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Winding Up
The Companies Act lays down the provisions and the procedures for
winding up operations leading to the dissolution of the company.
Winding up may be either through court or voluntarily by the members
of the company.
Before a company can initiate such proceedings under the Companies
Act, it must seek clearance from the government for closure of the
unit and displacement of labour under the Industrial Disputes Act.
A sick or a potentially sick company that has been referred to the
Board of Financial and Industrial Reconstruction may be wound up
pursuant to an order passed by the Board. If a company wishes to
close down a manufacturing unit without dissolving itself, it
requires clearance from the government under the Industrial Disputes
Act.
For final settlement to members of the Company Board, prior
permission of RBI is required. This permission is to be taken once
the final amount for payment has been ascertained.
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