The SAMRIDH Scheme

May 6, 2024
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SAMRIDH or Startup Accelerators of MeitY for Product Innovation, Development, and Growth, launched by the Ministry of Electronics and IT, aims to provide funding and acceleration to startups, predominantly software startups.

Description Who is it for? Benefits
To provide funding support to the tech and software startups with proof of concept & innovations. For Tech & Software startups Under this scheme, startups can get funding of up to Rs. 40 lakhs based on current valuation and growth stage through selected accelerators.

The investment is extensively for brilliant solutions and proof of concepts through selected accelerators. The selected accelerators are responsible for providing a customized acceleration program for 300 selected startups.

Startup Accelerators of MeitY for Product Innovation, Development, and Growth (SAMRIDH)

Table of Contents

Features of SAMRIDH Scheme

Features of SAMRIDH Scheme
  • The SAMRIDH scheme provides your startup which already has brilliant solutions and proof of concept for their product, better facilities to enhance the product using innovative technologies for the market with a solid business plan.
  • The scheme provides a platform to enhance your products and secure investment for scaling your business.
  • Once your startup gains traction, there is a gap in accessing the growth stage funding to scale up the operations,and the scheme is filling up this gap for startups.
  • The scheme supports existing and upcoming Accelerators to select and accelerate potential IT-based startups to scale to solve India's problems and create positive social impact.

Eligibility for SAMRIDH Scheme

For Startups

  • Must be recognized by DPIIT.
  • Must be in the Early-growth stage.
  • The product of the startup must be software-based.

For Accelerators

  • Must have operations in India.
  • Must have been in the business of incubation for more than three years and supported more than 50 startups.
  • Must have the required infrastructure and targeted acceleration programs.

Application procedure for Startups

The application procedure primarily comprises the following steps:

  • Visit https://meitystartuphub.in.
  • On the homepage, click on “Register” under the Startup section.
  • The registration page will appear. Fill in all the requisite details and click on the “Submit” button.
  • Following registration, one can "log in" to the page for further access by filling in the username and password.

Benefits of SAMRIDH

  • This scheme provides a platform for product development and business scaling in terms of investment.
  • To provide customer connect, investor connect, and international connect services.
  • Up to Rs 40 lakh will be provided to the startups according to their current valuation and growth stage through accelerators..
  • Customized acceleration programs for startups and provided product and capacity enhancement services.

Post-Selection Process for SAMRIDH Scheme

The ​​MeitY SAMRIDH Scheme will be implemented through the MeitY Startup Hub (MSH). The selected Accelerator will be responsible for developing personalized acceleration programmes, and the budget for each startup is Rs. 2 lakh.

The services include- Co-learning, networking, expert diagnosis, and negotiation of investment funding from Angel Investors. A maximum of 10 businesses and a minimum of 5 startups working in the sphere of software products can be helped by a shortlisted accelerator.

MSH will take equity in startups for the government's contribution via Promissory/SAFE Note, the same as Accelerator, which will be utilized to sustain the program.The startup's exit may be executed by MSH or its appointed entity holding the company's equity, subject to approval from SMC. Biannual assessments of startups within the portfolio will be conducted, and the resulting reports will inform decisions regarding exiting from the startup.

Frequently Asked Questions

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1,499 + Govt. Fee
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  • Professional services 
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  • Firms sharing resources with limited liability 

Frequently Asked Questions

What documents are required to apply for the SAMRIDH Scheme?

The documentation requirements may vary depending on the lending institution, but generally, applicants need to provide identity proof, address proof, income proof, and business-related documents.

What are the key benefits of the SAMRIDH Scheme?

The key benefits of the SAMRIDH Scheme include financial support, access to investment opportunities, and promotion of entrepreneurship with the help of the accelerators.

Which accelerators are presently part of the Samridh Scheme?

Here is a list of accelerators participating in the Samridh Scheme: Link.

