Meaning and Modes of Winding Up**

Meaning of Winding Up

Winding up is a legal process by which the existence of a company is brought to an end. It is the process of dissolving a company by selling off its assets, paying off its liabilities, and distributing any remaining surplus to the shareholders or members according to their rights. It signifies the death of the company in the eyes of the law.

Process of closing down the company

The winding up process involves several steps aimed at orderly closure. It begins with the appointment of a **liquidator** or **official liquidator**, who takes control of the company's affairs, manages its assets, deals with creditors, and eventually oversees the distribution of proceeds. The liquidator acts in a fiduciary capacity for the benefit of all stakeholders.

Unlike merely stopping operations, winding up is a formal legal procedure that leads to the dissolution of the company. Once wound up and dissolved, the company ceases to exist as a legal entity and its name is struck off the register of companies maintained by the Registrar of Companies (RoC).

Liquidation of assets and distribution to creditors and contributories

A key part of the winding up process is the **liquidation** of the company's assets. This involves selling or otherwise converting the company's property into cash. The funds realised from the sale of assets are then distributed in a specific order of priority, as laid down by law:

Costs and expenses of winding up.
Workmen's dues and secured creditors (pari passu).
Other preferential payments (e.g., certain government taxes, salaries of employees for a specific period).
Floating charge holders.
Unsecured creditors.
Preference shareholders (return of capital).
Equity shareholders (return of capital and any surplus).

Those who are entitled to contribute to the assets of the company in the event of its winding up to meet the company's liabilities are called **contributories**. In the case of a company limited by shares, members are contributories to the extent of any unpaid amount on their shares. In a company limited by guarantee, members are contributories to the extent of the amount they have guaranteed to contribute upon winding up.

Winding up is distinct from **dissolution**. Winding up is the process; dissolution is the result. A company is dissolved only after the winding up process is complete, and an order is passed by the Tribunal (or the liquidator files the final statement with the RoC in voluntary winding up) and its name is struck off the register.

Modes of Winding Up

Under the Companies Act, 2013, there are primarily **two** modes by which a company can be wound up:

Winding up by the Tribunal (Compulsory Winding Up)
Voluntary Winding Up

Winding up by the Tribunal (Compulsory Winding Up) (Section 271)

This mode of winding up occurs when the **National Company Law Tribunal (NCLT)** issues an order for the winding up of the company. It is often referred to as compulsory winding up because it is initiated by petition to the Tribunal and is not solely dependent on the company's or its members' wishes. The grounds for winding up by the Tribunal are specified in **Section 271(1)** of the Companies Act, 2013:

Grounds for Compulsory Winding Up:

**Special Resolution:** If the company has, by special resolution, resolved that the company be wound up by the Tribunal.
**Act Against Sovereignty or Integrity of India:** If the company has acted against the sovereignty or integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality.
**Failure to File Financial Statements or Annual Returns:** If the company has defaulted in filing its financial statements or annual returns with the Registrar for the immediately preceding **five** consecutive financial years.
**Just and Equitable Ground:** If the Tribunal is of the opinion that it is just and equitable that the company should be wound up. This is a broad ground and can cover situations like deadlock in management, oppression of minority shareholders, or substratum of the company being lost.
**Default in Repaying Debt:** If the company is unable to pay its debts. A company is deemed unable to pay its debts if it fails to pay a debt exceeding **₹1 Lakh** within 21 days of receiving a demand notice from the creditor, or if the Tribunal is otherwise satisfied that the company is unable to pay its debts (considering its contingent and prospective liabilities).
**Tribunal's Opinion:** If the Tribunal is of the opinion that the company should be wound up on application filed by the Registrar or any other person authorised by the Central Government on the ground that the affairs of the company have been conducted in a fraudulent manner, or the company was formed for fraudulent and unlawful purpose, or persons concerned in the formation or management have been guilty of fraud, misfeasance or misconduct.

