 Good evening, Mr. Manoj Kumar Anand, who is the resource person for today has already done sessions with us and he is the president of the All India Insolvency Professional Association and short AWIPA. Therefore, when we found that we were running on the same page to the effect that there should be decimation of the knowledge, information being shared and people are sensitized in the truth perspective and that is what we all say that where there should be knowledge, where everyone can understand the nitty gritties of all aspects in the right manner and the right way. Voluntary liquidation of the corporate's unhidden treasure and procedure is one of the aspects which we read a lot, but the manner to understand the things is always a facet which one intends to learn and there cannot be a better resource person than Mr. Manoj Kumar Anand who is a chartered accountant and an IP professor. Manoj Kumar Anand has created his niche within the market not only as the chartered accountant as well as as the insolvency professor. He has handled various assignments as an IRP, RP, PG, liquidator and processor devices. He has done not only small but big processes in this regard. But as they say that rather than reading a biodegrader of a person, once you hear a person who himself hammers everything which is an ounce of gold, it would always be a pleasure that too on a weekend to hold him rather than on the process of introducing him, but to straight away ask him that keep on sharing the knowledge and it would be enlightening the society at large or do you Manoj, it's always a pleasure connecting with you. Thank you Vikas ji. Thank you very much for giving me an opportunity to interact with my people, my advocates, my charter counters, my insolvency professionals and thanks to the audience also because when you gave me this opportunity to present myself before you, I studied this topic again as a result of which I polished my knowledge. I feel these webinars as far as as a speaker is concerned, this is best for us because it makes us to learn otherwise in our normal routine, we are always enrolled in doing all the little and small things there. In our daily G20 is going on. Somebody asked that the government is putting up so much energy in G20, what they will ultimately gain out of that? So somebody from the ministry, very senior person replied that this kind of G20 study you know what India is holding out, it will open us a lot of paths for us. Maybe you know if we look at China they are only opposing, otherwise every other country is saying that India should have a UN permanent seat, maybe with the hospitality and kind of strength seeing in the G20 seminar, such type of things and such type of paths will open up. Similarly, in every webinar I polish my knowledge, people like you who are you know who are my stream audience, they listen and maybe you know with a particular webinar you may not be able to have assignments directly but it will definitely make you to generate for you, you know if something unhidden is there that can always make you to extract out of that hiddenness and you know increase your professional practice and otherwise also. So we always one of the other we are dealing with the corporates but in every corporate as well as in my shape what I've seen is that in every corporate especially with the big groups there is always a hidden treasure, hidden treasure is means that block up capital. What happened is that you started a company because of one reason or the other reason you invested in the form of capital, there may be 50 lakh rupees, 50 crore rupees, every more than that and then you realize that this capital has to come and now companies at 2013 section 185, 187, 190 pieces are so stringent that diversion of funds is also you know very difficult. At the same time if you try to withdraw the money you have in market that there are two or three perceptions are there that if you go for the liquidation it will take years and it was the fact also and if you divert the fund then our editor will get hold of us or but in my today's webinar you will be easily able to understand and look into the aspect that you can withdraw your capital and that too with a very very minimum cost and that too within time then of maximum of 90 days and if we plan it the planning which I should be sharing with you if you if you plan it properly perhaps you can withdraw your capital maybe within 60 days or something like that with this objective that how we can broaden our knowledge as far as your voluntary liquidation is concerned I'm starting my screen share with you Sharadji please lobby to screen share because I request you to lobby my screen share please in sharing just for now not just check it out yeah yeah I'm able to share now please my difficulty is I hear it with the mobile because the audibility is much better so and then the mobile and a zoom meeting there's some difference of the timing no problem yeah no problem I hope my screen is absolutely visible to everybody now yes yes this is a small introduction of mine and my contact details also because many of times after seminar people ask me how to contact you so I've given it there oh okay my office put it there I was in Singapore representing India in one of the conference whereby on IBC I delivered a lecture on under that particular sheet they have enclosed there hidden treasure yeah okay my my my objective of this particular webinar is to enlighten my audience that how we can get benefit under voluntary liquidation and what is the hidden through which we treasure which we can extract and then get benefit out of that if we go to voluntary liquidation if we plan it this way whereby we let's take it with an example instead of going exactly with the sections for example you purchase the company in a company you purchase a particular property it happens it's a normal business practice especially the big houses that they buy property in one company and they do operations another company and the company in which operation is going on they do give that property on rent there just presume a situation that you purchase the property which has increased its price many for maybe 20 30 years ago you purchased it at a cost of 1 crore rupees and now it is costing you 30 40 crore rupees if you sell that property and put that money in the company in that case you know section 45 section 47 of the income tax act you have to pay the capital gain tax but voluntary liquidation provides you an opportunity whereby you can transfer this property to the shareholders without paying any taxes naturally there they have to pay the taxes when they will sell the property you know because the reason for that is that under section 46 one of the income tax act if any property is transferred to the shareholders at the time of liquidation then it is not taxable if you remember we have a section 56 subsection 2 subsection 10 in the income tax act which clearly says that the all transaction should be at the market rate this particular section overwrite that particular section in simple terms if you have a property company and you want that it is becoming a you want to transfer it to the owners of the shareholders voluntary liquidation can provide you a route whereby you're not supposed to pay any taxes this is one treasure second treasure is but you can you know otherwise also you can return capital by paying dividend tax only for excess transfer as per section the 194 j that is at the rate of 10% only it is not 105 it is a 10% only some topographic learn what I mean to say is that that for example say you have a capital of 1 crore rupees and there are 10 crore rupees of reserve and surpluses you have to deduct against that 10 crore rupees TDS of 10% only that will come out to be 1 crore