Winding UP A One Person Company

Winding up a One Person Company (OPC) in India involves formally closing the business, settling any outstanding liabilities, and distributing the remaining assets. The process can be initiated either voluntarily by the sole member or by a tribunal. Here’s a step-by-step guide to the winding-up process for an OPC:

Types of Winding Up

• Voluntary Winding Up: Initiated by the sole member of the OPC.

• Winding Up by Tribunal: Ordered by the National Company Law Tribunal (NCLT) due to specific reasons.

Voluntary Winding Up

Procedure for Solvent OPC

• Board Meeting:

• Pass Resolution: The sole member must pass a resolution to wind up the OPC voluntarily.

• Declaration of Solvency: The member must declare that the OPC is solvent and can pay its debts in full within a specified period (usually 12 months).

• File with Registrar:

• Submit Form MGT-14: File the special resolution with the Registrar of Companies (ROC).

• Submit Form 24: File Form 24 with the ROC, which includes the declaration of solvency and details of the resolution.

• Liquidation Process:

• Appoint Liquidator: Appoint a liquidator to manage the winding-up process.

• Settle Debts: The liquidator will settle all debts and liabilities of the OPC.

• Realize Assets: The liquidator will sell the OPC’s assets.

• Distribute Surplus: Distribute any remaining surplus to the sole member.

• Final Meeting:

• Hold Final Meeting: After completing the liquidation, hold a final meeting.

• Pass Resolution: Pass a resolution to approve the liquidator’s report and accounts.

• File Form 21: File Form 21 with the ROC to notify the ROC of the final meeting and the completion of the winding-up process.

• Obtain Dissolution Order:

• Apply for Dissolution: Apply to the ROC for the dissolution of the OPC.

• Receive Dissolution Certificate: The ROC will issue a dissolution certificate once all procedures are completed.

B. Procedure for Insolvent OPC

• Board Meeting:

• Pass Resolution: The sole member passes a resolution to wind up the OPC.

• Declaration of Insolvency: Declare that the OPC is insolvent and cannot pay its debts.

• File with Registrar:

• Submit Form MGT-14: File the special resolution with the ROC.

• Submit Form 24: File Form 24, including the declaration of insolvency and details of the resolution.

• Liquidation Process:

• Appoint Liquidator: Appoint a liquidator.

• Settle Debts: The liquidator will attempt to settle the OPC’s debts as much as possible.

• Realize Assets: Sell the OPC’s assets.

• Distribute Proceeds: Distribute the proceeds to creditors and, if any, to the sole member.

• Final Meeting:

• Hold Final Meeting: Hold a final meeting of the sole member.

• Pass Resolution: Approve the liquidator’s final report and accounts.

• File Form 21: Notify the ROC of the final meeting and the completion of the winding-up process.

• Obtain Dissolution Order:

• Apply for Dissolution: Apply to the ROC for the dissolution of the OPC.

• Receive Dissolution Certificate: The ROC will issue a dissolution certificate once all procedures are completed.

Winding Up by Tribunal

• File Petition with NCLT: A petition for winding up can be filed with the National Company Law Tribunal (NCLT) by the member or creditors.

• NCLT Hearing: The NCLT will hear the petition and may pass an order for winding up if the grounds are valid.

• Appointment of Liquidator: NCLT appoints a liquidator to handle the process.

• Liquidation Process: Follow the same procedures for settling debts, realizing assets, and distributing proceeds.

• Final Hearing: NCLT will conduct a final hearing to approve the winding-up process.

• Order of Dissolution: NCLT will issue an order for the dissolution of the OPC.

Key Documents and Forms:

1. Form MGT-14: For filing special resolution with ROC.

2. Form 24: For declaration of solvency/insolvency and details of resolution.

3. Form 21: For filing details of the final meeting and dissolution.

4. Liquidator’s Report: For final meeting and dissolution.

Protax Advisors view:

Winding up an OPC requires careful attention to legal procedures to ensure compliance and avoid potential complications. Whether voluntary or through tribunal orders, the process should be managed efficiently to handle all debts, realize assets, and dissolve the company properly. Consulting with legal or financial professionals is advisable to navigate the intricacies of the winding-up process and ensure a smooth closure of the OPC. Accurate documentation and timely filing are crucial to achieving a successful dissolution