Method of Dissolution of Company

Method of Dissolution of Company

Method of Dissolution of Company

To terminate the activities of the company management have to follow some procedure. Companies sometimes make termination voluntarily or compulsorily. According to the Companies Acts three process of dissolution of the company are discussed below:

  1. Compulsory Dissolution by the court.
  2. Voluntary Dissolution of the Company.
  3. Voluntary Dissolution under the supervision of the court.

The elaborate discussion is placed below:

Compulsory Dissolution by the court: Companies Act, 1994 describes some situation for which Compulsory Dissolution of the company will occur.

  • If the court gives special order to terminate the company.
  • If a company ignores its statutory conditions that are to be fulfilled.
  • If the company does not start within one year after the registration or if it closes for one year.
  • If the members will reduce at seven and two for public and private limited company respectively.
  • If the company is unable to pay its due.

Voluntary Dissolution of the company: In the Companies Act 1994, voluntary dissolution of the company will be occurring in the following section: Heads of the companies can pass bill for voluntary dissolution for-

(i) Ending of the working time of the company according to the Articles of Association,

(ii) Happening of any special incident described in Articles of Association,

(iii) If the company meet up its objectives,

(iv) If the company become defaulted,

(v) If the company frequently incur losses etc.

Voluntary Dissolution under the supervision of the court: After the decision of voluntary dissolution court can give the order to dissolute under its supervision. Court keeps the pecuniary interest of the debtor and creditor.

At last, we can say that a company is established by legal steps and also dissolute following some legal steps. From the above the procedure becomes clear.