Process:

Any of the following parties can file a petition for winding up with the NCLT:

The company itself.
Any creditor or creditors (including any contingent or prospective creditor).
Any contributory or contributories.
All or any of the above mentioned parties jointly or separately.
The Registrar of Companies.
Any person authorised by the Central Government (in case of fraud, etc.).

Upon hearing the petition, the Tribunal may dismiss it, make an interim order, appoint a provisional liquidator, or pass an order for winding up the company. If a winding up order is passed, the winding up is deemed to commence from the date of filing the petition.

Voluntary Winding Up (Section 304)

Voluntary winding up is initiated by the members or creditors of the company without the intervention of the Tribunal at the initial stages. It requires the passing of a resolution by the company. There are two types of voluntary winding up under the Companies Act, 2013:

1. Members' Voluntary Winding Up:

This occurs when the company is **solvent**, meaning it is able to pay its debts in full. It is initiated by the members. Key requirements include:

A declaration of solvency must be made by the majority of the directors, stating that they have made a full inquiry into the company's affairs and are of the opinion that the company has no debts or that it will be able to pay its debts in full within **three years** from the commencement of winding up. This declaration must be supported by a statement of the company's assets and liabilities as of the latest practicable date.
The declaration of solvency must be filed with the Registrar before the resolution for winding up is passed.
A special resolution must be passed by the company in a general meeting for winding up the company voluntarily. **Section 304(a)** refers to this resolution.
An ordinary resolution must be passed in the same meeting for the appointment of a liquidator and fixing their remuneration.

The process is supervised by the liquidator appointed by the members. The liquidator realises assets, pays debts, and distributes any surplus to members. Once the company's affairs are fully wound up, the liquidator calls a final meeting of members, presents accounts, and then files a copy of the accounts and a return with the Registrar and the Tribunal. If the Tribunal is satisfied, it passes an order for dissolution.

2. Creditors' Voluntary Winding Up:

This occurs when the company is **insolvent**, meaning it is unable to pay its debts. It is initiated by the members, but the process is primarily controlled by the creditors. Key requirements include:

No declaration of solvency is made or filed.
The company calls a meeting of its creditors, usually held on the same day or the next day after the members' meeting where a resolution for winding up is passed.
At the creditors' meeting, a resolution for winding up is passed, and creditors nominate a person to be the liquidator. If the members and creditors nominate different persons, the person nominated by the creditors shall be the liquidator.
A committee of inspection, consisting of creditors, may also be appointed to assist the liquidator.

In this type, the liquidator acts under the supervision of the creditors and the committee of inspection. The process is similar to Members' Voluntary Winding Up regarding asset realisation and payment of debts, but the focus is on the rights of creditors. After completing the winding up, the liquidator calls final meetings of both members and creditors, presents accounts, and files returns with the Registrar and Tribunal, leading to dissolution.

Winding up subject to supervision of Tribunal (Section 310)

Note: It is important to clarify that under the Companies Act, 2013, the concept of "Winding up subject to supervision of Tribunal" as a distinct mode of winding up that existed under the Companies Act, 1956, **has been abolished**. The winding up process is now either by the Tribunal (compulsory) or Voluntary (Members' or Creditors'), with the Tribunal involved at specific stages in both processes.

Section 310 of the Companies Act, 2013, does **not** deal with a mode of winding up. Instead, it gives the Central Government the power to make rules relating to winding up under the Act. The rules framed under this section govern various aspects of the winding up process, such as procedures, forms, fees, and the duties of liquidators.

Therefore, listing "Winding up subject to supervision of Tribunal" as a current mode under Section 310 is incorrect based on the provisions of the Companies Act, 2013. The two primary modes are Winding up by Tribunal and Voluntary Winding Up.

Summary of Modes:

Feature	Winding Up by Tribunal	Voluntary Winding Up
Initiation	Petition to Tribunal by company, creditor, contributory, Registrar, etc.	Resolution by members (Members' VWU) or members and creditors (Creditors' VWU).
Supervision	Supervised by the Tribunal (NCLT). Official Liquidator appointed.	Supervised by a Liquidator appointed by members/creditors. Tribunal's role is limited (e.g., dissolving company after process).
Solvency	Often due to inability to pay debts (insolvency), but can be for other reasons (e.g., just & equitable).	Can be for solvent companies (Members' VWU) or insolvent companies (Creditors' VWU).
Governing Sections	Sections 270 to 303 (primarily Section 271 for grounds).	Sections 304 to 323 (Section 304 for resolution, further sections for process).

