What is the difference between dissolving and liquidating a company


05-Sep-2017 16:46

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The dissolution process can be less expensive than other alternatives, particularly when litigation or disputes over claims is unlikely. Under Delaware law, once the dissolution commences the corporation is no longer permitted to operate as a normal business.

Instead, as the Delaware statute provides, the corporation continues only “gradually to settle and close their business, to dispose of and convey their property, to discharge their liabilities and to distribute to their stockholders any remaining assets, but not for the purpose of continuing the business for which the corporation was organized.” The corporation is allowed up to three years to complete the dissolution process; if more time is required, a request has to be made to the Delaware Court of Chancery (although a corporation in dissolution remains in existence, without having to go to the Chancery Court, to complete lawsuits that are pending when the three year period expires). To give you a sense of the process involved, below is a list of some of the main steps in a dissolution.

In the event of an Indian company registered under the Act becoming insolvent, it is winding up that is applicable.

These provisions apply equally to a listed company, a public limited company as well as a private limited company.

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In the next two sections, I will introduce you to these two variations and explain, briefly, how they apply to both individuals and companies.The laws of the state of incorporation govern the dissolution process, so it’s important to remember that the process described below will differ if the business is incorporated in another state.