What is Dissolution of a Company?
Dissolution is a legal process that terminates the existence of a company. The name of the company is struck off from the Registrar of Companies, and it shall be published in the official gazette. Dissolution of a company can be done in the following two ways:
- By transferring the company’s undertaking to another company under a scheme of amalgamation or reconstruction. The order of NCLT will dissolve the company without being wound up.
- After settling the debts of the company, the remaining amounts will be distributed to the stakeholders and the NCLT will pass an order for dissolution.
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)