Related Posts

What is a Shelf Prospectus? Meaning & Provisions Under the Companies Act, India

What is a Shelf Prospectus? Meaning & Provisions Under the Companies Act, India

A shelf prospectus is a legal document under the Companies Act of 2013 that allows a company to issue multiple rounds of securities without filing a new prospectus for each offering.

Once a company gets approval for a shelf prospectus, it can issue securities in tranches over a period (usually one year) without repeating the regulatory approval process. This mechanism is particularly beneficial for businesses that require frequent access to capital markets.

Simply put, a company gets approval for a prospectus and "shelves" it for use when needed. Just like a store keeps items on a shelf, ready to be picked up when required, companies can tap into their shelf prospectus whenever they decide to issue securities within the approved period.

Table of Contents

Shelf Prospectus Meaning

A shelf prospectus is a document issued by companies intending to offer securities in multiple tranches over a specified period without filing a new prospectus for each offering. Governed by the Companies Act of 2013, it serves as a framework to streamline capital-raising activities while ensuring regulatory compliance.

This approach helps all types of companies save time and resources while maintaining transparency in financial disclosures.

What Is The Validity Period of Shelf Prospectus?

As per the Companies Act of 2013 and SEBI regulations, a shelf prospectus is valid for one year from the issue date. During this period, the company can make multiple security offerings without submitting a fresh prospectus.

However, an Information Memorandum must be filed for each subsequent offering to ensure updated financial and operational disclosures.

What Are The Requirements For Shelf Prospectus?

To issue a shelf prospectus, a company must fulfil specific requirements under the Companies Act, 2013:

  • Eligibility Criteria: The company must be a public financial institution, a bank, or a company notified by SEBI.
  • SEBI Approval: Approval from the Securities and Exchange Board of India (SEBI) is mandatory before issuance.
  • Financial Disclosures: The prospectus must include audited financial statements, business details, and risk factors.
  • Regulatory Compliance: The company must adhere to statutory provisions and filing requirements.

Who Can Issue Shelf Prospectus?

Not all companies are eligible to issue a shelf prospectus. As per SEBI regulations, only specific entities can do so, including:

  • Public Financial Institutions such as banks and NBFCs.
  • Scheduled Banks that meet regulatory criteria.
  • Other Companies notified by SEBI, provided they meet compliance standards.

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What Are The Eligibility Criteria For a Company to Issue a Shelf Prospectus?

To issue a shelf prospectus, a company must meet the following key eligibility criteria:

  • Strong Financial Performance: A consistent and positive financial track record is essential.
  • Regulatory Compliance: The company must have a history of timely filings and adherence to statutory norms.
  • Market Reputation: A credible and trustworthy market presence is necessary.
  • Clear Disclosure of Fund Utilization: The company must provide transparency regarding how the raised funds will be used.

5 Incredible Advantages of Shelf Prospectus

A shelf prospectus offers several benefits to companies and investors:

  1. Flexibility: Companies can issue securities as needed without additional regulatory approvals.
  2. Cost Efficiency: Reduces administrative and compliance costs associated with repeated filings.
  3. Faster Time to Market: Companies can respond quickly to market conditions.
  4. Improved Investor Relations: Provides transparency and trust through consistent financial disclosures.
  5. Strategic Financial Planning: Enables better capital-raising strategies over time.

How Does an Investor Benefit from a Shelf Prospectus?

Investors gain multiple advantages from a shelf prospectus:

  • Greater Transparency: A single document offers comprehensive details about the company.
  • Consistent Access to Securities: Investors can participate in multiple offerings from a single prospectus.
  • Time-Saving: Reduces the need to analyse multiple prospectuses for each security issuance.
  • Better Investment Planning: Enables informed decision-making with consistent financial disclosures.

Difference Between Shelf Prospectus and Red Herring Prospectus?

