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What is the difference between Winding up and Dissolution?

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What is the difference between Winding up and Dissolution?
posted Jun 14, 2017 by Sherlyn Mishra

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The entire procedure for bringing about a lawful end to the life of a company is divided into two stages – ‘winding up’ and ‘dissolution’. Winding up is the first stage in the process whereby assets are released, liabilities are paid off and the surplus, if any distributed among its members. Dissolution is the final stage whereby the existence of the company is withdrawn by the law.

Winding up in all cases does not culminate in dissolution. Even after paying all the creditors there may still be a surplus, company may earn profits during the course of beneficial winding up, there may be a scheme of compromise with creditors while company is in winding up and in all such events the company will in all probability come out of winding up and hand over back to shareholders/ old management. Dissolution is an act which puts an end to the life of the company.

As such winding up is only a process while the dissolution puts an end to the existence of the company.

The Important differences between Dissolution and Winding Up are listed below:

Dissolution:
1. The dissolution of a company is recorded and registered by the Registrar of Companies.
2. The process of dissolution is purely administrative function.
3. The Liquidator does have any important role in the dissolution.
4. The dissolution must take place after winding up.

Winding Up:
1. The winding up of a company is heard and judged by the Tribunal.
2. The process of winding up is purely judicial function.
3. The Liquidator has important role in the winding up.
4. After winding up, dissolution takes place.

answer Jun 14, 2017 by Durga Prasad
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