Voluntary Winding Up of a Member

In case of a company which is solvent and able to pay its liabilities in full and which desires to be wound up voluntarily, the majority of its directors at a Meeting of the Board must make a declaration of solvency verified by an affidavit staling that in their opinion the company will be able to pay its debts in full within such period not exceeding 3 years from the com­mencement of the winding up as may be specified in the declaration. Such a declaration must be made within 5 weeks immediately preceding the date of the passing of the resolution for winding up the company and be delivered to the Registrar for registration before that date. 

The declaration must embody a statement of the company’s assets and liabilities as at the practicable date before the making of the declaration. Any director making a false declaration shall be criminally liable to imprisonment as well as with fine extending up to Rs. 50,000. The company must appoint liquidators for the purpose of winding up and fix their remuneration at a general meeting. On the appointment of the liquidators, the Board of directors, managing director and manager of the company cease to have any management power. The liquidator may transfer or sell the assets of the company and pay off its liabilities.

 If the winding up proceedings continue for more than one year, the liquidator must call a general meeting at the end of each year the liquida­tion continues.