Closing a private limited company involves a meticulous process, and GHR Advisory offers expert guidance to streamline this intricate procedure. There are four primary methods for closing a private company. The company’s owners or directors can decide to wind up the business, where they affirm under oath their decision to discontinue operations.To simplify the closure of small businesses without resorting to a tribunal, the Ministry of Corporate Affairs has introduced rules in 2020 under the Companies Act.
A private limited company can be closed through both ‘voluntary’ and ‘compulsory’ means. In the case of voluntary closure, the company, while maintaining its existing business and directorial structure, chooses to wind up its operations. The closure process entails settling all assets and liabilities, repaying loans and obligations, satisfying all creditors, and distributing remaining assets to shareholders.
Private limited companies can be closed voluntarily or through compulsory means. The decision is typically made by the owners or directors of the company.
Directors play a crucial role in the closure process, affirming their decision to wind up the business. They are responsible for ensuring compliance with legal requirements.
Yes, under the Ministry of Corporate Affairs rules in 2020, there is an alternative procedure for closing small businesses without resorting to a tribunal, providing a more streamlined approach.
