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Winding Up Of Company

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About Winding Up Of Company

Winding up of a company is defined as a process by which the life of a company is brought to an end and its property administered for the benefit of its members and creditors. In words, “Winding up of a company is the process whereby its life is ended and its Property is administered for the benefit of its members & creditors. An Administrator, called a liquidator is appointed and he takes control of the company, collects its assets, pays its debts and finally distributes any surplus among the members in accordance with their rights.”

Winding up is a legal process.

Under the process, the life of the company is ended & its property is administered for the benefits of the members & creditors. A liquidator is appointed to realise the assets & properties of the company. After payments of the debts, is any surplus of assets is left out they will be distributed among the members according to their rights. Winding up does not necessarily mean that the company is insolvent. A perfectly solvent company may be wound up by the approval of members in a general meeting.

A company can be wound up in one of two ways. First, the Court can compulsorily wind up a company. Secondly, the shareholders or the creditors of the company can themselves apply to wind up the company in proceedings known as "voluntary winding up".


There are certain grounds upon which a company can be wound up compulsorily. A company’s inability to pay its debts is a common ground for presenting an originating summons for compulsory winding up. A company is deemed to be unable to pay its debts if:

  • A creditor having a claim against the company for more than $10,000.00 has served a written demand requiring payment, and the debt is not paid within 3 weeks;
  • Execution of a judgment obtained by a creditor against a company remains unsatisfied in part or in whole; or
  • It is proved to the Court’s satisfaction that the company is unable to pay its debts.
  • A voluntary winding up is effected by the passing of a special resolution by the members of the company. The winding up commences at the time of passing the resolution.

Who Can File For Winding Up

The following parties can file an Originating Summons to wind up a company compulsorily:

  • The company itself;
  • A creditor of the company;
  • A shareholder of the company;
  • A liquidator;
  • A judicial manager; or
  • Various Ministers on grounds specified under the law.


Compulsory Winding Up

The Originating Summons for the winding up of a company by the Court in either Form 2 or Form 3 of the Companies (Winding Up) Rules must be filed together with a supporting affidavit (in Form 5).

When filing the Originating Summons, the plaintiff or applicant may nominate a person to be appointed as the liquidator if a winding up order is made by the Court. Before the hearing of the Originating Summons, the plaintiff or applicant, or his lawyer, must obtain and file the written consent of the nominated liquidator. If no liquidator is nominated, the Official Receiver is the default liquidator.

The Originating Summons must be served on the company, the Official Receiver and the nominated liquidator (if any). In addition, the plaintiff or applicant needs to pay a deposit of S$10,400.00 to the Official Receiver.

An advertisement of the Originating Summons is required to be placed in an English and a Chinese local daily newspaper as well as in the Government Gazette.

If any person intends to appear at the hearing, a Notice of Intention to Appear in Form 8 must be given to the plaintiff or applicant, or his lawyer.

Any person who wishes to oppose the originating summons for winding up may file an affidavit in opposition at least 7 days before the hearing date.

The hearing of the originating summons is usually fixed within 6 weeks from the date of filing of the Originating Summons. Hearings are usually conducted in open court before a High Court Judge each Friday. The judge may dismiss the Originating Summons, adjourn the hearing or make a winding up order or an interim order.

Main Effects of a Compulsory Winding Up Order

When a company is wound up compulsorily by the Court, the winding up is deemed to have commenced at the time of presentation of the Originating Summons for winding up. Upon the commencement of winding up, the company’s officers have no power to carry on the business of the company. The liquidator takes over control of the company.

Within 14 days of the winding up order, the directors and the secretary of the company must deliver a statement of the company’s affairs to the liquidator, who must then make a report to the Court. The statement of affairs contains details of the company’s assets and liabilities, and enables the liquidator to carry out investigations into the affairs of the company.

After the Originating Summons for winding up is presented, the company, its creditors or its shareholders may apply to restrain any pending proceedings against the company. Once the winding up order is made, no action against the company may be commenced or continued without the leave of the court. Any disposition of the company’s property and any transfer of its shares after the commencement of winding up shall be void unless the Court orders otherwise.

The Court Fees payable for the filing of documents in respect of Compulsory Winding Up Proceedings may be found in the Second Schedule of the Companies (Winding Up) Rules.

Voluntary Winding Up

The two types of voluntary winding up are:

Main Effects of Voluntary Winding Up

From the commencement of winding up, the company shall cease to carry on its business. However, the corporate powers of the company shall continue until the company is dissolved. The company’s shareholders cannot transfer their shares in the company without the sanction of the liquidator.

Frequently Asked Questions

The company can be wound up under any of the following modes -

  • Resolution and Winding up in case of a default – Chapter II and III of this Code
  • Winding up on any of the grounds listed in section 271, as amended by the Code – Section 271 of Companies Act
  • Voluntary winding up (other than summary winding up process below) – Chapter V of this Code.
  • Summary winding up of companies having assets upto Rs 1 crore – sections 361-365 of Companies Act, 2013
  • Winding up of unregistered companies including partnership firms and foreign companies – sections 375 and 376 of Companies Act, 2013
  • Dissolution without winding up by merger – section 232 (3) (d) of the Companies Act, 2013
  • Removal of the name of a defunct company from register of members – section 248 of the Companies Act, 2013
  • In case of financial service providers, until explicit provisions are enacted, either the Companies Act 2013, and/or the relevant special laws, will continue to prevail.

  • Winding up is being dealt under the Code and Act, 2013. The provisions dealing with voluntary winding up i.e., sections 304 to 323 has been omitted. Therefore the company will have to refer the following laws in case of winding up:
  • Winding up by the Tribunal – under the Companies Act, 2013
  • Winding up due to inability to pay – under the Code;
  • Voluntary winding up for corporate persons – under the Code
  • Voluntary winding up for other than corporate persons – under the Companies Act, 1956 or any special law, if any.
  • Under the Act, 2013 - the application shall be filed before the Tribunal. Tribunal referred under the Act, 2013 shall mean National Company Law Tribunal constituted under section 408 of the Act, 2013. (Section 2 (90) of the Act, 2013).
  • Under the Code – the application under part II of the Code shall be filed before the Adjudicating Authority. The term Adjudicating Authority shall mean National Company Law Tribunal constituted under section 408 of the Act, 2013. (Section 5 (1) of the Code).
  • The voluntary winding up provisions was never enforced and has been omitted pursuant to section 255 of the Code read with 11th Schedule. The voluntary winding up provisions has been shifted from the Act, 2013 to the Code. Section 59 of the Code deals with voluntary winding up of the corporate persons.
  • Note that the provisions of the Code are not applicable to financial services provider (Refer. section 2 (7) and (17) of the Code). For persons other than corporate persons, the provisions of the Act, 1956 or any special laws, if any shall apply.

Section 59 of the Code deals with voluntary winding up of the companies. Once the said section comes into force, the corporate persons shall become eligible to file an application under the Code.


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