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CS Professional · Insolvency and Bankruptcy - Law and Practice · Voluntary Liquidation of Companies

Sunrise Textiles Pvt Ltd, a company with no default to any creditor, wishes to start voluntary liquidation. Its directors have met and agreed on the plan. Under Section 59 IBC, which declaration must accompany the proposal?

A declaration from a majority of the directors, verified by an affidavit, must accompany the proposal. It states that they have fully inquired into the company's affairs, that it can pay its debts in full, and that liquidation is not meant to defraud anyone.

  1. AA declaration by majority of the directors, verified by an affidavit, that they have inquired into the company's affairs and that it is not being liquidated to defraud any personCorrect
  2. BA declaration by all the shareholders, verified by an affidavit, that the company has no debt
  3. CA declaration by the statutory auditor that the company has made no default in the past five years
  4. DA declaration by the Registrar of Companies that no inquiry is pending against the company

Explanation

Section 59(3)(a) requires a declaration from a majority of the directors, verified by an affidavit. It must state that they have made a full inquiry into the company's affairs and formed the opinion that it has no debt or can pay its debts in full from asset proceeds, and that the company is not being liquidated to defraud any person. Shareholder, auditor or ROC declarations are not the prescribed requirement.

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