Parameter Shelf Prospectus Red Herring Prospectus
Purpose Used for multiple securities offerings over time Used for IPOs before the issue price is finalised
Validity Period Valid for one year from the issue date Valid only for a single IPO
Flexibility Allows multiple issuances without a new prospectus Only valid for a one-time offering
Information Contains comprehensive details about the company and financials Lacks finalised share price details
Regulatory Requirement Requires filing of Information Memorandum Needs SEBI approval before IPO launch

Financial Securities and Shelf Prospectus

A shelf prospectus allows companies to issue various types of financial securities, including:

  • Equity Shares: Ownership stakes in a company.
  • Debentures: Debt instruments issued by companies.
  • Bonds: Fixed-income securities providing periodic interest payments.

This streamlined approach reduces delays and administrative hurdles for issuing these securities over multiple tranches.

What Is an Information Memorandum?

An Information Memorandum is a document containing essential details about a company’s financials, operations, and business strategy. It is a key resource for investors, offering in-depth insights into the company's capital-raising plans.

When a company issues securities under a shelf prospectus, it must file an Information Memorandum before each offering to ensure updated and accurate disclosures.

Procedure to Fill Form PAS-2

Form PAS-2 is required to be filed as per the Companies (Prospectus and Allotment of Securities) Rules, 2014. Here’s how to fill it:

  1. Company Details: Enter the name, registered office, and CIN.
  2. Security Details: Specify the type and number of securities being offered.
  3. Offer Details: Mention the issue price, purpose, and utilisation of funds.
  4. Financial Statements: Attach recent audited financial reports.
  5. Declaration: Ensure proper authorisation and sign the form.

Procedure to Upload Form PAS-2

Once Form PAS-2 is completed, follow these steps to upload it to the MCA (Ministry of Corporate Affairs) portal:

  1. Prepare the Form: Ensure all required fields are filled out correctly and attach the necessary documents.
  2. Log in to the MCA Portal: Use company credentials to access the e-filing section.
  3. Upload the Form: Select Form PAS-2, attach supporting documents and verify details.
  4. Payment of Fees: Pay the prescribed filing fee through the portal.
  5. Submit and Confirm: After submission, a confirmation receipt and acknowledgement are generated.

Conclusion

For companies, a shelf prospectus eliminates the repetitive, time-consuming regulatory hurdles that come with multiple capital raises.

Instead of drafting and filing a new prospectus each time, businesses can plan their fundraising strategically, issuing securities when market conditions are favourable. This saves time, reduces administrative costs, and provides the flexibility needed to stay competitive.

For businesses, this means less paperwork, faster fundraising, and more flexibility to raise funds when needed. For investors, it provides greater transparency and clarity, helping them make better financial decisions.

By using a shelf prospectus wisely, companies can focus on growth, and investors can confidently explore opportunities—making it a win-win for everyone in the financial market.

Frequently Asked Questions

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Limited Liability Partnership
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One Person Company
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Private Limited Company
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BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


One Person Company
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1,499 + Govt. Fee
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  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
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Limited Liability Partnership
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  • Professional services 
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  • Firms sharing resources with limited liability 

Frequently Asked Questions

What is meant by Shelf Prospectus?

A Shelf Prospectus is a type of prospectus that allows a company to issue securities in multiple tranches over a period of time without needing to file a separate prospectus for each offering. It provides flexibility for companies to raise funds as needed, reducing administrative burdens and costs.

What is Shelf Prospectus in Company Law Section 1?

In the context of Company Law (India - Companies Act, 2013, Section 31), a Shelf Prospectus is a prospectus issued by public financial institutions, banks, or listed companies for raising capital through multiple offerings. The prospectus remains valid for a specified period, and the company only needs to file an Information Memorandum before each tranche of issuance.

Does the Shelf Prospectus Require a Different Prospectus for Each Offering?

No, a Shelf Prospectus eliminates the need to file a separate prospectus for each offering. Instead, an Information Memorandum is submitted before each issuance, updating investors with relevant details about the specific tranche.

Is Shelf Prospectus Valid for Years?

In India, a Shelf Prospectus is typically valid for one year from the date of filing). Within this period, the company can issue securities in multiple tranches without filing a fresh prospectus each time.

Why Would a Company File a Base Shelf Prospectus?