rupees which will be taxable in your individual terms also on that basis you can return 11 crore rupees to shareholders yes another privilege has been given is that earlier this winding up reasons were gone by company sector 56 section 560 earlier than company sector 2013 now it has been transferred to the NCLT or brought under insolvency and bankruptcy code IBBI who is governing IBC looked deep into it and realized that obtaining NOC which is a procedural part of voluntary liquidation is something difficult they issued a circular which is applicable and binding on the incomplex authorities also because of the overriding IBC prison you are not going to get any NOC from the tax incomplex you know what happened that I remember that in my days of practice when company that 1956 was applicable for 2013 section 560 was there whereby we you know if we come across that whereby we want to get rid of a particular company what we used to do that only one on the one side we have a capital on the another side we have a profit and loss in debit and match it no liability no asset and then we put up an application before the ROC and the company was being struck off but this prison substantially changed when 2013 came out to be there and particularly under that pressure at such type of strike off was impossible and the only way out now with us is voluntary liquidation. Timeline is only 90 days IBC has prescribed timeline for in case of voluntary liquidation 90 days and there is a timeline of 180 days also but if we plan our phase we can end up our voluntary liquidation within 90 days that you know at present I'm telling you only broader hidden traces in voluntary liquidation later I tell you when we should come to the procedural part that how we can use this timeline. Yes as I told you voluntary winding up cases under section under earlier disease of 195 what taking 20 years 30 years 10 years because you people know better than me that honorable I quotes are very busy and if there is any answer they have a very lengthy procedure of selling it out there and then transfer into the proceeds and all this is one of my friends was doing this particular case and he told me that when he was selling it was some with a big national level drug company who are having stores all over India and all of a sudden they thought of going for a voluntary liquidation under oldism 195 56 at that time you know just got doubt that that stock may not be sold at particular you know at market price by the liquidator he said that honorable judge started supervising each sale of the stock in each city and that consumed a lot of years in reliquishing the whole stock. Yes R is a vibrant and modern economy if we have a right to form the company which our ministry claimed that within three days you can form a company or practically you can also form a company within week 10 days if we if we are a vibrant vibrant company if we are now tech savvy are the ministry of corporate phase is working tech savvy all forms are being filed online everything there why don't we have a right to exit also and that right to exit so fast why not in USA you and other definitive content you have a very very you know the fast right to exit also that situation is now has come to the India also through IVC under voluntarily liquidation in fact right to exit I've just shared with you that I found a very interesting news as far as right to exist is that in the UK the second largest city is Brimcombe in Brimcombe that municipality has gone for the insolvency I don't know the details but I was really shocked and surprised to see that how advanced those economies are there and that even municipalities or some government authorities can also go for liquidation in nutshell their liquidation laws provide that they have to maintain only minimum services nothing more than that will come to them like no luxury nothing like that with their reason of their liquidation was that they hold it some sport seminar or something like that which has eaten up their all their sources and money yeah this this voluntary liquidation is mandatory if it is brought in the article our session a memorandum of our session what happened is that you know practically I tell you how it has been provided for example in Delhi it happened that when in Delhi when metro construction was going on three or four big companies formed a jv and that jv that was the form of a private independent company whereby they put it in the article that the movement this metro work will be over this company will be dissolved or this company will be liquidated so if that situation is there you have to go for mandatory winding up and the only situation is now voluntary winding up yeah this is I already shared that other benefit is that you can save administrative costs on maintaining a company yes my eight point is that you know even you even as an advocate or as a charter to control or as an insolvestate professional you want to you want to learn that how that we can go for the voluntary liquidation the reasons are very very simple you'll be shocked to hear that for whole voluntary winding up under IBC 2016 there is only one section which deals with it that is section 59 and there is a one set of regulation which have around 41 regulations if you read and study that particular section in fact because I have included there that particular session there in that you can easily be able to impress any of your client to go for the voluntary liquidation but even in theory also serve a section of 59 or the the regulations and yes you did the practice of insolvency and we came across some very interesting cases also if you know there is some sort of liability which has not crystallized for example you're going for a liquidation and there are certain tax appeases are pending maybe income tax or the GST that can't act as a hurdle for you to close the company if any of the stakeholders that take the responsibility of paying them the courts are allowing you this voluntary liquidation another part the best part which I see I saw in these voluntary liquidation in fact in my IBC practice that that you are the owner of the company till companies under IBC as far as payment and fees and other things concerned you are not supposed to ask to your client you can take it as you want because bank account of the particular series operated by you again I demand to the court sorry I demand to the authorities that you know many times I've seen that our webinars also message this is to the government also that if we if you're as you are providing us right to decision maybe GST obtaining pan obtaining tan or forming a company all this thing at a very fast pace please you know expedite the right to exit also okay now let's go for you know I've already told you that why we should go for liquidation voluntary liquidation what are the benefits we have for it I've already earmarked points as as far as my with my experience only keep whereby we have planned for our clients of this sort of voluntary liquidation now let's move to what you know how we can go for the voluntarily liquidation I think by this time your dismissal conception will be over because still when we talk in our fraternity we are not much aware of this sort of practice of the you know doing the liquidation on IBC and something like that they still feel that you know company to a checker view you have to go Mahabharat to checker view that you can't get out of it meaning there that you want to invest the capital in the company it is next impossible to withdraw it this is not a checker view you can get out of it and how can you get out of it I will tell you in the coming slides that I have already talked to you that you know what people when they feel that they don't get an idea that they want