Difference between Dissolution and Winding up of a Company
Basis |
Dissolution |
Winding up |
---|---|---|
Meaning |
Dissolution is a legal process that terminates the existence of a company. The name of the company is struck off from the Register of Companies, and it is published in the official gazette. | Winding up is a process of bringing a company’s affairs to a close, liquidating its assets, and distributing the proceeds among its creditors and shareholders. |
Process |
It is the end process of winding up and getting the name struck off from the Register of Companies. | It is one of the methods through which the dissolution of a company is carried on. |
Existence of a Company |
Dissolution brings an end to the legal entity status of a company. | The company’s legal entity continues and exists at the commencement and during the winding up process. |
Continuation of Business |
The company ceases to exist once it is dissolved. | During winding up, a company can be allowed to continue its business if it is required for the beneficial winding up of the company. |
Moderator |
The order for Dissolution is passed by NCLT. | The process of Winding up is carried out by the liquidator. |
Activities Included |
Filing resolutions, declarations, and other documents required by the NCLT to pass the dissolution order. | Filing of winding up resolution, appointment of liquidator, disclosures to ROC, and filing for resolution to the NCLT. |
Difference between Dissolution and Winding up of a Company
Dissolution of a company is a legal process where a company is dissolved by an order of a Tribunal; i.e., National Company Law Tribunal (NCLT), after the winding up process is completed. Dissolution brings a company’s existence to an end, and the name is struck off by the Registrar of Companies (ROC). Both Dissolution and Winding up are related to the company’s end and are mostly confused. The process of winding up is the one where the liquidator is appointed to settle and distribute the company’s assets among the creditors and other relevant stakeholders. Only when the winding-up process is completed does dissolution take place.
Table of Content
- What is Dissolution of a Company?
- What is Winding up of a Company?
- Difference between Dissolution and Winding up of a Company
- Conclusion
- Frequently Asked Questions (FAQs)