Compulsory Winding Up**

Grounds for Compulsory Winding Up (Section 271)

Compulsory winding up, also known as winding up by the Tribunal, occurs when the National Company Law Tribunal (NCLT) orders the dissolution of a company. **Section 271(1) of the Companies Act, 2013**, specifies the grounds upon which a petition can be presented to the Tribunal for the winding up of a company.

Inability to pay debts

This is one of the most common grounds for compulsory winding up. A company that cannot meet its financial obligations as they fall due can be wound up. **Section 271(1)(a)** read with **Section 272(1)(d)** and **Section 272(2)** outlines when a company shall be deemed to be unable to pay its debts.

When is a company deemed unable to pay its debts? (Section 272(2))

A company shall be deemed to be unable to pay its debts if:

A creditor to whom the company is indebted in a sum exceeding **one lakh rupees** has served a demand notice at the registered office of the company demanding the sum so due, and the company has for **twenty-one days** thereafter neglected to pay the sum or to provide adequate security or arrange for a compromise or settlement acceptable to the creditor.
Execution or other process issued on a decree or order of any Court or Tribunal in favour of a creditor of the company is returned unsatisfied in whole or in part; or
It is proved to the satisfaction of the Tribunal that the company is unable to pay its debts, taking into account its contingent and prospective liabilities.

This ground is primarily based on the company's cash flow insolvency (inability to pay debts as they mature), although the Tribunal may also consider balance sheet insolvency (liabilities exceeding assets) under the third point.

Passing of special resolution for winding up

If the company itself decides that it should be wound up by the Tribunal, it can pass a **special resolution** to that effect. **Section 271(1)(b)** states that a company may be wound up by the Tribunal if the company has, by special resolution, resolved that the company be wound up by the Tribunal. While companies usually opt for voluntary winding up if they decide to cease operations, they might choose winding up by the Tribunal if, for instance, they anticipate complexities in dealing with creditors or require the official machinery of the Tribunal to ensure a smooth process.

Default in filing financial statements or annual returns

Persistent non-compliance with statutory requirements can also be a ground for winding up. **Section 271(1)(c)** provides that if a company has defaulted in filing its financial statements or annual returns with the Registrar for the immediately preceding **five consecutive financial years**, the Tribunal may order its winding up. This indicates a serious lack of compliance and transparency, suggesting the company may not be genuinely active or compliant with legal duties.

Less than seven members in a public company

This ground, mentioned in older company law frameworks, is **not explicitly listed** as a separate ground for winding up by the Tribunal under **Section 271(1)** of the Companies Act, 2013. However, the principle that a public company requires a minimum number of members (**seven** as per Section 3(1)(a)) and a private company requires a minimum of **two** members (as per Section 3(1)(b)) is fundamental. If the number of members falls below the statutory minimum and the company continues to carry on business for more than six months while the number is so reduced, every person who is a member of the company during the time that it so carries on business after those six months and is cognisant of the fact, shall be severally liable for the payment of the whole debts of the company contracted during that time. While not a direct winding-up ground under Section 271, such a situation could potentially lead to winding up under the "just and equitable" ground or if it results in the company being unable to function as required by law.

Company unable to pay its debts

This ground has been elaborated above under the first subheading. It is a crucial test of a company's financial viability and is a common reason for creditors, in particular, to seek winding up.