A company files a Base Shelf Prospectus to:

  • Streamline Fundraising: Raise capital efficiently over time without repetitive regulatory approvals.
  • Reduce Costs: Minimize administrative and legal expenses associated with frequent filings.
  • Enhance Flexibility: Issue securities when market conditions are favourable.
  • Ensure Compliance: Maintain transparency while avoiding delays in capital raising.

Sarthak Goyal

Sarthak Goyal is a Chartered Accountant with 10+ years of experience in business process consulting, internal audits, risk management, and Virtual CFO services. He cleared his CA at 21, began his career in a PSU, and went on to establish a successful ₹8 Cr+ e-commerce venture.

He has since advised ₹200–1000 Cr+ companies on streamlining operations, setting up audit frameworks, and financial monitoring. A community builder for finance professionals and an amateur writer, Sarthak blends deep finance expertise with an entrepreneurial spirit and a passion for continuous learning.

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Form DPT-3: Due Date, Purpose, Return Date

Form DPT-3: Due Date, Purpose, Return Date

Running a business in India comes with its fair share of challenges—managing finances, growing revenue, and keeping up with endless compliance requirements. One such crucial yet often overlooked filing is Form DPT-3.

This annual filing is mandatory for all companies in India—except government companies—to report details of deposits, loans, and non-deposit receipts. The Form DPT-3 due date is June 30th each year, making it essential for businesses to meet this deadline to avoid penalties and maintain good standing with regulatory authorities.

Table of Contents

What is Form DPT-3?

Form DPT-3 is an annual return form that companies must file to report deposits and outstanding loan details. It is a statutory requirement under the Companies Act 2013, ensuring that businesses remain compliant and transparent in their financial dealings. The form covers:

  • Deposits received by the company
  • Non-deposit loans taken from directors, shareholders, or other sources
  • Any other amounts that are classified as financial liabilities

The primary objective of this filing is to prevent malpractices related to undisclosed financial transactions and to strengthen corporate governance.

<H2> Applicability and Requirements for DPT-3 Form

Form DPT-3 filing applies to all companies except government companies. This includes:

Key requirements for DP3 include:

  • Annual Filing Deadline: Companies must submit Form DPT-3 by June 30 each year, covering financial transactions for the previous fiscal year.
  • Financial Year Coverage: The form includes details of financial liabilities up to March 31 of the relevant financial year.
  • Auditor Verification: Companies must ensure that the reported figures are verified by auditors to maintain accuracy and compliance.

Penalties for Non-Compliance with Form DPT-3 Filing

Failure to file Form DPT-3 on time can result in significant penalties under the Companies Act 2013. The penalties include:

  • A flat penalty of up to ₹5,000 for the company.
  • Additional daily fines of ₹500 per day for continued non-compliance.
  • Officers responsible for the filing may also be penalised with additional fines.

Ensuring timely submission is essential to avoid legal repercussions and unnecessary financial burdens.

Preparing for the DPT-3 Filing

To ensure a smooth DPT-3 filing process, companies should follow these steps:

  1. Review Financial Transactions: Examine all deposits, loans, and non-deposit receipts received during the financial year.
  2. Obtain Audit Reports: Work with auditors to verify and validate the data before submission.
  3. Gather Necessary Documentation: Collect supporting documents such as loan agreements, receipts, and auditor reports.
  4. Consult Experts: If there are complexities in reporting, seek advice from compliance professionals or legal experts.

Information Required to Fill DPT-3 Form

Companies need to provide the following details while filling out Form DPT-3:

Other financial liabilities as per the balance sheet-

  • Net Worth of the Company: The net worth is calculated as total assets minus total liabilities based on the most recent financial year-end.
  • Particulars of Charge (if any): Companies must disclose any charges or encumbrances on their assets. This includes mortgages, liens, or any other security interests held against company-owned properties or resources.
  • Total Amount Outstanding as of March 31st, 2020 including-  
  • Deposits received from individuals or entities.
  • Loans borrowed from banks, directors, or other companies.
  • Any other non-deposit receipts that need disclosure.
  • Particulars of Credit Rating (If Applicable): Companies with an assigned credit rating should provide: Name of the credit rating agency (e.g., CRISIL, ICRA, CARE, etc.) and the rating assigned

Form DPT-3 Due Date

The due date for filing Form DPT-3 is June 30th of every financial year. Companies should ensure timely submission to avoid penalties and maintain regulatory compliance.