to get out of it so the one that is a capital invested in their associate companies where they divert it in other places but most diversion scope are a mystery of corporate phase the company's head you have to strictly comply with the section 179, 185, 186 and similar more sections for example that other sector 185 you can't you know divert funds are more than 60% of your capital and reserves that section is put on you you can't give money to the directors or their associate companies you know a lot of things are there then they go for planning which in fact is not a planning but misplanning if you get the eye of the auditor or ministry after your filing no law gives you an official return back your capital or throw voluntary liquidation okay but you know before we move further let me explain you very very briefly what were the earlier you know these were not applicable until unless some pending cases are going on very briefly I tell you earlier persons you know the companies that go as you people are aware that companies are gone by companies at 1956 so when 1956 was prevailing at that time similar reasons about section 5560 was there which we call strike up reasons you know as you people be remembering or I tell you that in case of strike up you have to compulsorily create losses equivalent to your capital but that was compulsory creation there was no way of returning back the capital this planning was possible only for small companies for big companies it was never possible no law gives you an official return back your capital okay as far as companies at 2013 is concerned which is applicable at present now it deals with chapter 18 section 248 to 52 which deals with removal of the names of the companies from the register of companies chapter 20 part 1 section 272 303 deals with the terminal bind fundica chapter 20 part 2 section 304 to 303 deals with the voluntary binding okay now according to chapter 18 it is parallel to section 560 earlier which was their strike off but only big difference is that in this case now ROC has also a power whereby if you're not doing business for the two years whereby if you are not you know you are not filing your have not filed your annual term then they you know stuck of the name from the company from the register mca himself stuck of the name from the company from the register if you remember three four years ago our honorable prime minister both is he very proliferately is told told to the parliament that how many so many companies go strike off Korea or Joe you know you know Joe a shadow anti-operation so that was under these reasons chapter 18 the ministry of corporate affairs stuck of the companies or it's got some sort of a new son he would get your directors they were going to be disabled so if I remember Quotek Mindra was one of the very non-personality at that time when he's one of the small company got stuck up because of these reasons and he was he become ineligible to be a director in all his listed companies or something like that but when he filed application showing his this you know showing his this the thing there terminal granted him a release yes the presence of voluntarily winding up under chapter 20 have been removed from the companies of 2013 and now gone by the insolvency and bankruptcy court 2016 now what I mean to say is that yes but before that I tell you that in part one terminal winding up tribunal has also a right to wind up but that situation is particularly used very very very rarely you know what that situation is somebody is doing illegal business somebody some enemy has created a company for example if you remember that during last approximately six or seven months ago there was a very big hue and cry that some Chinese companies are doing illegal business in India or they have you know diverted lot of funds from India to China in that case tribunal can wind up those companies they have the power under chapter 20 part 1 to do all this no no I have given you the basic background now already 23 minutes have passed now let's move to our core topic of voluntarily winding up how we can go for it what are the procedures and other things there but this time if you have any question you can ask me related to my topic or I can move forward okay I move forward since there is no question now you'll be surprised that why this prison from company sector has been removed to from the ministry of corporate affairs to IBC reason for that is two one is that you know with the passage of time ministry realized that the liquidator which is being reported under companies that perhaps their their propositional market their lies that they're they're paying a lot with the company jobi his assets or whatever they were they were doing a personal level gain or otherwise they were doing a sale as a result of credibility of those leakers your liquidators downed a lot and ministry of corporate thought of you know removing the giving removing that power with them to the insolvency profession because insolvency professions are better placed they are controlled by the IBA also agency also and they have a different type of class and that is why go and thought of removing these winding up reason voluntarily winding up reasons from this companies that to IBC and it is akin to also because under IBC companies not able to get dissolved then it has it goes under section thirty three compulsory to the liquidation in that case also in that you know the liquidation or this voluntarily winding up the liquid voluntary liquidation or compulsory liquidation are also very much correlated and in fact a lot of reasons of voluntary liquidation is akin to normal liquidation also okay I've given you consume your twenty twenty five minutes now you'll be interesting to know that what do it has any market factor not these reasons are theoretical only that latest statuses which I've got that will really make you to feel happy that people and business community are using quite extensively these reasons at the end of June twenty three two thousand thirteen once one thousand six seven cases have been filed I just tell you that are so far out of them seventeen has been withdrawn out of the total final reports have been submitted in the case of double one zero four cases and 486 cases are going out I just tell you that our IBCs started only in 2006 hardly seven days seven years are passed and this much is the other data that because of these reasons capital of eleven thousand seven hundred seventy five has been yet again withdrawn for this thing assets of the value of twelve thousand zero eighty six has been you know used for this thing and this is all sacrificial data which can help you to understand that after IBC 2016 these pieces are being used very extensively this data is 23 not 13 as I told you earlier there is only one section which deals with the voluntary regression that section is 59 mercy of corporate phase wide notification dated 30th of March of 2017 you know made applicable this particular section but it includes in one of their subsection the section 59 it is then told it has been written that section 35 to 53 of chapter 3 and section 68 to 77 E of chapter 7 shall also be applicable on these voluntary liquidation meaning thereby that substantively we need to study section 59 but to effectively implement that section 30 59 we need to understand basic reasons of section 35 to 53 also which is part of the chapter 3 but section 60 and 277 simply consists of penalty reasons which is applicable to all insolvency cases and we need to understand voluntary equation process also which was noted right immediately by the IBBI after one day as of 31st March 2023 and both these pieces are made applicable from 1st April 2017 it has 1 to 41 regulations I have reproduced whole section 