Liquidation and winding up
This query is : Resolved
11 October 2013
difference between liquidation of the company and winding up of thee company ??
12 October 2013
DEAR MEMBER,
When a company makes the decision to go out of business, it generally cannot simply close its doors the instant it makes that decision. Most businesses have long-term obligations to employees, suppliers and customers as well as landlords and various other parties. A company will have to take time to end these relationships and handle any obligations it has to various stakeholders before it can close its doors.
Winding up is a process whereby all assets of the company are realised and used to pay off the liabilities and members. Dissolution of the company takes place after the entire process of winding up is over. Dissolution puts an end to the life of the company. A dissolution order passed by the court is like the death certificate of the company. As the concept of bankruptcy is not of much relevance in India, for the purposes of this article, the focus is on the concept of winding up.
Liquidation.
************
Once a company has wound up its affairs, it can then sell its remaining assets. Some of these assets, such as remaining inventory, may be liquidated as part of the winding up phase. Others, such as land, buildings and equipment will typically be sold only after the company has completely gone out of business.
Winding up of a company is the process whereby its life is ended and its property is administered for the benefit of its creditors and members. The court appoints an administrator,called a ‘liquidator’, who takes control of the company, takes possession of its assets and finally distributes any surplus among the shareholders in accordance with their respective rights. The objective behind the winding up of a company is to realise the assets, pay off the liabilities and distribute the surplus as expeditiously as possible.
Under section 425 of the Act, a company may be wound up in any one of the following three ways:1
(a) by the court2 making a winding-up order (compulsory
winding up);
(b) by passing of an appropriate resolution for voluntary
winding up at a general meeting of members (voluntary winding up); and
(c) voluntary winding up subject to supervision of the court.
Voluntary winding up
In the case of voluntary winding up, the entire process is done without court supervision. When the winding up is complete, the relevant documents are filed before the court for obtaining the order of dissolution. A voluntary winding up may be done by the members or the creditors.
When a company makes the decision to go out of business, it generally cannot simply close its doors the instant it makes that decision. Most businesses have long-term obligations to employees, suppliers and customers as well as landlords and various other parties. A company will have to take time to end these relationships and handle any obligations it has to various stakeholders before it can close its doors.
Winding up is a process whereby all assets of the company are realised and used to pay off the liabilities and members. Dissolution of the company takes place after the entire process of winding up is over. Dissolution puts an end to the life of the company. A dissolution order passed by the court is like the death certificate of the company. As the concept of bankruptcy is not of much relevance in India, for the purposes of this article, the focus is on the concept of winding up.
Liquidation.
************
Once a company has wound up its affairs, it can then sell its remaining assets. Some of these assets, such as remaining inventory, may be liquidated as part of the winding up phase. Others, such as land, buildings and equipment will typically be sold only after the company has completely gone out of business.
Winding up of a company is the process whereby its life is ended and its property is administered for the benefit of its creditors and members. The court appoints an administrator,called a ‘liquidator’, who takes control of the company, takes possession of its assets and finally distributes any surplus among the shareholders in accordance with their respective rights. The objective behind the winding up of a company is to realise the assets, pay off the liabilities and distribute the surplus as expeditiously as possible.
Under section 425 of the Act, a company may be wound up in any one of the following three ways:1
(a) by the court2 making a winding-up order (compulsory
winding up);
(b) by passing of an appropriate resolution for voluntary
winding up at a general meeting of members (voluntary winding up); and
(c) voluntary winding up subject to supervision of the court.
Voluntary winding up
In the case of voluntary winding up, the entire process is done without court supervision. When the winding up is complete, the relevant documents are filed before the court for obtaining the order of dissolution. A voluntary winding up may be done by the members or the creditors.
12 October 2013
Completely agree with Expert Ramesh Ji,
All of those terms refer to the final ending of a business. Liquidation is the sale of all the assets of the business or converting the remaining fixed assets and inventory into cash.
Winding up is a more broad term and refers to both liquidation and dissolution.
All of those terms refer to the final ending of a business. Liquidation is the sale of all the assets of the business or converting the remaining fixed assets and inventory into cash.
Winding up is a more broad term and refers to both liquidation and dissolution.
Message likes :
1 times
12 October 2013
thanks sir for appreciate.
regards,
regards,
Message likes :
1 times
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Is this income indian or foreign income?
- ITC temporary reversal and reclaim
- Inventory of finished goods
- Applicable TDS rate for sale of property in Nov 2024
- RCM INVOICING FROM NOV-2024
- Sale of property furniture sale
- Can we claim ITC of Feb-2024 in the month of November-2024 which was not claimed by oversight
- Tds on building rent monthly
- Confusion around Form 26QB fields
- REGARDING 25 AS DATE OF PAYMENT AND DATE OF BOOKING
- TDS under section and rate of TDS
- GST input on scooter purchased
- TDS under section 194Q and TCS under section 206C
- GST input on car insurance and repairs
- GST input on Diwali gift to employee
- GST input on Mobile Handset
- Material and freight in same invoice
- TDS under section 194J inclusive of reimbursement of expenses
- TDS on Material and Labour in same invoice
- Should I be worried about and rectify reporting Jan,Feb ,March 2024 foreign salary in schedule FA?
Trending Online Classes
CAclubindia