Documents Required to File DPT-3 Form

To complete the Form DPT-3 filing, companies must submit:

  • List of Depositors
  • Deposit Insurance Contract
  • Copy of the Trust Deed
  • Copy of the Instrument Creating Charge
  • Details of Liquid Assets
  • Outstanding Receipts of Money or Loans
  • Auditor’s Certificate

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Conclusion

Form DPT-3 is a critical compliance requirement for companies in India. Filing this might feel like just another compliance task, but it’s actually a crucial step in keeping your business financially transparent and legally sound. Missing the deadline can lead to penalties, unnecessary stress, and last-minute scrambling. Instead of rushing at the last minute, take a proactive approach—review your records, coordinate with your auditors, and get your documents in order well in advance.

Frequently Asked Questions

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Limited Liability Partnership
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One Person Company
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BEST SUITED FOR
  • Freelancers, Small-scale businesses
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Private Limited Company
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1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


One Person Company
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1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
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BEST SUITED FOR
  • Professional services 
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Frequently Asked Questions

Is Form DPT-3 mandatory?

Yes, Form DPT-3 is mandatory for all companies (except government companies) that have received deposits, loans, or other non-deposit receipts. It must be filed annually, as per the Companies Act of 2013, to ensure financial transparency and regulatory compliance.

What is the penalty for delay in DPT-3?

If a company fails to file Form DPT-3 on time, penalties may include:

  • A fine of ₹5,000 for the company.
  • An additional fine of ₹500 per day for continued non-compliance.
  • Officers in default may also face penalties, which can go up to ₹2 lakh.

What is the fee for DPT-3?

The filing fee for Form DPT-3 depends on the company’s authorised share capital:

  • ₹200 for companies with capital up to ₹1 lakh
  • ₹300 for ₹1-5 lakh
  • ₹400 for ₹5-25 lakh
  • ₹500 for ₹25 lakh-1 crore
  • ₹600 for ₹1 crore or more

Late filing attracts additional fees, increasing with the delay period.

Is DPT-3 applicable to LLPs?

No, Form DPT-3 is not applicable to LLPs (Limited Liability Partnerships). It applies only to private and public limited companies, as LLPs are governed by the LLP Act of 2008 and have different compliance requirements.

Can we file DPT-3 after the due date?

Yes, you can file DPT-3 after the due date, but it will attract late filing fees and penalties. To avoid unnecessary financial and legal consequences, it is advisable to file before the June 30 deadline.

Is DPT-3 mandatory every year?

Yes, DPT-3 is an annual compliance requirement that must be filed every year by June 30, reporting financial data from the previous fiscal year.

What is the purpose of filing DPT-3?

The purpose of Form DPT-3 is to:

  • Ensure financial transparency by reporting deposits, loans, and non-deposit transactions.
  • Help regulators track company borrowings and financial stability.

Ensure compliance with the Companies Act of 2013 and avoid penalties.

What is Winding up of a Company?: Process and Modes Explained

What is Winding up of a Company?: Process and Modes Explained

The winding up of a company is the process of dissolving a company and distributing its assets to claimants. Also known as liquidation, winding up typically occurs when a company is insolvent and unable to pay its debts when they are due. However, a solvent company may also be wound up voluntarily by its shareholders and directors.

In India, the winding up of companies is governed by the Companies Act, 2013 and the Insolvency and Bankruptcy Code, 2016 (IBC). The IBC has significantly changed the winding up regime in India and introduced a time-bound insolvency resolution process

Table of Contents

What is the Winding Up of a Company?

