Section 59 of the Insolvency & Bankruptcy Code, 2016 deals with the provisions related to Voluntary Liquidation of Corporate Persons.
Pre-requisites for initiation of Voluntary Liquidation Proceedings:
- Intention to liquidate itself voluntarily.
- Not committed any default under the provisions of Chapter V of Insolvency & Bankruptcy Code, 2016.
Conditions to be fulfilled for Voluntary liquidation proceedings of a corporate person registered as a company:
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Affidavit from majority of directors stating that- Either the company has no debts Or it will be able to pay its debts in full from the proceeds of assets to be sold in the voluntary liquidation |
Affidavit from majority of directors stating that- The Company is not being liquidated to defraud any person Affidavit from majority of directors stating that- The Company is not being liquidated to defraud any person |
The declaration given above shall be accompanied with the following documents,
(i) audited financial statements and record of business operations of the company for the previous two years or for the period since its incorporation, whichever is later;
(ii) a report of the valuation of the assets of the company, if any prepared by a registered valuer;
Within 4 weeks of a declaration (through affidavit) given above:
- Special Resolution is required to be passed by the members in a duly convened general meeting for voluntary liquidation & appointment of insolvency professional.
In case, the company has creditors, then such creditors representing two thirds in value of the debt of the company, have to approve the resolution passed above within seven days of such resolution.
Where the affairs of the corporate person have been completely wound up, and its assets completely liquidated, the liquidator shall make an application to the Adjudicating Authority for the dissolution of such corporate person.
The Adjudicating Authority shall on an application filed by the liquidator, pass an order that the corporate debtor shall be dissolved from the date of that order and the corporate debtor shall be dissolved accordingly.
A copy of an order as stated above shall within fourteen days from the date of such order, be forwarded to the authority with which the corporate person is registered.
Thus, this is the brief summary of procedure to be followed by the Company under Insolvency & Bankruptcy Code, 2016 for voluntary liquidation of corporate persons.
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