A portal that completely connects all the phases of the liquidation process, right from the application by the companies to the processing by all the departments, will prove to be very useful, it added.
The Economic Survey 2021-22 has emphasized the need for a simplified procedure for voluntary liquidation of companies. “There is a case for simplifying the problems in the voluntary liquidation process, improving the ease of exit for the business,” the survey said.
“Apart from simplification of issues at various stages in the process, there is a need to create a single window for the entire process,” it said.
A portal that completely connects all the phases of the liquidation process, right from the application by the companies to the processing by all the departments, will prove to be very useful, it added.
Liquidation may be involuntary in case of insolvency or bankruptcy; Or voluntary which may be due to personal reasons, there may be merger of subsidiaries. A company may voluntarily decide to cease its operations even if it is viable. With the introduction of the Insolvency and Bankruptcy Code, 2016 (IBC), there has been a change in the process of winding up on account of insolvency/bankruptcy. “However, the process of voluntary exit of business still needs to be significantly simplified, on top of recent progress,” the survey said. At present, there are two main modes of voluntary liquidation, one is through the Registrar of Companies (ROC) under Section 248 of the Companies Act, 2013 and the other is under IBC. The former is currently the far more popular route. Under section 248(2) of the Companies Act, a company may, after exhausting all its liabilities, in the case of paid-up share capital, by special resolution or consent of 75% of the members. , may file an application in the prescribed manner to the Registrar of Companies (ROC). There should be no pending litigation against the company and it has to follow 5 step-by-step due process which is cumbersome. Also, companies that have been incorporated for carrying on business items like NBFCs, asset management companies, insurance have to obtain NOC from their regulatory authority like RBI, SEBI, IRDA respectively and it takes a long time.
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