Home / Blog

Governmeent eases Winding Up of Indian Companies.

The Ministry of Corporate Affairs has notified rules for winding up and provide an option to the small companies to shut their companies without going to the National Company Law Tribunals (NCLTs). The Companies (Winding Up) Rules, 2020, signed off on 24th January, 2020 will be effective from 1st April, 2020.




SECTION: Section 361 of the Companies Act, 2013

RULES: Companies (Winding Up) Rules, 2020


EFFECTIVE FROM: April 01, 2020




Summary procedure is applicable on the companies having assets of book value not exceeding one crore rupees to shut their business without taking approval from the NCLT.  


The above-mentioned companies having total outstanding deposits up to INR 25 lakh, or having outstanding loan including secured loan up to INR 50 lakh, or company with turnover upto INR 50 crore or the companies with paid up capital up to INR 1 crore can opt for winding up under the these rules.


The rules specify that the closure of the company will be carried out by the Official Liquidator hired by the Central Government, who will take charge of the assets and deal with the claims of the company. The Central Government will issue directions to the Liquidator similar to what the NCLT is doing in other cases.


IMPACT OF THE NEW NORMS: It seems that the new rules are introduced to lessen the burden of National Company Law Tribunals (NCLTs), hence fasten the process of winding up of companies, though the most of the current applicable compliances shall have to be complied by the companies opting this route.


Please click here to view the updated rules from the Ministry of Corporate Affairs.