The winding up or liquidation of a company is the process by which a company’s assets are collected and sold in order to pay its debts.

Any monies remaining after all debts, expenses and costs have been paid off are distributed amongst the shareholders of the company.

When the winding up has been completed, the company is formally dissolved and it ceases to exist.

Broadly speaking, a company can be wound up in one of two ways:
A Court can compulsorily wind up a company.
The shareholders or the creditors of the company can themselves apply to wind up the company in proceedings known as “voluntary winding up”.

When a company is wound up compulsorily by the Court, the winding up is deemed to have commenced at the time of the making of the application for the winding up. Within 14 days of the winding up order, the directors and the secretary of the company must deliver a statement of the company’s affairs to the liquidator, who must then file a copy of the statement with the Court.

Voluntary winding up of a company takes place by mutual agreement of the members of the company.

Through the winding up of the company, wherein assets of the company are realized and applied towards the payment of its liabilities.