Oppression and Mismanagement

While Section 271 primarily lists the grounds for winding up, situations involving oppression of minority shareholders or mismanagement of the company's affairs by those in control are typically addressed under **Sections 241 to 246** of the Companies Act, 2013, which deal with prevention of oppression and mismanagement. These sections empower the Tribunal to pass various orders to remedy the situation, which may include regulating the conduct of the company's affairs, removing directors, or even directing the purchase of shares. However, if the Tribunal is of the opinion that no other remedy provided under Sections 241-246 would bring an end to the matters complained of, and that winding up the company would be just and equitable, it *may* order winding up on this basis. So, while not a direct standalone ground in Section 271, oppression and mismanagement can lead to winding up under the "just and equitable" clause.

Fraudulent conduct of business

If the affairs of the company have been conducted in a fraudulent manner, or if the company was formed for a fraudulent and unlawful purpose, or if persons concerned in its formation or management have been guilty of fraud, misfeasance, or misconduct, the Tribunal may order winding up. **Section 271(1)(e)** grants the Central Government (or a person authorised by it) or the Registrar the power to file a petition for winding up on these grounds after obtaining the previous sanction of the Central Government. This ground is intended to protect the public interest and crack down on companies used for illegal or fraudulent activities.

Winding up just and equitable

This is a broad and discretionary ground available to the Tribunal under **Section 271(1)(g)**. The Tribunal can order the winding up of a company if it is of the opinion that it is "just and equitable" to do so. This ground is not precisely defined in the Act and is left to the interpretation of the Tribunal based on the facts and circumstances of each case. It is intended to cover situations where, although none of the other specific grounds apply, it would be unfair or unjust to allow the company to continue its existence. Common examples of situations where this ground has been applied include:

**Deadlock in Management:** Where the shareholders or directors are equally divided, and the company cannot function effectively.
**Loss of Substratum:** Where the main object for which the company was formed can no longer be achieved.
**Oppression of Minority:** As mentioned earlier, if oppression and mismanagement cannot be remedied by other means.
**Company operating as a Partnership:** Where the company is essentially a two-person company acting as a partnership, and the relationship between the "partners" has broken down, similar to how a partnership would be dissolved.
**Fraudulent or Illegal Objects:** Where the company was formed to carry out illegal activities.

The "just and equitable" ground provides flexibility to the Tribunal to order winding up in situations not specifically covered by other grounds but where justice and fairness demand it.

Procedure for Compulsory Winding Up

The process for compulsory winding up by the Tribunal is a formal legal procedure governed by the Companies Act, 2013, and the National Company Law Tribunal (Procedure for Admission of Insolvency and Liquidation Proceedings of Corporate Persons) Rules, 2016 (in some aspects, as winding up and insolvency proceedings under IBC are related but distinct), and the Companies (Winding Up) Rules, 2020.

Filing of petition

The winding up process begins with the presentation of a winding up **petition** to the National Company Law Tribunal (NCLT) having jurisdiction over the registered office of the company. As listed under Section 272(1), the petition can be filed by:

The company.
Any creditor(s) (including any contingent or prospective creditor).
Any contributory(ies).
All or any of the above mentioned parties jointly or separately.
The Registrar of Companies (in certain cases, with Central Government sanction).
Any person authorised by the Central Government (in certain cases, with Central Government sanction).

The petition must be in the prescribed format and supported by an affidavit. It must state the grounds on which winding up is sought and provide relevant details about the company and the petitioner's locus standi.

Hearing of the Petition:

Upon filing, the Tribunal examines the petition. If it is admitted, notice is served on the company and other interested parties. The Tribunal holds a hearing where the petitioner, the company, and other parties (like supporting or opposing creditors/contributories) are heard. The company can file an objection or response to the petition.

Powers of the Tribunal upon Hearing:

After hearing the parties, the Tribunal may:

Dismiss the petition.
Make any interim order it thinks fit.
Appoint a provisional liquidator until a winding up order is made.
Make an order for winding up the company.
Adjourn the hearing conditionally or unconditionally.

Winding Up Order:

If the Tribunal is satisfied that a valid ground for winding up exists, it passes a winding up order. The winding up of the company is deemed to commence from the date of the presentation of the petition for winding up.

