Jul 06,2020 | 8 min read

All You Need to Know About the Companies Act

The Companies Act
The Company Act, 2013, regulates all needs related to the Company from incorporation, responsibilities, manage directors till it's dissolution. The Company Act, 2013 replaced the Company Act, 1956 in 2013. This Act includes the concept of "one-person company" that is Private Company. It's provisions mandated companies to file requisite documents such as annual return, financial statements, etc. with the Registrar of Companies (RoC) of the jurisdiction.

When And How The Company Can Be Windup At Its Own
Winding-up of a company is the final stage of it, and the reason behind it may vary from loss, mutual agreement between the stakeholders, up to the bankruptcy, etc. It is a process of ending the corporate existence of a company. As per the Company Act, 2013, winding-up can be either tribunal or voluntary.
A winding petition may be filed by any of the parties such as Company, Creditors, Contributory or contributors, Central or state government, Registrar of Companies (ROC) or a person authorized by the Central Government for the purpose. The petition should be certified by a certified Chartered Accountant, be in form no. 1, 2 or 3 as required and should accompany the statement of affairs in form no. 4. Voluntary winding-up of a company occurs by the mutual consent of members of a company. It may take place either by special or ordinary resolution by members of a company.

Procedure of Winding-up

The Company needs to follow the following procedures for winding-up:
      Conduct a meeting of directors to initiate the process of winding-up, ensuring no pending third party debts.
      Conduct a general meeting of all shareholders for and passes an ordinary resolution for winding-up a company by a simple majority or a special majority.
      Conduct a meeting of all the creditors.
      File a wind-up notice with the Registrar to appoint an official liquidator within ten days of the resolution. Also, a winding-up notice in the official gazette and newspaper as an advertisement.
      File a certified copy of the ordinary or special resolution passed in the general meeting within 30 days of resolution. Company's liquidator account gets audited at this point.
      Conduct the next general meeting to pass the resolution for the disposal of books and other necessary documents.
      File a copy of accounts and application of winding-up in the tribunal, within 15 days of the resolution
      The official liquidator files a copy of the order with the Registrar
      Finally, the Registrar publishes a notice in the official gazette declaring the dissolution

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What Steps Can Be Taken By NCLT Or High Court
The winding-up cases are dealing with both IBC and the Company Act after the implementation of IBC. According to the Rule 4 of Companies Rules, 2016 – all the voluntary winding-up petitions and applications pending before the High Court (till the date of commencement of the rule, i.e. April 1, 2017) will be dealt by the High Court as per the provisions in the Act. Therefore, pending proceedings of voluntary winding-up before April 1, 2017, does not get transferred to the NCLT and dealt with by the High Court. However, as per the sections of the Company Act, 2013, which has provisions for dealing with voluntary winding up has only one mode of winding up that is "winding up by the NCLT". In this, only insolvency professional have been allowed as liquidators whether it is by NCLT under the Company Act, 2013 or winding up under the IBC or voluntary liquidation of a company under IBC.

Actions May Be Taken By SFIO Against The Company
Serious Fraud Investigation Office (SFIO) is a new concept introduced under the Company Act, 2013 to investigate the affairs of the Company. Certain corporate activities are regarded as a fraud and kept it under the category of cognizable, non-bailable offences which are punishable under section 447 of the Company Act, 2013.

Why SFOI Take Steps

The SFIO can investigate a company's affairs under the following circumstances:
·        On a report of the Registrar or inspector under section 208 of the Companies Act, 2013
·        Upon notified by a company of having passed a special resolution to investigate its affairs
·        If the case is in the public interest.
·        When requested by any Central / State Government Department

How SFIO Takes Actions:
      SFIO possess the power to arrest
      Director, additional or assistant director requires to sign arrest order with the personal memo
      Same would be served on arrestee and get an acknowledgement in writing
      Same in the sealed envelop in prescribed format requires to serve to the office of director
      Within 24 hours, arrested persons presented before to the judicial or metropolitan magistrate

 

 


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ABOUT THE AUTHOR


Samar Inam Khan

Advocate & Arbitrator since 2003

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