The company winding-up process is the way by which a company ceases to exist. Winding up or liquidation is possible only for Companies registered under the law of Bangladesh. However, the process of winding up or liquidation is not applicable to closing down a sole proprietorship or partnership business. This article will highlight the step-by-step process of the Company winding up or Liquidation process in Bangladesh, including cost and all other legal issues in detail.
Different Ways of Company Winding Up
Under the company law 1994, 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.
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 company’s assets in paying the debts and costs of the company), together or separately.
Winding Up by the Court
Winding Up of a company by the court 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 the default is made in filling the statutory report or in holding the statutory meeting; or
- if the number of members is 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.
Winding up the process by the court
Company winding up or Liquidation process in Bangladesh by the court has been discussed very briefly in order to give an idea of the process.
Step one: Filing Petition to Court
In order to wind up a company court, a petition has to be filed by the company court of the High Court Division of the Supreme Court. It is to be noted that the winding up of a company by the court shall be deemed to commence from the time of presentation of the petition for winding up. Upon hearing the application the court will pass an order for the winding up of the company.
Step two: Notification to the registrar
On the making of a winding up order, it is the duty of the petitioner and of the company to file with the Registrar a copy of the order within 30 (thirty) days from the date of the order. On the filing of a copy of a winding-up order, the Registrar shall register a summary in his books relating to the company. Thereafter, the registrar will notify the official Gazette that such an order has been made. Such order shall be deemed to be notice of discharge to the servants of the company except when the business of the company is continued.
Step three: Appointment of Liquidator
The court will then appoint an official liquidator and the liquidator will perform its duties as per the Companies Act 1994. In case of winding up by the court, all the property and effects of the company shall be deemed to be in the custody of the Court as of the date of the order for the winding up of the company.
Step four: Information recorded with RJSC
When the affairs of a company have been completely wound up, the Court shall make an order that the company be dissolved from the date of the order, and the company shall be dissolved accordingly. The order shall be reported to the registrar by the official liquidator within 15 (fifteen) days of the order. The registrar shall record in his books a minute of the dissolution of the company.
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 provide 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 the commencement of voluntary winding up shall be deemed to commence at the time of the passing of the resolution for voluntary winding up.
Company Winding Up process 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 the supervision of the court and such terms as the court thinks just.
Steps Step process of voluntary Winding Up
Step One: Drafting documents for Winding Up
The second step is of 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 of the directors of the company.
Step Two: 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 the directors.
Step Three: Pass Special Resolution
Step four requires passing a special resolution through the extraordinary general meeting. This is to approve the decision of winding down the company and the appointment of the liquidator. It is to be noted that the content of the meeting will also be filed with 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 Four: 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 Five: 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 notice must be given not less than one month before the meeting.
The special resolution will be passed in the extraordinary general meeting with regard to the disposal of the books and papers of the company.
Step Six: Documents filing to RJSC
Lastly, a final meeting must behold and a return of the meeting must be submitted to the RJSC upon which the company will be winded up. The submission must be made within one week of the meeting.
Step Seven: Petition filing to Court for Winding Up
For voluntary winding up, the petition to the court is made at this stage. All the documents relevant to the winding up of the company are submitted to the court. The court is satisfied and declares that the company has been dissolved. This stage is essential to avoid any allegation of fraud later on.
Government fees for Company Winding Up Process
- For Private and Public Companies: BDT 20.00
- For Trade Organization and Foreign Company: BDT 10.00
LEGAL ADVICE ON WINDING UP AT CLP:
Counsels Law partners, a leading Business law firm can provide following the legal services: The Law firm can help to prepare the actual assent and value of each share of the company. In addition, CLP will give a complete road map for winding up the process. Furthermore, team CLP will assist in selling business assets and use the proceeds to pay creditors. Furthermore, the team will help in Conducting meetings with creditors, Settling legal disputes, and Settling all pending obligations of the company.
CLP will take responsibility to Submit the documents to RJSC and preparing all documents for the Company winding up or Liquidation process in Bangladesh. On top, the company law chamber will provide complete legal services in relation to Company winding up or Liquidation process in Bangladesh.
For queries or legal assistance, please reach us at:E-mail:info@counselslaw.com Phone:+8801700920980 (WhatsApp). +8801947470606. Address: House 39, Road 126 (3rd Floor) Islam Mansion, Gulshan 1, Dhaka.
