A company is said to be dissolved when it ceases to exist as a corporate entity. On dissolution, the company’s name shall be struck off by the Registrar from the Register of Companies and he shall also get this fact published in the Official Gazette. The dissolution, thus puts an end to the existence of the company.
|Point of Difference
|This is the stage prior to dissolution. Winding up is one of the process by which dissolution of a company is taken for dissolution.
|Dissolution is the end result of winding up. In other words, it takes the company to its terminal point of existence.
|Existence of Legal Entity of the Company
|Legal entity of the company continues at the commencement of the winding up till the dissolution of company.
|Dissolution brings about an end to the legal entity of the company.
|Continuation of Business
|A company may be allowed to continue its business as far it is necessary for the beneficial winding up of the company.
|Company cannot carry business as it ceases to exist on its dissolution.
A company may be wound up in any of the following two ways:
1. Compulsory Winding Up of a Company:
Winding up a company by an order of the Tribunal is known as compulsory winding up.
WHO MAY FILE A PETITION TO THE TRIBUNAL?
A petition for compulsory winding up of a company may be filed in the Tribunal by any of the following persons. (Sec. 272)
The Insolvency and Bankruptcy Code, 2016 relates to re-organisation and insolvency resolution of companies, partnership firms and individuals in a time bound manner.
The Insolvency and Bankruptcy Code, 2016 applies to matters relating to the insolvency and liquidation of a company where the minimum amount of the default is Rs. 1 lakh (may be increased up to Rs.1 cr by the Government, by notification).
The Code lays down two stages:
It is the stage during which financial creditors assess whether the debtor’s business is viable to continue and the options for its re-organisation and re-structuring are suggested; and
In case the insolvency resolution process fails, the liquidation process shall commence in which the assets of the company are realized to pay off the creditors.
Dissolution of a company may be brought about in any of the following ways:
1. Through transfer of a company’s undertaking to another under a scheme of reconstruction or amalgamation. In such a case, the transfer or company will be dissolved by an order of the Tribunal without being wound up.
2. Through the winding up of the company, wherein assets of the company are realized and applied towards the payment of its liabilities. The surplus, if any is distributed to the members of the company, in accordance with their rights.