59 in my slides I just I'm just slowly and steadily from my animation reading each and every section but I have summarized it also later on the vital reason of this particular section but I made this section 59 as part of my presentation only with intention because this is a single section and need to be understood very very diligently I'm quickly passing through without reading it because corrects and summary of this section I have summarized in my feature one slide yes no no let's understand you know corrects of the section 59 section 59 through its subsection provides that what are the preconditions for going for voluntary liquidation by this time you must have understood it is applicable only to the corporate person which includes LLP also but excludes financial service failure under central government uses power under section 227 meaning thereby that if any of the companies say for example a company which is going by RBI or with a company which is going by by insurance authority IRDA if there is some special those types of companies they can't go for the voluntary liquidation until for that for those companies to go into the voluntary liquidation the power has been given to the central government they have to you know specify that this company is going for liquidation which is with the permission and with the consent of the regulator concerned regulator only and popularly we have financial companies going by RBI meaning thereby that if any NBFC has to go it can't go it requires the approval of the RBI and they appoint administrator and there is not separately gone there under the overall umbrella of IBC now second precondition for voluntary liquidation is that that particular company has not committed default in section as default as you know default that company has not committed any default default has been defined under section 3 subtraction 12 of the IBC it means it means non-payment venue meaning thereby that there should not be any creditor in the company balance sheet or there should not be any creditor if there is any creditor then you can't go for the voluntary liquidation you require regulation firstly from the majority of directors majority of directors being more than 51% should agree for that the company has no debt as I told you or if there is any debt which comes out to be there which has not shown in the balance sheet or when you issued the public notice and then you come across for that particular debt then that company must be able to pay that debt that particular there is no it is not defined it is a defraud spelling mistake committed by my office I should change it later on that tension of voluntary liquidation is not too defraud you have to make it you know the directors have to make a declaration of solvency within four weeks of passing of the members resolution members edition has to be a specialization meaning thereby that two-third of the members should consent for this thing yeah but it can be an ordinary if it is prescribed under article of association memorandum session that only happening of this particular event or after a particular period this company will be liquidated if it is a status as the you know I let you know that it is possible as I earlier written that there should not be any debt but if any debt comes out to be there even then you go for a voluntary liquidation subject to consent by the two-third creditors date is very important because from the date under section 59 subsection 5 all subsequent proceedings to start so the voluntary liquidation to date that time is when members resolution pass and if there is any creditors then it has to be proved by the creditors otherwise this date won't be relevant you have to go for declaration of solvency a declaration from majority of the directors of the company verified by an affidavit stating that they have made they have made a full inquiry into the phase of the company and they have formed an opinion that either the company has no debt or that it will be able to pay its debt and full from the proceeds of the asset to the to be sold in the voluntary liquidation and the company is not being liquidated to defraud any person's direct or indirect taxes like service and gsts size custom or something like that until unless we make an arrangement of payment of expected taxes against that thing there so that defraud is not allowed in this case members approval a specialization of the members of the companies in the general money to work that company to be liquidated voluntarily and a pointing and insolvency professional to act as a recruiter must be passed within four weeks of the declaration of solvency nothing to explain characters approval if the company owes any debt debt to any person characters representing two third of the value of the debt of the company shall approve the resolution pass for voluntary liquidation within seven days of such a resolution yes here what we learned from our experience that I'm including in my slide as a special event basically if you feel that you have any creditors or you have any crystallized characters you pay to them before going for the voluntary liquidation we always try to plan our fears in such a way that fear by we pay to the character so that there is no character and that you know the if you if you don't have any characters that process will really help you in going for the voluntary liquidation quite easily quite easily another condition is that the above distance should be company with the altitude financial statement and the court of the business operation of the company for the previous two years or for the period since its cooperation whichever is later a report of the relation of the assets of the company if any prepared by the existing value if you have any assets you need to prepare a report for that and here again with our experience we have learned that ultimately liquidation has to sell these assets it's better that the company's life you sell all the assets until unless you want to process those assets directly to the ship holder for example if you have a car if you have any debtor recover the money from him if you have any stock instead of liquidating selling all the same make a balance sheet whereby you have capital and bank balance only try to make it in that case everything goes very easy another important purchase that the company can notify the ROC and the IBBA about the relation past to liquidate the company within seven days of such a resolution or the subsequent approval by the characters as the case may be as per section 59 subsection 4 yeah no no no the here one very big catch is there until unless you inform to the IBBA or ROC that about you're going for the voluntary liquidation process there after that I okay I tell you the process for that doing this because we faced a very big hurdle while intimating this thing practically what what at present situation is that MCS delegated all work to IBBA and change the master data is done at the base of the IBBA only and typically requires stringent follow up with the IBBA meaning there by that you need to file papers theoretically with ROC option IBBA also in IBBA it has only one branch all over India that is in Delhi we were lucky enough near one in the key branch you need to open a bank account you are not able to open a bank account you are not able to proceed for anything further because if you sell something and you want to put the money after start of the liquid voluntary liquidate you have to put money only in that account where as the company in liquidation is written you can't put that money in your normal account and be mentally prepared that it takes approximately earlier when we informed with ROC ROC changes the master data say within a week 10 days but not because of the involvement of