Appointment of Official Liquidator

Once a winding up order is passed, the Tribunal usually appoints the **Official Liquidator** attached to the Tribunal as the liquidator of the company. The Official Liquidator is a government officer responsible for overseeing the winding up process. **Section 275** deals with the Company Liquidator and their appointment.

Role and Duties of the Official Liquidator:

Upon appointment, the Official Liquidator takes custody or control of all the property, assets, effects, and actionable claims of the company. Their duties and powers are extensive and include:

Taking possession of company property.
Calling for information from directors and officers.
Submitting a report to the Tribunal on the company's financial position, assets, liabilities, and causes of failure.
Carrying on the business of the company if necessary for beneficial winding up.
Selling the company's property.
Realising the company's assets.
Inviting and scrutinising claims from creditors and preparing a list of creditors.
Paying the debts of the company according to the order of priority.
Instituting or defending any suit, prosecution, or other legal proceeding on behalf of the company.
Making compromises or arrangements with creditors or contributories.
Distributing any surplus among the members according to their rights.
Maintaining proper books of account for the winding up.
Calling meetings of creditors and contributories.
Filing periodical reports and accounts with the Tribunal.

The Official Liquidator acts under the control and supervision of the Tribunal.

Consequences of Winding Up Order:

The powers of the board of directors cease, and the Official Liquidator takes charge.
Any suit or legal proceeding against the company cannot be commenced or proceeded with without the leave of the Tribunal.
The employees of the company are generally discharged, except those whose services are required for the winding up process.
The properties of the company come under the custody of the Official Liquidator.

Final Steps:

After the assets are realised and distributed, and the affairs of the company are fully wound up, the Liquidator applies to the Tribunal for dissolution of the company. If the Tribunal is satisfied, it passes an order dissolving the company from the date of the order. The Liquidator then forwards a copy of the dissolution order to the Registrar of Companies, who strikes the company's name off the register.

Voluntary Winding Up**

Winding up subject to Supervision of Tribunal

Under the erstwhile Companies Act, 1956, there were three modes of winding up: (1) Compulsory winding up by the Court, (2) Voluntary winding up, and (3) Winding up subject to the supervision of the Court. However, under the **Companies Act, 2013**, the mode of "Winding up subject to the supervision of the Tribunal" as a distinct category **has been abolished**.

The Companies Act, 2013, primarily recognises only **two** modes of winding up:

Winding up by the Tribunal (Compulsory Winding Up)
Voluntary Winding Up

**Section 310 of the Companies Act, 2013**, which previously might be associated with this concept (in the context of the 1956 Act's Section 522 dealing with supervision), now simply grants the Central Government the power to make rules for carrying out the provisions of the Act relating to winding up. It does not define or deal with a separate mode of winding up under supervision.

While the distinct mode of "supervision" is gone, the National Company Law Tribunal (NCLT) still plays a role in the voluntary winding up process, especially in the case of Members' Voluntary Winding Up for final dissolution, as per the procedure laid down in the Act and the Companies (Winding Up) Rules, 2020. However, this limited judicial oversight at the end of the process is not the same as the comprehensive "winding up subject to supervision" mode that existed previously.

Therefore, it is crucial to understand that "Winding up subject to Supervision of Tribunal" is **not a current mode of winding up** for companies incorporated under the Companies Act, 2013.

Types of Voluntary Winding Up

Voluntary winding up is initiated by the members or creditors of the company without the necessity of obtaining an order from the Tribunal at the outset. The process is set in motion by passing a resolution. Under the Companies Act, 2013, voluntary winding up is divided into two types, primarily based on the **solvency** of the company:

Members' Voluntary Winding Up

This type of winding up is undertaken when the company is **solvent**, i.e., it is capable of paying its debts in full. The control and supervision of the winding up process lie primarily with the **members** of the company.

Key Characteristics:

It can only be initiated if the company is solvent.
Requires a Declaration of Solvency by the directors.
Supervised by a liquidator appointed by the members.
The process is relatively simpler and quicker than Creditors' Voluntary Winding Up or compulsory winding up.