Winding up a company refers to the legal process of closing its operations permanently. It involves selling the company's assets, settling its debts and liabilities, and distributing any remaining surplus among shareholders according to their rights. Once the process is complete, the company is dissolved and ceases to exist as a legal entity. Winding up may be voluntary, initiated by members or creditors, or compulsory, ordered by a court.

The main reasons for winding up a company include:

  • Ceasing the company's operations
  • Collecting the company's assets
  • Paying off the company's debts and liabilities
  • Distributing any remaining assets to the members

The main reasons for winding up a company include:

  • Inability to pay debts (insolvency)
  • Completion of the purpose for which the company was formed
  • Expiry of the period fixed for the duration of the company
  • The passing of a special resolution by the members to wind up the company

Key Aspects of Winding Up of a Company

The winding up of a company involves several key aspects that need to be considered:

1.  Appointment of Liquidator

A liquidator is a person or entity responsible for managing the winding-up process of a company, including selling assets, settling liabilities, and distributing remaining funds to stakeholders. A liquidator is appointed to manage the winding up process. He is appointed by members or creditors in voluntary winding up or by the court in compulsory winding up. 

2.  Realisation of Assets

The liquidator takes possession of all the company's assets and realises them into cash. This may involve selling the company's property, plant and equipment, collecting debts from debtors, and recovering any unpaid capital from the contributors.

3.  Payment of Liabilities

The liquidator settles all the company's liabilities, including debts owed to creditors, outstanding taxes and employee dues. The order of priority for payment is fixed by law, with secured creditors being paid first, followed by unsecured creditors and members.

4. Distribution of Surplus

After settling all the liabilities, surplus assets are distributed among the members in proportion to their shareholding. Preference shareholders are paid first, including any arrears, as per their rights. Once their claims are fully settled, the remaining surplus is allocated to equity shareholders in proportion to their shareholding. This process adheres to the company’s articles and legal requirements, ensuring an equitable distribution.

5. Dissolution of Company

Once the winding up process is complete, the liquidator submits a final report to the Tribunal or the ROC. The Tribunal then orders the dissolution of the company, and its name is struck off from the register of companies.

Types of Winding Up

There are three main modes of winding up of a company under the Companies Act 2013:

  1. Compulsory Winding Up of a Company (By the Tribunal)
  2. Voluntary Winding Up of a Company

a) Members' Voluntary Winding Up

b) Creditors' Voluntary Winding Up

  1. Winding Up Subject to the Supervision of the Tribunal

Let us discuss each of these types in detail.

1. Compulsory Winding Up (By the Court)

Compulsory winding up of a company is when a company is wound up by an order of a court or tribunal. This is also known as "winding up by the court". The court may order a company to be wound up on various grounds specified in Section 433 of the Companies Act, 1956 (now governed by Chapter XX of the Companies Act, 2013).

Compulsory winding up of a company is initiated by a petition filed before the National Company Law Tribunal (NCLT) by:

  • The company itself
  • The company's creditors
  • The company's contributors
  • The Registrar of Companies
  • Any person authorised by the Central Government

The grounds for compulsory winding up include:

  • Inability to pay debts
  • Acting against the sovereignty and integrity of India
  • Conducting affairs in a fraudulent manner
  • Failure to file financial statements or annual returns for five consecutive years
  • The Tribunal is of the opinion that it is just and equitable to wind up the company

If the NCLT is satisfied that a prima facie case for winding up is made out, it admits the petition, appoints an official liquidator and makes an order for winding up.

2. Voluntary winding up of a company

Voluntary winding up is when a company is wound up by its members or creditors without the intervention of a court or tribunal. Voluntary winding up is initiated by the company itself by passing a special resolution in a general meeting. There are two types of voluntary winding up:

1. Members' Voluntary Winding Up

This occurs when the company is solvent and can pay its debts in full. A declaration of solvency is made by a majority of the directors, stating that they have made an inquiry into the company's affairs and believe that the company has no debts or will be able to pay its debts in full within three years from the commencement of the winding up.