the IBBA this process takes approximately one month practically in change of the master data with the wording in liquidation valuation the valuation you need to done and the best part here is that the responsibility of doing valuation is with that director which is quite different under other IBC reasons whereas the valuation responsibility was with the liquidator or with the RP as I told you we generally try to sell all the assets beforehand so that we don't find any you know we don't need to require valuation and have at the mercy of the liquidator to distribute the proceeds to sell from the assets as received from the public announcement public announcement is a you know something very big interesting because only through the liquidation make a public announcement within five working days office appointment to submit clearance within 30 days it must be published in one English daily and where this is a disappear where in the registered office of the corporate person is associated it must also be posted in the website of the corporate person if having it must be sent to the IBBA via email at this particular desk for posting it on board's website because this is the public announcement which is very important why it is so important because this is the only thing which opens up a gateway for public to know that company is going for the voluntary liquidation and if in the accounts anything hanky maky has been done they should come forward i have prepared this yeah these points that what public announcement should contain these are the normal things i just shared with you one of the format of our public announcement which we made earlier yeah this is the format of the public announcement which we did i think six months ago this is only for your reference you need to uh put advertisement in the newspaper also we have shown you the cutting of the newspaper also one in hindi and english because r was a deli and deli based company and we put it in the business standard yeah this is there this is nothing new it's something quite normal i come back to my screen again now uh important the public announcement i can share it to you with one of the case law which i extracted from the ibb i ibb i got the order number so ibb i so and so dated solar charge those are bees by dc of ibb against prasad taran jaggi he made public it didn't make public announcement within three days but he made public announcement after 18 months ibb imposed the penalty of one lakh rupees on the liquor rotor for delay in the public announcement the the purpose of telling you this case is that how important what big importance has been given for the public announcement by the mca yes another practical aspect is to opening a bank account where it should be taken written that companies under liquor fields and like that opening a bank account is an is a hurricane star it is not easy that banks are opening uh uh the liquidation account very easily we face a lot of difficulties while opening a bank account but with why i'm telling you this thing that with our experience you can open your bank from now within two or three days how you can open that particular bank account within two or three days which with us took more than one and a half month uh reason for that is that i just tell you and if you go for any voluntary liquidation opening up account go for it you know every bank has its own uh set of guidelines some people for example our existing court was in the uh hdfc they were saying that until unless uh roc changes the record we won't open your bank account we are falling out with the ibb and they were taking their own time in change of the master data and hence they did not open but on the other hand somebody referred us that you go to the kotak mindana bank and yes bank they with the kind of resolutions of members of vision vectors that's richer and with the kycs of uh the other person which i think i have yeah with these documents which are easily available setting for that kind of incorporation m y a y ban of all directors this uh in complex profile screenshots why i'm sharing you all this thing is there that you keep record of all the things in case of your any of the cases you just simply click all these documents beforehand and go to the yes bank and or kotak mindana bank they will open up your account easily these are the documents are easily available but if you try to open a bank account with the public sector bank or a gfc at least i face a lot of difficulty in opening that particular account it's a subjective matter but in our fraternity everybody says that they face a lot of difficulty in opening a bank account okay another is claims uh you'll ask me if you're listening to me very carefully that when when i said that there should not be any crater then how uh claims should come out to be there there may not be any characters but in case of public announcement people may come out with some sort of claims claims what is a claim let's let's understand legally what is a claim claim means a right to payment whether or not such right is reduced to judgment fixed distributed undisputed legal equitable secured or unscured a right to remedy for deach of content under any law for the timing in force if such peace gives rise to right to payment whether or not such right is reduced to judgment fixed distributed undisputed legal equitable secured or unscured that is all so this claim uh basically came here that uh uh uh company come to the uh this thing that i'll let you know yeah you know that these are all things which uh in the process of voluntary liquidation you need to understand why you know it is so important that there are only two sections which deals with this voluntary winding up one is section 176 it deals with not only with the voluntary winding up it deals with all the discontinued business i just you know share the whole section with you it is very important it is second for example if you know uh let's understand there's a substitution for with an example that say that some court case was going on and you'd see the favorable judgment in that case favorable judgment comes to be there and company is under voluntary winding up it has been dissolved in that case if money comes out to be there to some of the share load of directors as mentioned in the order then that particular person will be you know accountable for that particular money he has to pay tax against that money which is of the company for that particular purpose this is subsection 176 subsection 4 says another important section is section 178 meaning within 30 days concerned assessing officer the assessing officer share after making such inquiries or calling for such information as may be dean fit notified to the liquidator within three months from the data of which he sees notice of the appointment of the liquidator the amount which independence and assessing officer would be suffocated to provide for any text meaning thereby that uh uh you know the the high within three months uh uh uh uh secondly subsection three uh uh uh without the uh concerned of principal chief commissioner or chief commissioner. If he does an asset sale and he has a liability that is either in the portal or through the AO, in that case, he will be responsible for payment to the authorities, income to the authorities, to the amount of default along with interest. It will be personally liable to the government to pay the tax. If some of the company's dues are there and the company is liquidated, they can distribute the assets to the stakeholders. So, after doing this, section 176, 178, its compliance is very important. Properly. Meaning, if there is news of a tax, the liquidator must be cautious that the tax dues are paid before distribution of proceeds of the liquidation. Earlier, it