Procedures on De-registration and Liquidation in India

What are  the necessary procedures for dissolving a foreign-owned subsidiary in India?What are the documents that need to be submitted to the tax office when dissolving a company in India ?

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What is the logic behind the deregistration and liquidation process of a foreign-owned company in India?

The dissolution and liquidation procedures in each country may seem very complicated and difficult to understand at first glance.

When a foreign-owned company is established in India, it needs to register with the Ministry of Corporate Affairs (MCA).
After the company is established, obtains a CIN (Corporate Identity Number), which is a unique identification number used for financial transactions and regulatory reporting.
In contrast, when you decide to close your company, you also need to declare it to the Ministry of Corporate Affairs (MCA) to cancel the CIN (Corporate Identity Number).

After the approval of the Ministry of Corporate Affairs (MCA),
Register for tax with the Income Tax Department and obtain a PAN and TAN.
Then apply for a GST number from the Income Tax Department.
Depending on the nature of your business, you may need to obtain a business license or permit for your specific business.
Finally, you need to obtain a social security number from the EPFO and ESIC,
and finally open a bank account.

Conversely, when closing a business,
Report on the company’s dissolution to the Income Tax Department and complete the relevant tax procedures.
Finally, the relevant agencies need to be notified to cancel the income tax number, the GST number, the business license or permit for the specific business, the payroll accounts, and the cancellation of the bank account.

In addition to the cancellation of various certificate numbers, when a foreign-funded company is dissolved, it is necessary to appoint a Liquidator to supervise the procedure, evaluate and value the company’s assets and liabilities, pay off outstanding debts and obligations, and sell the company’s assets, according to Statutory priorities distribute proceeds of sale to creditors and shareholders.

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What are the necessary procedures for dissolving a foreign-owned subsidiary in India?

1. Declaration of Solvency
   • A declaration must be received from the majority of the directors of the company.
2. Passing of resolution/ special resolution by members and appointment of liquidator
   • A special resolution requires the company to be liquidated voluntarily and appointing an insolvency professional to act as the liquidator must be passed within 4 weeks of declaration of solvency.
   • The voluntary liquidation proceedings in respect of a company shall be deemed to have commenced from the date of passing of the special resolution, subject to the approval of the creditors.
3. Public announcement in Form A by the liquidator
   • The liquidator shall make a public announcement within 5 working days of his appointment to submit the claims within 30 days.
   • It must be published in one English daily and one regional daily newspaper wherein the registered office of the corporate person is situated.
   • It must also be posted on the website of corporate persons.
4. Notification to Registrar of Companies and Board and IBBI
   • The company is required to notify the ROC and the IBBI about the resolution passed to liquidate the company within 7 days of such resolution or the subsequent approval by the creditors.
5. Submission of claims by stakeholders and withdrawal/ modification of claim by stakeholders
   • All claims must be made within 30 days of the public announcement.
   • The liquidator must verify the correctness of each claim and prepare a list of the stakeholders.
6. Proceeds of liquidation and distribution of proceeds
   • The liquidator shall open a bank account in the name of the corporate person followed by the words ‘in voluntary liquidation’, in a schedule bank, for the receipt of all money due to the corporate person.
   • The realization of each day shall be deposited into the bank account without any deduction.
   • The liquidator shall distribute the proceeds from realization within 30 days from the receipt of the amount to the stakeholders.
7. Completion of liquidation
   • The liquidator shall endeavor to complete the liquidation process of the corporate person and submit the Final Report under regulation 38 within: –
   a) 270 days from the liquidation commencement date where the creditors have approved the resolution and
   b) 90 days from the liquidation commencement date in all other cases.
8. Final Report
   • On completion of the liquidation process, the liquidator shall prepare the Final Report consisting of: –
   a) Audited accounts of the liquidation, showing receipts and payments pertaining to liquidation since the liquidation commencement date; and
   b) A statement demonstrating the assets of the corporate person has been disposed of, the debt of the corporate person has been discharged to the satisfaction of the creditors and no litigation is pending against the corporate person.
   c) A sale statement in respect of all assets containing the realized value, cost of realization and the manner and mode of sale, the person to whom the sale is made.
   

   Submit

   https://ibbi.gov.in/en/legal-framework/updated?title=liquidation&date=

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What are the documents that need to be submitted to the tax office and other government competent units when dissolving a company in India?

When dissolving a company in India, there are specific documents that need to be submitted to the government units.
These documents are important to ensure that all matters are properly addressed as part of the dissolution process.
Here are some of the key documents that may need to be submitted:

1.Registrar of Companies (RoC):

• i)Audited financial statements and the record of the business operations of the company for the previous 2 years or for the period since its incorporation, whichever is later.
• ii)A report on the valuation of the assets of the company, if any, prepared by a registered valuer.

2.Registrar of Companies (RoC):

• A notice of appointment of liquidator must be filed with the registrar within 10 days of passing the resolution for company winding up.

4.Registrar of Companies (RoC) and the Insolvency and Bankruptcy Board of India (IBBI):

• A resolution to liquidate the company has to be filed.

8.Registrar of Companies (RoC) and the Insolvency and Bankruptcy Board of India (IBBI):

• The liquidator shall send the Final Report to the registrar and the Board.
• The liquidator shall submit the Final Report and the compliance certificate in Form-H.
• The Company liquidator shall also make an application to the Tribunal for an order of dissolution of the company. Upon being satisfied with the winding up, the Tribunal shall pass an order of dissolution within 60 days of the application. A copy of the final order should be filed with the ROC.

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