This article will explain the step by step process of Winding Up or Liquidation of a Company Winding Up Process in Bangladesh.
Winding Up and liquidation
Winding up is the process by which a company ceases to exist. In the course of such dissolution of a company its assets are collected, its debts are paid off out of the assets of the company or from contribution by its members if necessary.
It is to be noted that the process of winding up or liquidation is possible only for Companies registered under the law of Bangladesh and not applicable for Businesses. This is because the process of winding up or liquidation are not followed in case of closing down a sole proprietorships or partnership business.
Legal service for Liquidation or Winding Up
Winding up is a mechanism that transforms the assets of a company into cash which the company uses to pay its debts, outstanding bills. If there are any surplus assets after paying the debts, it is distributed among shareholders, company members, partners, or any other investors. In this process a liquidator can be appointed whose duty is to ascertain and settle the liabilities of a company. Company Winding Up Process in Bangladesh
As a liquidator you can also appoint us i.e. your leading Law Firm in Dhaka, Bangladesh. We can assist you in performing the duty of a liquidator and can manage the entire winding up or liquidation process. The kind of legal service we can provide for winding up or liquidation of company are listed below:
- Sell business assets and use the proceeds to pay creditors
- Conducting meetings with creditors;
- Settle legal disputes
- Settle all pending obligations of the company;
- Submission of documents to RJSC
- Draft documents for winding up;
- Pay outstanding VAT, bills and liquidation expenses (if any);
- Any step necessary for the winding up.
Ways of Winding Up
There are three modes of winding up a company in Bangladesh. The winding up of a company may be either:
- by the court or
- voluntarily or
- Subject to the supervision of the court.
The Winding Up process discussed below applies to any of the three modes of winding up.
Winding Up by the Court
Winding Up of a company may be done in certain circumstances which are:
- if the company through the special resolution decided that it must be winded up by the court; or
- if default is made in filling the statutory report or in holding the statutory meeting; or
- if the number of members reduced below the required number as per the Company Law; or
- the company is incapable of paying its debts; or
- if the court is of opinion that it is just and equitable to wind up the company.
It is to be noted that winding up of a company by the court shall be deemed to commence from the time of presentation of petition for winding up.
Voluntarily Winding up
A company may be winded up voluntarily:
- when the period, if any, fixed for the duration of the company by the articles expires or any event occurs for which the articles provides that the company is to be dissolved and the company in general meeting has passed a resolution for winding up voluntarily;
- if the company resolves by special resolution that the company be winded up voluntarily;
- if the company resolves by extraordinary resolution to the effect that it cannot by reason of its liabilities continue its business, and that it is advisable to wind up.
It is to be noted that commencement of voluntary winding up shall be deemed to commence at the time of the passing of the resolution for voluntary winding up.
Winding Up subject to the supervision of the Court
When a company has by special or extraordinary resolution resolved to wind up voluntarily the court may make an order that the voluntary winding up shall continue but subject to supervision of court and such terms as the court thinks just.
RJSC fees for Winding Up
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Steps by Step process of Winding Up
Step One: Petition filing to Court for Winding Up
For Winding Up of a company, a petition has to be filed to the Court. Now the Question is who can file the petition of winding up?
A petition for winding up can be filed by:
- Creditor or,
- the Company (i.e. shareholders) or
- Contributory (who contributes to a companies’ assets in paying the debts and costs of the company), together or separately.
Upon hearing the petition, the court will pass an order for winding up or liquidation of the company.
Step Two: Drafting documents for Winding Up
The second step is winding up which is to prepare documents. The documents that need to be prepared are:
- Declaration of Solvency, (which includes information such as the company has no debts among other things) and
- Profit and Loss Account and
- Audited Balance.
The above mentioned documents will have to be approved by the majority directors of the company.
Step Three: Submission to RJSC
The next step is to file the approved Declaration of Solvency to the RJSC within 5 (five) weeks from the approval by directors.
Step Four: Pass Special Resolution
Step four requires us to pass a special resolution through the extraordinary general meeting. This is to approve the decision of winding up the company and the appointment of the liquidator. It is to be noted that the content of the meeting will also be filed to the RJSC. Thereafter, the special resolution must be advertised in the official Gazette, and in a newspaper circulating in the district where the registered office of the company is located. Such must be done within 10 (ten) days of its passing the special resolution.
Step Five: Appointing Liquidator
Once the chosen liquidator has been approved by the extraordinary general meeting and the liquidator has accepted the appointment, such must be notified to the RJSC. In addition, the Deputy Commissioner of Taxes will also be informed of the same within 30 (thirty) days of the said appointment.
Step Six: Final Report by Liquidator
At this stage the liquidator needs to prepare a Final Account. The Final Account must have the details of how the winding up has been conducted and the assets distributed. Thereafter, the liquidator will call an extraordinary general meeting and the notice for that must be circulated by advertisement in the official Gazette, and in a newspaper. Such a notice must be given not less than one month before the meeting.
The special resolution will be passed in the extraordinary general meeting with regards to the disposal of the books and papers of the company.
Step Seven: Documents filing to RJSC
Lastly, a final meeting must be held and the submission of all the documents must be made to the RJSC upon which the company will be wound up.
LEGAL ADVICE ON WINDING UP AT CLP
The Barristers, Advocates, and lawyers at CLP in Gulshan, Dhaka, Bangladesh are highly experienced at dealing with Company matters in particular Winding Up or Liquidation of company. In addition to handling various issues related to domestic clients on a regular basis, it also has experience in consulting and assisting numerous international clients with utmost care and attention throughout their legal troubles. For queries or legal assistance, please reach us at:
E-mail:info@counselslaw.com
Phone:+8801700920980. +8801947470606. Address: House 39, Road 126 (3rd Floor) Islam Mansion, Gulshan 1, Dhaka
