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Meaning of Winding-up/Liquidation of a Company

Since the company is an artificial or statutory person, its termination is done in a legal manner and not automatically. Dissolution refers to the situation when the business of the company is closed, the assets are sold, the money received is distributed among the shareholders as per rules, the amount remaining after paying the creditors. If the company does not have enough money at the time of winding up to pay the creditors as well, then in such a situation the company asks its shareholders for the amount according to their liabilities. In short, the dissolution of a company refers to the statutory manner by which a company is dissolved.

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