was a reason that before dissolving the company, when you put the liquidation application, you were required to obtain NOC from the income tax office. And getting NOC from the income tax office was a critical task. You put an application there, they will see their portal, they will see their record and it takes months to give you NOC. And many a time on some small loans, they don't give you the NOC. For example, they will say, we don't have a record application available until we get it. The particular ward where it was recorded, do your record from there. And then we shall look into it. No computation has been done. But still, it appears to have been compromised. But maybe some other manual record is there. And until and unless you leave with a concerned ward and this thing, you don't get NOC from them. In every hearing before NCLT, they will say that, we are taking the record, they are doing it, they are doing it. And since this was the prison in the taxation act, the judges didn't allow you to get the liquidation until you got NOC. Seeing all these difficulties, you know, you represented this into the IBBI. And IBBI came out with a circular number, so and so, whereby they said that in case of voluntary liquidation, I'm not talking about other liquidation, then normal liquidation, you still need to have this thing. But in case of voluntary liquidation, you're not required to update any NOC. This is the IBBI circular, 15 November 2018 circular, which I'm sharing with you, which says that you don't need to, under section, so and so, and so, you don't need to have NOC from the Incompress Department. You need to file some procedural reports with the IBBI also. These reports, this is preliminary report. Pre-registered report has to be filed with a liquidator, whereby given the details of assets, liability, and all annual status reports, if your liquidation proceed, you know, persists, goes beyond a year, then you are supposed to file your annual status reports also. Stakeholders being shareholders, you need to file their consultative report also. You have to file final report in form H, which is a summary of whole liquidation process with the IBBI also. Petition format, okay, you know, I thought of sharing petition format with you also, so that you can have a guest of what actually, how many pages it need to have. It's a very lengthy petition. 165 pages are included therein. You are supposed to file all the form H, G and L at two, all minutes of the meeting. You need to file all bank account statement, the seat and payment account, auditory accounts, new due certificate from income test. Now it is not applicable. Preliminary report and everything, whatever you have submitted to the IBBI or ROC, all this you need to file with the, in the final petition for liquidation of the company. The purpose of showing you petition format was that, you can also understand how lengthy and, you know, big petition it is there. Yeah, these are what I told earlier, that what are the form prescription, voluntary liquidation process. These are there. These are the particular forms prescribed therein, which you need to file before. In case of public account form number A, if anybody has to file a proof of claim by OC, it is a form number B, by financial card is a C, by work manual it is D, by ER of work manual and it is E, by other stakeholders, which is generally the shareholders, it is form F. Our office has prepared a flow chart, so that in summary, you can understand how much time it takes in, you know, doing this voluntary liquidation and let me have a glass of water first, please. Yes, please. As I told earlier, board of directors to obtain declaration of solvency, pass specialization within four weeks of obtaining declaration of solvency. No, T, T being that this is the time, the day you pass the resolution, your 90 days period or 180 days period will start from therein and during that particular period, what you have to do, if there are any creditors, within seven days you have to get it approved, you have to make public announcement within five days, intimate to the IBBI within seven days, notice to ROC and IBBI with reference to declaration of solvency, special regulation approval by creditors, it has to be with ROC seven days and IBBI within 14 days, any submission of claims by stakeholders, stakeholders go from the start of this thing, their approval of this, passing of specialization by the members, within 30 days they have to find the claim, they are given 14 days more time to modify or withdraw the claim, if any, within 46 days of the start of the liquidation process, you have to submit the preliminary report, the liquidator has to verify within another 14 days all these claims, your whole process will take 60 days, in between seven days, intimate to the claim, then he has to finally prepare a list of stakeholders within 45 days or 75 days, 45 days in case of liquidation without creditors, 75 days if it is with creditors, creditors have set up a particular claim, sorry, the liquidator has set up a claim, which he did not like, so he can file an appeal against it to the national company, liquidator is duty-bound to distribute within 30 days of realization, deposit unclaimed amount in corporate voluntary liquidation account before filing a distribution application, what is this voluntary liquidation account, I'll let you know, submission of final report to ROC, IBBI and duty category 30, in case of members voluntary within 90 days, in case of creditors wanting up within 270 days, it's not 180 days, it's 270 days, completion of all voluntary liquidation process within 90 days or 270 days. Now, there is a question that can we extend this period of 90 days or 270 days, or how we can extend, as far as extension of 90 days or 270 days are concerned, we don't need to regard the provision of NCRT, which is generally a process in the case of other insolvency cases, even in the normal liquidation cases also, here you can take the approval for extension only from the stakeholders. This is what I've written because when I'm speaking to you, you may miss something, these are the steps which I have written to you, solvency meaning thereby that in the first step for board should approve and voluntary liquidation and must declare that the company's solvent and the voluntary liquidation is not done for default of the any company. This is what I've told you earlier, you need to submit auditory principle statement, valuation of the assets as applicable as I told you. Earlier told you also that to reduce timeline and to reduce the process of this thing, you can sell all the assets. Yeah, before making a payment, you have to deduct with the holding text to this. For example, if you are making payment to share order, let's take an example that the capital of the company is 1 crore rupees and you're making payment to them of 10 crore rupees. The case 9 crore rupees, you have to deduct the tax at the rate of 10% under section 194 I and rebit to them only 9 lakh 10,000. Sorry, 9 crore, 9 crore 10 lakh only. The moment NCLT passes this order, your whole liquidation process ends. Yeah, point number three, pursuant to this application by the liquidator, the NCLT shall pass an order for dissolution and the entity shall stand dissolved from the data of NCLT's order. A clear copy of this order needs to be forward with the ROC within 14 days of the passing of the order. Now, let me tell you the, I've now prepared some slides on the role of the duty getting authority and what difficulties we face and what are the important landmark judgments in this case. The first is the role of the NCLT. NCLT is competent to determine that a corporate data person is dissolved after due liquidation and distribution of access. The NCLT comes into