2.  Creditors' Voluntary Winding Up: 

This occurs when the company is insolvent and unable to pay its debts in full. No declaration of solvency is made in this case. The creditors play a greater role in this type of winding up compared to a members' voluntary winding up.

In a voluntary winding up, the company appoints a liquidator in a general meeting to conduct the winding up proceedings.

3. Winding Up Subject to the Supervision of the Court

A voluntary winding up (whether members' or creditors') may be converted into a winding up by the Tribunal if the Tribunal is of the opinion that the company's affairs are being conducted in a manner prejudicial to the interests of the public or the company.

In such cases, the Tribunal may order that the voluntary winding up shall continue but subject to the supervision of the Tribunal. The Tribunal may appoint an additional liquidator to conduct the winding up along with the liquidator appointed by the company.

Winding Up a Company Process

The procedure for winding up of a company in India depends on the mode of winding up. Here is a step-by-step procedure for compulsory winding up of a company in India and voluntary winding up:

H3 - Compulsory Winding Up H3 - Voluntary Winding Up
1. The winding-up process begins when a petition is filed before the National Company Law Tribunal (NCLT) by creditors, shareholders, or the government. 1.Passing of special resolution for winding up: The process begins when shareholders pass a special resolution in a general meeting, requiring a three-fourths majority, to wind up the company.
2.Admission of Petition and Publication of Notice: Once the petition is accepted, the NCLT admits the case and orders the publication of a notice. 2. Declaration of solvency (in case of members' voluntary winding up): If the company is solvent, the directors must file a Declaration of Solvency with the Registrar of Companies (RoC).
3 Appointment of Provisional Liquidator: The NCLT may appoint a provisional liquidator to temporarily manage the company’s assets and prevent them from being misappropriated during the winding-up process. 3. Appointment of liquidator: After the special resolution, members appoint a liquidator to manage the winding-up, sell assets, settle liabilities, and distribute remaining funds.
4. The NCLT issues an order for the company’s winding up, which formally starts the dissolution process. 4. Giving of notice of appointment of liquidator to Registrar: The company must notify the Registrar of Companies (RoC) about the appointment of the liquidator.
5. The directors of the company are required to submit a statement of affairs to the liquidator. 5. Realisation of assets and payment of debts by liquidator: The liquidator takes control of the company’s assets, sells them, and pays off debts, prioritising secured creditors, then unsecured creditors.
6. Appointment of Official Liquidator: The NCLT appoints an official liquidator who takes full control of the company’s assets and liabilities. 6. Calling of final meeting and presentation of final accounts: After settling debts and realising assets, the liquidator calls a final meeting to present the final accounts, detailing the liquidation process and asset distribution.
7. The liquidator liquidates or sells the company’s assets to generate funds.The liquidator uses the proceeds to pay off the company’s creditors, including secured creditors, employees, and unsecured creditors, according to the legal priority order. 7. Dissolution of company: After approval of the final accounts, the company applies to the RoC for dissolution, and once approved, it is removed from the RoC register.
8.Submission of Final Report by Liquidator: Once all assets are realised and debts paid, the liquidator prepares a final report that details the liquidation process.
9. Dissolution of company: After the final report is submitted and all obligations are met, the NCLT issues a dissolution order, removing the company from the RoC register and formally ending its existence.

The process of winding up of a company in India is complex and involves several legal formalities. It is advisable to seek the assistance of a professional (such as a company secretary or a lawyer) to ensure compliance with all the requirements.

Example of Winding up of a Company

One notable example of the winding up of a company in India is the case of Kingfisher Airlines Limited. Kingfisher Airlines was a prominent Indian airline that ceased operations in 2012 due to financial difficulties and mounting debts.

In 2016, the Karnataka High Court ordered the winding up of the company on a petition filed by the Airports Authority of India, which was one of the company's creditors. The court appointed an Official Liquidator to take charge of the company's assets and manage the winding up process.

The liquidator faced several challenges in the winding up process, including the recovery of dues from the company's debtors and the sale of its assets. The company had a fleet of aircraft and other assets, which had to be valued and sold to pay off the creditors.

