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Closing Public Limited Company

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:

  1. 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,
  2. Liquidation:- The dissolution resolution and submission of application is followed by liquidation, in a series a steps.
    • 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.
  3. 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.