Pre-requisite: Declaration of Solvency (Section 304 read with Section 305)

Before the company can pass a resolution for Members' Voluntary Winding Up, a majority of the directors (not being less than two directors, if there are more than two directors) must make a **Declaration of Solvency**. This declaration must be verified by an affidavit and must state that they have made a full inquiry into the affairs of the company, and that, having done so, they are of the opinion that the company has no debts or that it will be able to pay its debts in full within such period not exceeding **three years** from the commencement of the winding up, as may be specified in the declaration.

The declaration must be accompanied by a statement of the company's assets and liabilities as at the latest practicable date immediately before the making of the declaration and within **thirty days** of such date. The declaration must be filed with the Registrar of Companies.

Resolution for Winding Up (Section 304)

Within **four weeks** of filing the Declaration of Solvency, a general meeting of the company must be held. In this meeting, a **special resolution** must be passed requiring the company to be wound up voluntarily. **Section 304(a)** specifically refers to this resolution.

Simultaneously, an ordinary resolution is usually passed in the same meeting for the appointment of a liquidator and fixing their remuneration.

Creditors' Voluntary Winding Up

This type of winding up is undertaken when the company is **insolvent**, i.e., it is unable to pay its debts as they fall due. Although initiated by the members, the control and supervision of the winding up process primarily lie with the **creditors** of the company.

Key Characteristics:

It is initiated when the company is unable to pay its debts (insolvent).
No Declaration of Solvency is made or filed.
Requires separate meetings of members and creditors.
Supervised by a liquidator primarily appointed or approved by the creditors.
Often involves a Committee of Inspection formed by creditors.

Resolution for Winding Up (Section 304)

The process begins with the members passing a **special resolution** in a general meeting for voluntary winding up under **Section 304(b)**. This is usually done when the directors are unable to make a Declaration of Solvency.

Meeting of Creditors (Section 306)

On the same day as the general meeting at which the resolution for winding up is to be proposed, or on the next day, the company must cause a meeting of its creditors to be summoned. Notice of this meeting must be sent by post to the creditors simultaneously with the sending of the notice of the meeting of the company's members.

At the creditors' meeting, the directors must present a full statement of the position of the company's affairs together with a list of creditors and the estimated amount of their claims.

Appointment of Liquidator (Section 310 - Companies Act, 2013, rules related to liquidators)

In the creditors' meeting, the creditors can nominate a person to be the liquidator. The members also nominate a liquidator in their meeting. If the creditors and members nominate different persons, the person nominated by the **creditors** shall be the liquidator. If the creditors do not nominate anyone, the person nominated by the members becomes the liquidator.

Committee of Inspection (Section 306(4))

The creditors may, at their meeting, appoint a committee of inspection consisting of not more than **five** persons. The company may also appoint up to **five** persons to the committee, but the creditors have the power to reject any person appointed by the company and appoint others in their place.

The committee of inspection acts as a check on the liquidator and has powers to supervise the liquidator's actions.

Comparison: Members' vs. Creditors' Voluntary Winding Up:

Feature	Members' Voluntary Winding Up	Creditors' Voluntary Winding Up
Company Solvency	Company is solvent (able to pay debts in full).	Company is insolvent (unable to pay debts).
Initiation	Resolution by members after Declaration of Solvency.	Resolution by members, followed by meeting of creditors. No Declaration of Solvency.
Control/Supervision	Primarily by members.	Primarily by creditors.
Declaration of Solvency	Mandatory and filed with RoC.	Not made or filed.
Creditors' Meeting	Not mandatory, but liquidator must call one if they form the opinion that the company will not be able to pay its debts in full within the period stated in the declaration.	Mandatory. Held same day or next day after members' meeting.
Liquidator Appointment	Appointed by members.	Appointed by creditors (creditors' nomination prevails if different).
Committee of Inspection	Not required.	May be appointed by creditors.
Final Dissolution	Requires approval/order from the Tribunal after final accounts filed.	Deemed dissolved after liquidator files final return with RoC & Tribunal, unless Tribunal orders otherwise.

