This type of winding up is carried out when the company is solvent and is able to pay its liabilities totally. The important aspects of members’ voluntary winding up are as follows −

Declaration of Solvency

●      For the winding up of a company, it is needed for the directors to conduct a meeting, where the majority of the directors make a declaration approved by an affidavit that they have made a full assessment of the company and the company is able to pay all its debts within three years of the winding up of the company.

●      It is necessary for such a declaration to be made at least 5 weeks before the resolution to become effective.

●      It should be necessarily delivered to the registrar’s office.

Appointment and Remuneration of Liquidators

The company, in a general meeting, must exercise the following things &minsu;

●      Appointment of liquidators for the purpose of winding up of the company as and when the company is about to be wound up and for the distribution of the assets of the company

●      Fixing an adequate remuneration to be paid to the liquidators. This fixed remuneration cannot be changed in any circumstances. The liquidator does not take charge of his office unless the remuneration is fixed.

Board’s Power to Cease

●      During the course of liquidation, all the powers of the directors and managers are ceased.

●      However, the power to give notices and the power to make appointments to the registrar is not ceased.

●      However, the powers of the directors may continue to exist upon the sanction of their powers by the shareholders or the liquidator.

Notice of Appointment of the Liquidator Is Given to the Registrar

Power of Liquidator to Accept Shares as Consideration as Sale of Property of the Company −

●      The liquidator can accept shares, policies or take interests to consider the sale of the company’s belongings to another company.

●      He may do so with an aim to distribute the same amount of members of the transferor company, provided −

ü  A special resolution is passed in the company for this act to be effective.

ü  He buys the interest of any dissenting member at a price to be determined by an agreement or arbitrarily.s

Duty of Liquidator to Call Creditors’ Meeting in Case of Insolvency

If the liquidator, for any reason, realizes that the company is on the verge of insolvency, i.e., thinks that the company will be unable to pay its debts and liabilities within the limited time as specified by the declaration of insolvency, he must summon a meeting of the creditors where the statement of all the assets and liabilities is laid before them.

Duty of the Liquidator to Inform the Income Tax Officer

●      Upon the appointment of a liquidator, the income tax office must be informed of the appointment of the liquidator.

●      This must be done within 30 days of the appointment of the liquidator.

●      The tax assessment of the company is to be carried out.

Duty of the Liquidator to Call General Meeting at the End of Each Year

●      In case the process of winding up takes more than one year, the liquidator must call for general meetings at the end of each year.

●      The meetings should be held within three months from the end of each year or as specified by the central government of India.

●      The liquidator must present a brief account of his actions and the matters he is dealing with and the progress of the winding up at the general meeting before all the other members of the company.

Final Meeting and Dissolution

When the affairs of the company are fully finished, the liquidator must do the following things −

●      Make a report on how the process of winding up progressed, ensuring all the property of the company has been disposed.

●      Conduct a general meeting of the company for laying the report before the company and provide justification of the steps he has taken for the successful winding up of the company.

●      Send a copy of the report to the registrar’s office and meet the registrar to return the report within one week and make a report to the tribunal about the conduct of the winding up to ensure that that the liquidation went as per the members of the company’s interest.

Dissolution of the Company

●      Bringing an end to the life of a company is termed as dissolution.

●      No property can be held by a dissolved company.

●      The company cannot be sued by the court after liquidation.

●      If any property of the company still remains after the dissolution of the company, the property will be taken over by the government immediately.