The Companies (Winding-Up) Rules 2020 shall come into effect from the 1st April 2020. The Ministry of Corporate Affairs (MCA) has notified the new rules regarding the winding up of companies and these rules applicable under Companies Act 2013. The new rules will reduce the burden of the National Company Law Tribunals (NCLTs) by enabling summary procedures for liquidation. Petitions for winding up of companies are subject to various conditions, including thresholds on turnover and paid-up capital.
Key features of the winding up of the company under the rules of 2020
- MCA has provided the rules for the winding up for small business without going to the tribunal under the Companies Act 2013. For the purpose of clause (ii) of sub-section (1) of section 361, the class of small business include:
- A company which has taken a deposit and total outstanding deposits are not more than 25 Lakhs.
- A company which has the total outstanding loan, including secured loan is not more than 50 Lakhs.
- A company which has turnover is up to 50 Crores.
- A company which has paid-up capital is up to 1 Crore.
- A company which has paid-up capital is up to Rs.1 Crore.
- The Official Liquidator shall maintain the Registers and books of accounts in the manner provided in rules 79 and 80.
- The filing and audit are done by the tribunal of Official Liquidator’s accounts, according to the procedure laid down in rules 91 to 99 shall be followed with the modification and directions issued by the Central Government.
- The Official Liquidator shall dispose of all the assets in the manner laid down in rules 165 to 167 with the modification and directions issued by the Central Government.
- The Official Liquidator under section 349 shall deposit money into the public account in the Reserve Bank of India.
- Under section 363, the creditors of the company have to prove their claim under rules 100 to 125, with the modification and directions by the Central Government.
Read our article:Functions of a Company Secretary as per the Companies Act, 2013
Part II- Procedure for Winding up by Tribunal
- Rule 3- Under section 272 (1), a petition for winding up of a company is made in Form WIN 1 or Form WIN 2. The petition has to be verified by an affidavit by all petitioners in Form WIN 3.
- Rule 4- Under section 272 (4), the statement of affairs required to filed in Form WIN 4 with information of last 30 days prior to the date of filing the petition. It is duly verified by an affidavit made in Form WIN 5.
- Rule 5- The tribunal gives the company an opportunity of being heard when the filing of the petition for winding up is made by a person. Afterwards provides direction to publish an advertisement and provide copies to the concerned persons of winding up.
- Rule 6- The petitioner has to furnish the copies to every contributory of the company within 24 hours and made payment of five rupees per page for the same.
- Rule 7- The notice of the petition has to be published in the newspaper before 14 days of the date fixed for the hearing. The advertisement shall be made in Form WIN 6.
- Rule 8- The permission by the tribunal is required for the withdrawal of the petition of winding up.
- Rule 9- The substitution of the petitioner in the case where he is not entitled to present the petition for winding up or if the petitioner fails to advertise the petition or consent to withdraw the petition or where Tribunal opines to substitute the petitioner.
- Rule 10- When tribunal substitutes a petitioner in a winding-up petition then directs for the amendment in the petition. After within 7 days of the order of amendment, two fresh copies requires to be furnished with an affidavit attached and now treated as a new petition for winding up of the company.
- Rule 11- Any objections raised in the affidavit filed by the petitioner shall be filed within 30 days from the date of the orderand require to make payment of five rupees per page within three working days.
- Rule 12- Affidavit in reply must be filed within 7 days from the date of hearing against the affidavit in objection.
The winding by of a company is done by a summary procedure where the assets are below one crore, and now the NCLT has no role to play. According to new Companies rules for winding up, the central government provides guidance and has the authority to deal up with the winding up of the company. We at Corpbiz have a team of expert professionals who can help you with winding-up procedure as well as post incorporation compliance services.winding-up-rules-2020