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There are two primary paths to consider based on your circumstances: either closing your business or selling it.
This process, also known as winding up, entails a formal legal procedure. In India, there are two main methods to close a business:
This option is chosen when you decide to cease operations due to factors such as lack of profitability. Here's a breakdown of the process:
Obtain approval from shareholders by passing a resolution by the board of directors.
Appoint a liquidator responsible for managing the company's assets and liabilities.
Settle any outstanding debts with creditors, employees, and governmental entities.
File the requisite paperwork with the Registrar of Companies (ROC).
This is a quicker option suitable for companies that have been inactive for some time or have not fulfilled tax return obligations. The ROC will issue a notice and provide an opportunity for objections before deregistering the company.
If your business is still operational and holds value, selling it could be an option. Below are the general steps involved:
Engage a professional to assess the fair market value of your business accurately.
Utilize business brokers or online platforms to connect with potential purchasers.
Prospective buyers will scrutinize your business's financial records and operations.
Reach mutually agreeable terms with the buyer regarding price and finalize the sale with legal assistance.
Consulting with a Chartered Accountant and a lawyer specializing in company closure or sales is advisable. They can ensure compliance with all legal obligations and facilitate a smooth process.
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