a company

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The tribunal then may pass the dissolution order within 60 days of verifying the documents submitted

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After the dissolution, the company should file a copy of this record with the registrar of the company

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