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• 11th January 2023

Chapter V – Section 59, Voluntary Liquidation of Corporate Persons of the Insolvency and Bankruptcy Code, 2016

Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017

PROCESS FOR VOLUNTARY LIQUIDATION

STEP1. A Company can voluntarily liquidate itself if it has not committed any default may initiate voluntary liquidation proceedings under the provisions of Insolvency and Bankruptcy Code, 2016.

STEP2. Voluntary liquidation proceedings of a company shall meet the following conditions, namely:

a) a declaration from majority of the directors of the company verified by an affidavit stating that –

i. they have made a full inquiry into the affairs of the company and they have formed an opinion that either the company has no debt or that it will be able to pay its debts in full from the proceeds of assets to be sold in the voluntary liquidation; and

ii. the company is not being liquidated to defraud any person;

b) the declaration shall be accompanied with the following documents, namely: –

i. audited financial statements and record of business operations of the company for the previous two years or for the period since its incorporation, whichever is later

ii. a report of the valuation of the assets of the company, if any prepared by a registered valuer

iii. within four weeks of a declaration there shall be –

• a special resolution of the members of the company in a general meeting requiring the company to be liquidated voluntarily and appointing an insolvency professional to act as the liquidator

• a resolution of the members of the company in a general meeting requiring the company to be liquidated voluntarily as a result of expiry of the period of its duration, if any, fixed by its articles or on the occurrence of any event in respect of which the articles provide that the company shall be dissolved, as the case may be and appointing an insolvency professional to act as the liquidator: Provided that the company owes any debt to any person, creditors representing two thirds in value of the debt of the company shall approve the resolution passed above within seven days of such resolution.

STEP3. The Company shall intimate the Registrar of Companies and the Board about the resolution to liquidate the Company within seven days of such resolution or the subsequent approval by the creditors, as the case may be.

STEP4. Subject to approval of the creditors, the voluntary liquidation proceedings in respect of a company shall be deemed to have commenced from the date of passing of the resolution passed.

STEP5. The Company shall appoint an insolvency professional as liquidator. – The liquidator shall make a public announcement in Form A of Schedule I within five days from his appointment.

STEP6. When the affairs of the corporate person have been completely wound up, and its assets completely liquidated, the liquidator shall make an application to the National Company Law Tribunal (NCLT) for the dissolution of such corporate person.

STEP7. The NCLT shall on an application filed by the liquidator, pass an order that the corporate debtor shall be dissolved from the date of that order and the corporate debtor shall be dissolved accordingly

STEP8. A copy of an order shall within 14 days from the date of such order, be forwarded to the authority with which the corporate person is registered.

STEP9. The liquidator shall preserve the reports, registers and books of accounts for at least 8 years after the dissolution of the company

INTIMATION BY THE INSOLVENCY PROFESSIONAL TO IBBI ABOUT HIS APPOINTMENT

An Insolvency Professional shall intimate the Board within three days of his appointment as liquidator during voluntary liquidation process (regulation 5(2) of the Voluntary Liquidation Regulations)