Winding Up and Dissolution Explained
Winding up is the process of bringing a company’s affairs to an end by liquidating assets, paying liabilities, and distributing surplus. Dissolution is the legal process that terminates the company’s existence.
Procedures and Responsibilities
During winding up, the company still exists and can be sued. The key difference is that after dissolution, the company ceases to exist and its officers have no more duties. However, during winding up, directors still have duties towards creditors and shareholders.
Winding up can occur in two different ways:
- Voluntary winding up: Triggered by shareholders.
- Compulsory winding up: Initiated by creditors, the Registrar or the company.
Conclusion
In conclusion, winding up and dissolution both serve to close a company’s affairs, with specific differences in legal status and obligations. Winding up involves settling affairs, whereas dissolution legally closes the company.