1) Compulsory liquidation (By the order of the court):
In this case, the liquidator would be appointed by the court and would be called an official liquidator.
2) Voluntary liquidation (By Shareholders):
In this case, the shareholders would decide at their meeting (extraordinary) that the company has to be wound up by passing a special resolution. The shareholders would appoint the liquidator who would prepare a statement that would consist of the estimated realizable value of assets and estimated payment towards liabilities. This statement is termed as ‘Liquidator statement of Affairs’. Based on this statement, the directors of the company would make a declaration of solvency. A copy of this statement has to be submitted to the court for obtaining its permission. Once the permission is granted the liquidation would commence.
On the completion of the liquidation proceedings. The liquidator would call a final meeting of the shareholders. At this meeting, a statement of accounts would be submitted to the shareholders. This statement would be summarizing the actual amount paid towards expenses and liabilities. This statement is called “Liquidation Final Statement of Account”. A copy of this statement has to be submitted to the ROC – On the submission the company’s name would be deleted and the company is said to be liquidated.