• Aug 12,2025

Companies Act Section 275

Companies Act, Section 275: Company Liquidators and Their Appointments

Section 275 of the Companies Act, 2013 lays down the legal framework governing the appointment of Company Liquidators for the winding up of companies by the Tribunal (NCLT). The provision ensures that winding up proceedings are conducted by qualified professionals with independence and integrity. It also details who may be appointed as a liquidator, the qualifications required, the scope of their powers, and the procedure for disclosure of conflicts of interest.

Sub-section (1): Appointment of Company Liquidator at the Time of Winding Up Order

When the Tribunal passes an order for the winding up of a company under Section 273, it is mandatory for the Tribunal to appoint a Company Liquidator to carry out the winding up proceedings.

The appointment may be made from either:
The Official Liquidator, who is a government-appointed officer, or A liquidator selected from a panel maintained for this purpose.
This ensures that the Tribunal has flexibility to select a suitable liquidator based on the specific needs of the case, the size and complexity of the company, and the expertise required.

Sub-section (2): Eligibility Criteria for Appointment as Liquidator

As per the amended provisions of the law, the Company Liquidator or the Provisional Liquidator must be selected exclusively from among the insolvency professionals (IPs) registered under the Insolvency and Bankruptcy Code, 2016 (IBC, 2016).

This professionalization of the liquidator’s role ensures:
High standards of competence and ethical conduct, Independent administration of the winding up process, and Alignment with modern insolvency and restructuring frameworks.
The reference to IBC also reflects the legislature’s intention to streamline corporate insolvency processes under a unified regulatory regime.

Sub-section (3): Powers of the Provisional Liquidator

When the Tribunal appoints a Provisional Liquidator (usually in advance of a final winding up order to preserve the assets and records of the company):

The Tribunal has the authority to limit or restrict the powers of the provisional liquidator either at the time of appointment or through a subsequent order.
In the absence of such restrictions, the provisional liquidator shall be vested with the same powers as the Company Liquidator.
This provision offers the Tribunal flexibility to tailor the powers granted, depending on the urgency and complexity of the case, and ensures protection of company assets pending a final decision.

Sub-section (5): Terms, Conditions, and Remuneration of the Liquidator

The terms and conditions governing the liquidator’s appointment, including the fees payable, are to be determined by the Tribunal based on several objective factors, such as:

The scope and nature of the tasks to be performed during the winding up, The professional qualifications and experience of the liquidator, The size and complexity of the company involved.
This ensures fair compensation while maintaining cost efficiency and accountability in the winding up process.

Sub-section (6): Declaration of Independence and Disclosure of Conflicts of Interest

To uphold the principles of transparency and impartiality, every liquidator whether provisional or appointed for the full winding up must file a declaration of independence.

This declaration must be submitted within seven (7) days of the appointment in the prescribed form.
It should disclose:
Any conflict of interest that may affect the liquidator’s ability to act independently, Any circumstances that might give rise to bias or influence in the conduct of the liquidation.
This obligation continues throughout the term of the liquidator's appointment, ensuring sustained integrity and confidence in the winding up process.

Sub-section (7): Continuation of Provisional Liquidator as Company Liquidator

In cases where a Provisional Liquidator has already been appointed prior to the final winding up order under Section 273(1)(c), the Tribunal may, at its discretion:

Appoint the same Provisional Liquidator as the Company Liquidator to continue managing the winding up proceedings.
This avoids disruption, ensures continuity, and leverages the liquidator’s prior knowledge of the company’s affairs to expedite the winding up efficiently.

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