Company winding up and Director loan issues

Hey! Let’s break down your queries about winding up the private limited company and dealing with director loans:

1) Process for winding up the company

Since it's a private limited company with paid-up capital of ₹10L, here are the common winding-up routes:

• Voluntary winding up by members (most suitable for solvent companies)

  • Company passes a special resolution to wind up.

  • Appointment of a liquidator to settle liabilities and distribute assets.

  • Filing of necessary documents with MCA (e.g., Form STK-2, etc.).

• Compulsory winding up by tribunal (if company is insolvent and unable to pay debts)

  • Creditors can file a petition to NCLT.

  • NCLT appoints a liquidator.

• Since your company has poor sales and inability to repay director loan, insolvency could be considered.

2) Is filing DPT-3 necessary for director loans during winding up?

• DPT-3 is required to be filed for deposits accepted by company (including certain loans from directors).

• However, if the loan is not considered a deposit (e.g., proper board resolution, loan agreement, and terms), DPT-3 may not be required.

• Since the company is winding up, the last DPT-3 should ideally be filed for FY 22-23 if loan was taken then.

• You cannot ignore DPT-3 filings outright, as non-compliance attracts penalties.

• Best practice: File pending DPT-3 (if applicable) before closure.

3) What about outstanding director loan before winding up?

• Director loans are liabilities owed by the company.

• Since the company does not have funds to repay ₹15L loan, repayment is challenging.

• Possible options:

  • Settle with directors by waiver or write-off (directors may waive claims in winding-up).

  • Loan can be considered unsecured creditor liability in winding-up.

  • Liquidator will attempt to recover assets; if insufficient, creditors (including directors) may get proportionate payment.

• Directors should be informed and may have to accept loss on loan amount.

• Maintain proper documentation about loan waiver or settlement.

Summary Table