Voluntary liquidation is a process through which the members of a company decide to voluntarily wind up or terminates all its business affairs and get dissolve. Voluntary liquidation begins with the passes of the resolution from the company. Once the resolution is passed from the company then the company will generally cease to carry on any further implementation in business plan during that time. Liquidation generally occurs due to the financial problem of the company. These happen because the company is unable to make much profit from its production, which brings the financial trouble for producing any further product. The goods which are producing in the company takes lots of money for manufacturing and is now unable to attract the customer attraction which causes abundant wastage of the products. This factor leads to the financial trouble for the manufacturer.
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The manufacturer borrows money from the creditor in order to manufacture the product and if that product will not make a penny for manufacturer then this may create much trouble for the manufacturer to pay the amount to the creditors. So in this case the company yields the risk of Voluntary wind up his company. Through this wind up or termination of the business the Director of the company will be able to pay the certain amount which they owe from the creditors and shareholder. Gradually the share of the company will decline if their product is not able to hit the market. And if share decline, then the percentage rate of the company will also decline automatically, which may create lots of trouble for the company in the share market.
But the law against the voluntary liquidation is very strong, the company must bring the proper reason to wind up or terminate the company. Otherwise the case of voluntary liquidation will be discarded. The individuals must file the strong petition in order to complete the process. The Company should consult the lawyer in order to make the petition strong to file up in the court. During voluntary liquidation the company needs to provide all the correct data of its assets and property which is required to file the petition.
Types of voluntary winding…
Generally there are two types of voluntary winding.
1. Members voluntarily winding up, or
2. Creditors voluntarily winding up
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| Voluntary Liquidation |
Member voluntarily winding up: - Directors of the company will be calling a Board of Directors meeting declaring the winding up of the company, accompanied by an Affidavit stating that the company has no debts to pay, or will specify any certain date for the payment of remaining debts as soon as possible.
Creditors voluntarily winding up: - If the resolution is passed for the winding up, but the Board of Directors are not in a position to present any liability of the company then they may call a meeting with creditors for the resolution of winding up. It is the responsibility of the Board of Directors to present a full statement of company’s assets and the list of creditors for the resolution of winding up. Any resolution, the company permits in creditor’s meeting shall be informed to the Registrar as soon as possible.
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