| S. Krishnamoorthy - Member Since: Oct 2008 Subject - Closure of a private Company and Declaration of dividend I seek guidance and advice on the following. 1. A private limited company has ceased to function as the contracts for providing service have expired/terminated by the service receivers. 2. It worked for the first 3 months of the financial year with a small margin of profit. 3. As the Directors are not interested to continue the business, they feel that the company be closed and the balance of amount in bank be distributed as dividend. 4. What action should be taken to close the company vis-a-vis ROC? 5. How to declare dividend out of the balance amount in the bank? 6. Will the provisions of Companies (Transfer of profits to Reserves) Rules, 1975 apply to this company? I shall be grateful for guidance from experts. Regards S. Krishnamoorthy pca Full Member - Member Since: Oct 2008 Subject - Re: Closure of a private Company and Declaration of dividend It is easy to form a company, but it is very difficult to wind up a company. Various modes of winding up have been provided. However it is advisable to get approval of High Court for the same to avoid any problem in future. Official Liquidator will have to be appointed for winding up. You may engage a practising company secretary or advocate for this purpose. Dividend can be declared only out of profits. Entire bank balance cannot be declared as dividend. Consultant will guide you on this during winding up process. Thanks
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