picture only at the final stage of the liquidation after application for dissolution of the corporate data is made by the liquidator after distribution of the liquidation proceeds of the asset of the corporate data by following the procedure stipulated in the board. In the voluntary liquidation, there is a very good thing. You have given all the assets in it, you have processed it all, then you have to go to NCLT. Otherwise, what happens is that under all the IBC proceeding, you need to go to the moment you put an application. For example, in IBC, you file section 7, file section 9, file section 10. You need to go to the, what you call to the NCLT immediately on filing of the application. Nothing like that is there. Here you have to go when you have completed all the process and only for the dissolution, you have to file to the NCLT. Okay, yes, yes. You know, the NCLT, the principal bench, to evaluate your application, they have given a checklist to all the insolvency professionals which I think can be made applicable to, since it is a principal bench having overriding power, having supervising power for all the NCLT benches also, you can prepare this checklist with you and that will definitely help you in completion of your dissolution process and your list. I'm just sharing you that particular checklist. Just hold on. I'm just extracting that particular list. Yes. My screen is, I understand is for the visible. Section-wise, which I have sent, for example, they look into deeply into it that whether you have complied these particular subsections or not, for example, section 59, subsection 3, subsection A, they look into it whether you have complied and when you have complied it, in its reference, the already petition filed, you simply have to give a reference. Auditory, you don't file a special edition file, and the proof of public announcement and a list of stakeholders claim this is a checklist given by the principal bench, which you can need or to check these points. So this is all you need to put it before the principal bench and maybe with the other banks also, which can really help you expediting all the process and this can also give you the guideline also, at the time of this thing, at the time of filing your dissolution application with the NCRT. I'm turning back to my PowerPoint presentation. Yes, you need to maintain as per regulation some registers also for preservation of record. These are specified and I just tell you that instead of these registers you're not supposed to maintain any other record. The regulation 41, which prescribes records to be maintained by the liquidator and I tell you that this is the period for which these records need to be maintained. In electronic form these need to be maintained for a minimum period of eight years and in physical form these need to be maintained for a period of three years so that if any of the 30 ask you for any records, you'll be able to produce for them from the date of dissolution. Yeah, this is a briefly of what are the role of liquidator. These are the normal things which I have already spoken to you. Now, let me move to some important things because time is an hour and 15 minutes. Okay, one important process is there that let's understand this unkind proceeds of the liquidation with an example. Say for example that you have some NRI shareholder and you want to give them proceeds and you are not able to despite your best efforts, you are not able to get from them some details of some bank account, their bank account or you are not able to trace to them and you know it happens with big companies in that case you need to deposit these proceeds under section 15 and section 8. Firstly, you have to apply to the duty getting count to 30 for an hour to pay into the company liquidation account of the public account of India any unkind proceeds of liquidation or undistributed assets to any other balance table to the stakeholders in his hands on the date of dissolution. So IVBI have this particular account so they do maintain in it and do this thing again. Under no circumstances, liquidator can retain any money with them any liquidator who stays any money which should have been paid by him to the company's liquidation account under regulation shall pay interest on the amount retained at the rate of 12% per annum and also pay such penalty as maybe to slide by the board. So up to be left over since that you need to pay to the IVBI in a designated account and do it there. The person who later on comes across that he is the title for this money he can claim that money from that particular liquidation account or even if the title person doesn't take it for 15 years then it will be transferred to the central government. Despite I am telling you that the process is taking 90 days or something like that but particularly when we put an application with the NCRD they take a lot of time sometimes a year maybe a two year also but this delay on the part of NCRD is not only for voluntary liquidation it is for everybody. Another issue which comes out in the voluntary liquidation process is that although for income certificates come out to be there that you don't need to have NSE but if you want to take NSE from say from GST department if you want to take NSE from custom department or PF authorities and several similar type of regulators there is no formal prescribing there is nothing mentioned in their respective when you go for getting NSE from them it is a hurricane's task despite having nil amount payable to them. It need to be this is an issue in voluntary liquidation delay obtaining NSE opening bank account and you know another thing is that if you listen to you know diligently then there are conflicting reason one conflicting reason is that under section 178 section 2 assessing officer can ask the legal director to make arrangement for payment within three months but on the other hand this liquidation process says that it will end within 90 days how you know both their timeline are clashing and which will prevail or which will exceed in that case we have IBC which says in a particular section that if in case of conflict with income tax authorities or other specified authorities IBC will prevail meaning they are bad that if you file the dissolution application before 90 days before 90 days of the statutory period available with the assessing officer then it is not harmful under section 238 of the code which clearly says this thing and the section 178 section 6 of the income tax act also has granted some relief now I have already discussed in detail with you that how you can avoid tax under section 46 of section 1 OPCA bank account I have already shared with you that it is an legal status for liquidation account it is a subjective matter you can open it up later on also you know I have prepared two slides for questions and answers which we come across practically to understand the whole process of liquidation my first question is that sale of business versus sale of company if your company is a going person you want to sell it you can't sell it but you can sell it is a business there is a thin line of business between business and sale of a company for sale of company you have to voluntary liquidate in case of contingent assets contingent liabilities and un-crystallized liabilities you need to you can transfer it to the stakeholders whereby they can you know who should have been in title for those assets you can transfer to them signing of financial statements it creates a lot of problems who will sign liquidity will sign or debtor will sign as I have written there and liquidity is signed secondary can you point new directors during the liquidation process yes you can appoint another point is that shareholder is also required to submit their claims