It means a process in which life of the company is ended and all affairs of the company are wound up, its rights and liabilities are ascertained and claims of creditors are paid out of the assets of the company. A liquidator is appointed who takes over charge of the company, realize its assets, disposes of its debts and finally distribute any surplus to the shareholders in accordance with their shareholding. It also involves liquidation under Insolvency and Bankruptcy Code, 2016. There are two modes of winding up which are compulsory winding up or winding up by Tribunal and voluntary winding up.

For voluntary winding up the company needs to get approval of creditors owing atleast 2/3rdof the total debt and need to pass a special resolution to wind up the company. Such resolution is to be filed with the ROC in Form MGT-14 within 30 days of passing the same. Form GNL-2 is also required to be filed for appointment of liquidator. A petition for winding up shall be filed to the NCLT with the prescribed documents and fee. Company can be wound up compulsorily if it has acted against the sovereignty and integrity of India, it was formed for fraudulent or unlawful manner etc.