One of the major issues in the winding up of Kingfisher Airlines was the recovery of dues from its promoter, Vijay Mallya. Mallya had given personal guarantees for some of the loans taken by the company, and the creditors sought to recover these dues from him. However, Mallya fled to the UK, and the Indian authorities have been trying to extradite him to face charges of fraud and money laundering.

The winding up process of Kingfisher Airlines is still ongoing, and the liquidator is working to realise the company's assets and settle its liabilities. The case highlights the challenges involved in the winding up of a large and complex company with multiple stakeholders and legal issues.

The Kingfisher Airlines case also underscores the importance of timely action by creditors in the event of default by a company. Many of the company's creditors, including banks and airports, had allowed the debts to accumulate for several years before initiating legal action. This delay made it more difficult to recover the dues and increased the losses for the creditors.

In conclusion, the winding up of Kingfisher Airlines is a cautionary tale for companies and creditors alike. It highlights the need for effective risk management, timely action in case of default, and the importance of following due process in the winding-up of a company.

Conclusion

In conclusion, the winding up is a legal process of  liquidating a company's assets, settling of liabilities and distributing surplus to its members. It is a complex process that requires careful planning and execution, and the guidance of professional advisors. 

There are three modes in winding up under companies act 2013: compulsory winding up by the Tribunal, voluntary winding up by the members or creditors and winding up under the Tribunal's supervision. 

These modes of winding up have specific requirements and procedures. Proper planning and professional guidance can help minimise the impact on stakeholders like creditors, employees and members, ensuring a smoother and compliant winding-up process.

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Frequently Asked Questions

What does winding up mean?

Meaning of winding up of a company: It is the process of dissolving a company and distributing its assets to claimants. It involves closing down the company's operations, realising its assets, paying off its debts and liabilities and distributing the surplus (if any) to the members.

What is Creditors' Voluntary Winding Up?

Creditors' Voluntary Winding Up is a type of voluntary winding up of a company that occurs when the company is insolvent and unable to pay its debts in full. In this type of winding up, the creditors have a greater say in the appointment of the liquidator and the conduct of the winding up proceedings.

Who can be appointed as a liquidator?

A liquidator can be an individual or a corporate body. They must be independent and should not have any conflict of interest with the company being wound up. Usually, professionals such as chartered accountants, company secretaries, cost accountants or advocates are appointed as liquidators.

What is a Statement of Affairs?

A Statement of Affairs is a document submitted by the directors of a company to the liquidator in a winding up. It shows the particulars of the company's assets, debts and liabilities, the names and addresses of the creditors, the securities they hold and other relevant details.

What is the process of dissolution of a company?

The process of dissolution of a company involves the following steps:

a. Passing a special resolution to wind up the company

b. Appointment of a liquidator to manage the winding-up process

c. Realisation of the company's assets and settlement of its liabilities

d. Distribution of any surplus assets to the members

e. Submission of the final report by the liquidator to the Tribunal or ROC

f. The passing of an order by the Tribunal dissolving the company

g. Striking off the company's name from the register of companies by the ROC

What are the effects of winding up a company?

The main effects of winding up of a company are:

  • The company ceases to carry on its business except for the beneficial winding up of its business.
  • The powers of the board of directors cease, and the liquidator takes over the management of the company.
  • Legal proceedings against the company are stayed.
  • The company’s assets are realised and distributed to the creditors and members.
  • The company is eventually dissolved and ceases to exist as a legal entity.

Akash Goel

Akash Goel is an experienced Company Secretary specializing in startup compliance and advisory across India. He has worked with numerous early and growth-stage startups, supporting them through critical funding rounds involving top VCs like Matrix Partners, India Quotient, Shunwei, KStart, VH Capital, SAIF Partners, and Pravega Ventures.

His expertise spans Secretarial compliance, IPR, FEMA, valuation, and due diligence, helping founders understand how startups operate and the complexities of legal regulations.

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