which earlier only creditors were supposed to submit there if liquidity finds fraud then make an application to suspend the whole process of liquidation to the NCLT outstanding creditors are prerequisite to decide debts to their satisfaction if there is any outstanding creditors and you want to go for the liquidation you want to file the dissolution application in that case with the satisfaction on that particular creditors you can discharge that debt and go for the dissolution application voluntary liquidation is spending on many litigation but you know come across a case of central inland water transport cooperation limited works with this is an old case with reference to voluntary liquidation where it was suspended because lot of cases are pending this in there concept of withdrawal versus suspension what is withdrawal? after filing your voluntarily liquidation application that you want to withdraw whether you can withdraw or not suspension mean that you find something wrong in the voluntary liquidation process that the applications filed initially in that case file an application with the NCLT and go for the suspension once the process started, the court is silent on withdrawal but courts have allowed withdrawal in the following cases yes I have noted down some case law which can help you that if you want to withdraw the liquidation process this is the Kari University limited versus official liquidator of Alabad High Court Anil Kumar Dhuma and others Icon Realtek in these cases you know on the basis of circumstances this was allowed VB Prahit versus Gajay Jamukeshwar and others it's an old case of Karnatka High Court whereby it was allowed withdrawal was allowed Kansal Hozli it was again allowed if some tax cases are pending in the appeal that you can dissolve the company subject to completion of all the formalities may this was allowed in the case of commission of income tax versus express new super limited by Supreme Court sorry in the case of Kansal Hozli NCLT Dilli allowed the dissolution despite pending of some income tax cases but in my opinion I come across contrary to this thing because Supreme Court has held in the case of commission of income tax versus express new super limited that if the company on the data passing of the order is not in existence no order can be passed meaning thereby that if the company is already which I have seen in my lot of merger and acquisition cases also whereby E and B companies merge into and C companies coming out to be there and before the merger order after the merger order if any order is passed this has been stuck down by the applicant authorities yeah we have what is application also there what does application mean that we can find any fraud therein that is also notified as I earlier told in my slide under section 43 covered under section 43 51 and any proceeds or any you know against what is transition has to be given to the shareholders and if any word as application is there then will NCLT allow you to go for this thing or not it's a subjective matter some benches are allowing some banks to say that until you conclude this particular thing you have to be at this thing this is all for one and a half our presentation by me I hope I have been able to make to understand my audience everything and now I have stopped my screen share and yes please yeah because if any questions are there if anything else you can ask me yeah this is by Swachh Chitrahan please indicate the normal time frame provided under the act for voluntary winding up yes sir in case of only members winding up it is 90 days under IBC and it is 270 days winding up this is as per the amended prison I think at present this is the time a strike of application to the ROC after some voluntary winding up process this I have already explained earlier also I will explain it again you cannot return your capital it wipes off but in the case of a voluntary winding up you can return your capital to stakeholders and in 1956 section 550 which dealt with strike of and present act that is so cumbersome that hardly any application is filed against that particular section the members strike of not only alternative left with us is that go for the voluntary liquidation since voluntary liquidation prison of section completed in 2013 has been deleted and has been transferred to the IBC we need to go for voluntary liquidation only I should go for voluntary liquidation versus strike of option yes I have given you the answer sorry do you want to I will read it from the chat box Vikasi if you permit me allow me that is the last question yes no sir one more question is are the timelines at all levels including penalty and odyssey invariably takes years together to see the final order for voluntary winding up even please I fully endorse views of the Subhadji that if the liquidator gets delayed even for a day then the IBBA starts putting its penalties so NCLT they are taking time generally they put a year and a half to pass the order of dissolution before that you have distributed all your assets sir which are the companies eligible to apply for voluntary winding up I had told you in detail and basically against who does not have any claim or default those companies can go for voluntary winding up thank you these are the all questions yes since we are tied up to make a request to you kindly inform the audience at which all further sessions we are taking upon in partnership citation I could not understand which sessions we are going to do jointly vikad ji you want to bind no problem with the prices we shall do take it since I am 26th one yes that I am telling you since myself is specializing only in solitude and bankruptcy so I will take any topic with you in 26th today our date next and next Saturday for that we have a topic what is its name Forex Inc why Forex Inc we have this topic since you you know far better than me your criminal procedures laws are changing last time when we had a session Amish Shah ji said whatever the English law criminal procedure codes we are bringing them into the new form if you look at these criminal procedures codes investigation of the code investigation of the police investigation all this is dependent on the forensic forensic means if the forensic expert says that he has done this crime seen the totality of the whole scene if you suppose some transaction fraud for example some money has been diverted from a company to individual or someone else if the forensic editor says that this fraud is diverted then the report will be a substantive base the court will give the order at the same time to control the forensic audits Institute of Charlotte in June I think around June the standards of the forensic audit have been made mandatory for the C.S. and the rest of the people to understand this the criminal procedure code will be made mandatory to understand this we will deliberate on this over view on the 26th time for that we have called the specialist that speaker will definitely deliberate on it thank you Mr. Manoj and friends now do stay connected with us I am just sharing the topic with you it's on the latest judgment of the Honourable Supreme Court that is succession rights of Hindu children from white or wardewal marriages by none other by SR Suryan Narayan Rao from Karnataka do stay connected with us tomorrow at 6 p.m thank you Namaskar we will jointly session and knowledge could be decimated in the right perspective and right manner today you have seen how they simplify things which was a complex process and they are doing voluntary distribution and they have done voluntary which is a very good topic I will speak with you I will also present this on my association thank you Saturday evening everybody get together to listen to me and to have a webinar thanks a lot thank you