Closing down the business voluntarily or compulsorily by following a distribution process or killing the legal existence of an entity is legally called winding up or liquidation or dissolution or insolvency of the company or LLP or trust or society or any other entity. Meaning, the manner in which an entity might be closed after completion of the procedure of selling all its assets, settling all its liabilities and distributing the balance to the owners of the company.
The internal rules and regulations of the entity detail the procedure which shall be complied with. This process might be initiated by Central Government or Court or other Authorities or by the Owners of the company themselves. The criterion to commence this process begins with achieving ZERO balance sheet i.e the company shall dispose all its assets and settle all its liabilities. This shall be carried out by appointing a Liquidator and then valuation of all assets & liabilities is carried out by the liquidator.
During this process, the company can also decide to restructure part of its business or merge a portion with other company or enable the owners to get shares of other company were assets are sold or a variety of other ideas with the approval of the concerned authority.
Thus, an entity can be completely closed down, if it is no longer serving the purpose or carrying out activities for which it was incorporated or when the purpose has become legal or when the purpose is accomplished.
Your business entity is an important part of your life and therefore the decision to close the same, is equally important too. Closing of business involves consideration of various factors like, manner of closing i.e whether it should be closed or sold away, employee related issues etc and therefore it is necessary to carefully analyze all the factors for taking a decision, which at end is beneficial to you.
Following options are available for closing the business
- To wound up the business entity
- To sale the business as going concern
The decision to wound up or sale depends upon the state of business and attitude of the owners. In case the business is in working state of affairs, it is always beneficial to sale the same as going concern and it is advisable that in all the cases, the first effort should be to sell the business and only in case it is not possible to sell the business, than the process should be initiated for the wounding up of the same.
Corporate Law Advisory & approval Package: [Rs.50,000 per entity*]
Strategy: To settle all the assets and liabilities of the entity or business in India
Procedure: To ensure filing of necessary application before all the authorities to get their no-dues confirmation to close down the entity or business or to do a restructuring of the operations. To prepare all necessary supporting documents in this regard.
Certification: Certification by a competent professional and declaration by Board of directors in certain aspects.
Compliance: To ensure full and final settlement of all legal aspects of the entity or business or to carry out as a restructured entity.
