The Members’ Voluntary Winding Up
A members’ voluntary winding up is initiated by a special resolution of the members, accompanied by a declaration of solvency in Form MGT-14 stating that the company will be able to pay its debts in full within a period not exceeding three years from the commencement of the winding up. The declaration must be made by a majority of the directors and must be verified by an affidavit.
The Creditors’ Voluntary Winding Up
Where the declaration of solvency cannot be made, or where the creditors’ meeting does not accept the members’ nominee as liquidator, the winding up proceeds as a creditors’ voluntary winding up. The creditors’ meeting is convened within the prescribed period, and the creditors may appoint their own liquidator.
The Liquidator’s Appointment
In a members’ voluntary winding up, the members appoint the liquidator by ordinary resolution. In a creditors’ voluntary winding up, the creditors appoint the liquidator. The liquidator must be an insolvency professional eligible under the IBC where the winding up is under the IBC’s voluntary liquidation framework; under the Companies Act, the liquidator must be qualified under Section 275.
The IBC Overlay
Voluntary liquidation under the IBC (Section 59) is a separate route that requires the company to be solvent and to file the necessary declarations with the IBBI and the ROC. A company that elects the Companies Act voluntary winding up must ensure that it is not simultaneously pursuing IBC voluntary liquidation; the two regimes are distinct and cannot be mixed.
Documentation
The file should contain: the special resolution; the declaration of solvency; the creditors’ meeting notice and minutes; the liquidator’s appointment; the ROC filings; and the final accounts. A voluntary winding-up file that lacks the declaration of solvency is incomplete.
Call to Action: For voluntary winding-up route selection, declaration of solvency drafting, or liquidator appointment, contact office@anujdesaiassociates.com or 9619456656. Website: https://anujdesaiassociates.com. LinkedIn: linkedin.com/in/ca-anuj-desai-122547230.