When the members of the company and the creditors decide to dissolve the company without the intervention of the tribunal, it is called voluntary winding up. The main objective of voluntary winding up is to provide an opportunity to the shareholders and the creditors to settle the matter on their own and through mutual agreements. Voluntary winding up is more advantageous as there are fewer restrictions as per the Act. This is the reason that the winding up of the company is often done by this method only.
conditions of voluntary termination
Voluntary winding up of a company can be done in the following cases (1) Expiry of the period- A company may by passing a resolution in its general general meeting
The company may be dissolved if (i) the term of the company specified in the Articles of Association has expired, or (ii) an event has occurred on the happening of which the company shall be dissolved in accordance with the Articles.
(2) Passing of special resolution – The company may, for any other reason, make a voluntary winding up of the company by passing a special resolution in its meeting. Publication of special resolution for voluntary winding up
If a special resolution is passed voluntarily for the dissolution of the company, then within 14 days of the passing of such resolution, such information is required to be given by the company in the official gazette and newspaper. For violation of the arrangement, a fine of ₹ 50 per day can be imposed on the company and each of its guilty officers during the period of error. Commencement of voluntary winding up The voluntary winding up of the company is deemed to have commenced from the date on which a special resolution has been passed to do so. Effects of Voluntary Dissolution In case of voluntary winding up of the company, the following are the effects:
(1) In the event of voluntarily winding up of the company, the company shall cease its business from the date of commencement of the winding up, unless the continuance of business is necessary for the dissolution of the company.
(2) The amalgamated status and amalgamated rights of the company shall continue till the dissolution of the company.
(3) After the commencement of the winding up of the company, the transfer of shares is void without the consent of the liquidator. (4) Any change made in the position of the members of the company after the commencement of the winding up of the company is void.