A Public Limited company is also known as the PLC and it is company which trades with the public. The minimum number of directors in a Public Limited Company is 3. A Public Limited company sometimes might be closed either voluntarily by the shareholders or by the judiciary compulsorily.
Reasons for Voluntary closing of Private Limited Company:
- Creditors’ Voluntary Liquidation – This is when the company is unable to pay the debts.
- Members’ Voluntary Liquidation – This is when there is no debt but the members want to close it
Reasons for Compulsory closing of Private Limited Company:
- The Company is unable to pay its debts.
- If the Company gets Tribunal orders as to be shut down.
- When the Company has not filed financial statements or annual return in the preceding five consecutive years.
- The Company has acted against the sovereignty and integrity of the state and India.
- If the company engages itself in any misconduct or honesty.
Procedure for Public Limited Company Closure
The dissolution of a Public Limited Company consists of three main stages:
- Dissolution Resolution:- For the dissolution of the companies, the shareholders must adopt the resolution. The companies should submit an application to the ROC along with the resolution of dissolution,
- Liquidation:- The dissolution resolution and submission of application is followed by liquidation, in a series a steps.
Deletion from Commercial Register:After all the formalities of the Public Related Company are done, the company management needs to submit a final application to the Register for the removal of the company from the Commercial Register. This can only be done after six months of entry of the dissolution.
- The liquidator submits the application of dissolution to the Registrar. The appointment of the liquidator should be a member of the management or a person who is appointed by the Judiciary.
- A notice regarding liquidation of Public Limited Company should be passed out, naming the creditors.
- Submission of annual report and opening balance sheet to the Registrar.
- If the assets of the public limited company being liquidated are not sufficient to satisfy all of the requirements of the creditors, the liquidators must file a bankruptcy petition.
- Preparation of final balance sheets of Public Limited Company and distribution of remaining assets according to the plan prepared by the liquidators is the final step of liquidation.