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Winding up of a banking company - Coggle Diagram
Winding up of a banking company
Definition - Winding Up is the process of closing down a banking company. It involves a systematic approach to liquidate assets, settle liabilities, and distribute any remaining funds to shareholders.
Types of winding up- There are two types of winding up. These are as follows:-
1) Voluntary Winding up
2) Compulsory Winding up
Voluntary Winding Up: Initiated by the company itself, often due to financial difficulties or a decision to cease operations.
Compulsory Winding Up: Ordered by a court, usually due to insolvency or failure to comply with legal requirements.
Liquidation
Asset Realization: Selling off the company's assets to generate cash.
Liability Settlement: Paying off creditors and other liabilities.
Distribution: Distributing any remaining funds to shareholders.
Closure
Final Accounts: Preparing and submitting final accounts to regulatory authorities.
Strike-Off: The company's name is removed from the official register.
Key players
Liquidator: Appointed to oversee the winding-up process and ensure assets are realized and liabilities are settled fairly.
Creditors: Individuals or entities owed money by the company.
Shareholders: Owners of the company's shares.
Regulatory Authorities: Government agencies responsible for overseeing the banking industry.
Legal Framework
Companies Act: The primary legislation governing the winding up of companies in India.
Banking Regulation Act: Specific provisions related to the winding up of banking companies.