Procedure for Voluntary Winding Up

The procedure for voluntary winding up, while initiated voluntarily, involves several steps and legal requirements. The exact steps differ slightly depending on whether it is a Members' Voluntary Winding Up (MVWU) or a Creditors' Voluntary Winding Up (CVWU).

Common Initial Steps:

1. Board Meeting:

The directors convene a board meeting to decide on the proposal for voluntary winding up. If it's intended to be MVWU, they also approve the Declaration of Solvency.

2. Declaration of Solvency (Only for MVWU):

As detailed above, for MVWU, a Declaration of Solvency must be made by the majority directors, verified by affidavit, supported by a statement of assets and liabilities, and filed with the Registrar of Companies (RoC) within four weeks before the members' meeting.

3. Notice of General Meeting:

A notice calling for a general meeting of members is issued. For CVWU, a notice for a meeting of creditors is also issued simultaneously.

4. General Meeting & Resolution (Section 304):

A general meeting of the company is held, and a **special resolution** is passed for the voluntary winding up of the company. An ordinary resolution is also passed for the appointment of a liquidator and fixing their remuneration.

5. Creditors' Meeting (Only for CVWU) (Section 306):

For CVWU, a meeting of creditors is held on the same or the next day. Directors present the statement of affairs. Creditors confirm the resolution for winding up and appoint the liquidator (or agree with members' nomination) and may appoint a Committee of Inspection.

6. Filing with RoC (Section 307):

Within **ten days** of passing the resolution for voluntary winding up, the company must file a copy of the resolution with the Registrar of Companies (RoC).

Appointment and Role of Liquidator (Section 310 - Companies (Winding Up) Rules, 2020):

Upon appointment, the liquidator takes charge of the company's affairs. Their key duties include:

Taking custody and control of the company's assets.
Carrying on the company's business so far as may be necessary for beneficial winding up.
Selling the company's property and assets.
Collecting all sums due to the company.
Inviting, verifying, and settling claims of creditors.
Paying creditors according to their legal priority.
Settling the list of contributories (members liable to contribute) if the assets are insufficient to pay debts (more relevant in CVWU or if MVWU becomes insolvent).
Distributing any surplus assets among the members according to their rights and interests.
Maintaining proper books of accounts of the winding up.
Calling meetings of members and creditors periodically (at least half-yearly) to report on the progress of the winding up.

Process Specifics:

Members' Voluntary Winding Up:

The liquidator manages the process, realises assets, pays debts, and distributes surplus to members. If at any point the liquidator forms the opinion that the company will not be able to pay its debts in full within the period stated in the Declaration of Solvency, they must summon a meeting of creditors and proceed as if it were a Creditors' Voluntary Winding Up (Section 305(2)).

Creditors' Voluntary Winding Up:

The liquidator acts under the supervision of the creditors and potentially a Committee of Inspection. The focus is on realising assets and paying creditors. Contributories may be called upon if assets are insufficient.

Final Steps Leading to Dissolution (Section 314 & 315):

1. Final Meeting(s):

As soon as the company's affairs are fully wound up, the liquidator must prepare an account of the winding up, showing how the winding up has been conducted and how the property has been disposed of.

The liquidator then calls a final general meeting of the company (for MVWU) and, in addition, a final meeting of the creditors (for CVWU) for the purpose of laying the accounts before them.

2. Filing Final Accounts and Return:

Within **one week** after the meeting(s), the liquidator must file a copy of the accounts and a return relating to the final meeting with the RoC and the Tribunal.

3. Dissolution:

**For MVWU (Section 314):** Upon receiving the liquidator's final accounts and return, if the Tribunal is satisfied, it shall pass an order dissolving the company from the date of the order. The liquidator then files a copy of this dissolution order with the RoC.
**For CVWU (Section 315):** Upon receiving the liquidator's final accounts and return, the company shall be deemed to be dissolved from the date of the filing of the liquidator's return with the Tribunal, unless the Tribunal, within 90 days of filing, orders otherwise.

Upon dissolution, the name of the company is struck off the register, and it ceases to exist as a legal entity.