A company without debts or default meets the directors' declaration requirements and elects voluntary liquidation under Section 59 of the Insolvency and Bankruptcy Code. Its articles contain no…
Question and options
A company without debts or default meets the directors' declaration requirements and elects voluntary liquidation under Section 59 of the Insolvency and Bankruptcy Code. Its articles contain no event-based dissolution provision. When is the liquidation deemed to commence?
On the date its members pass the required special resolution
On the date the directors sign the solvency declaration
On the date the liquidator makes a public announcement
On the date the Tribunal later orders dissolution
Answer and explanation
Section 59(5) of the Insolvency and Bankruptcy Code, 2016 deems voluntary liquidation to commence on the date the resolution under section 59(3)(c) is passed, subject to creditor approval where the company has debts. The solvency declaration comes earlier, and dissolution by the Adjudicating Authority comes at the end of the process.
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