{"id":9037,"date":"2021-01-16T18:18:30","date_gmt":"2021-01-16T18:18:30","guid":{"rendered":"https:\/\/simplebooks.com\/srilanka\/?p=9037"},"modified":"2025-10-12T22:43:35","modified_gmt":"2025-10-12T17:13:35","slug":"close-a-business","status":"publish","type":"post","link":"https:\/\/simplebooks.com\/srilanka\/close-a-business","title":{"rendered":"How to Close Your Company \u2013 A Step-by-Step Guide"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">There comes a time in an entrepreneur\u2019s journey when they might have to close down their company.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">You might or might not have planned for this occasion. However, it\u2019s always important to follow the right protocols when it comes to things like company liquidation.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Closing down, just like any other company activity has its own procedures.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It\u2019s important to follow them down to the last dot, since failing to do so will result in legal and financial consequences.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">So, if you\u2019re a business owner that\u2019s looking to close down your company; this blog will guide you through the entire process.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">We&#8217;re going to look at every way you can possibly liquidate, and how to do so.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Let\u2019s get started.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What to do before you close down your company&nbsp;<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Now, this is really important.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The process of winding up a company is not simple.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">There\u2019s a lot of things you need to do before, during, and after the close down process.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Let\u2019s take a look at what you need to do before:&nbsp;<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>Notify and pay your employees<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\">You need to notify your employees about your plans. This will help them get a head start on looking for new jobs.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">You can notify them via email, a memo or any method mentioned in their employment contract.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Once you let them know, you will need to finalize their payments.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">All your employees need to be paid up until their last day of work.&nbsp;<\/p>\n\n\n\n<ol class=\"wp-block-list\" start=\"2\">\n<li>Let your customers and suppliers know<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\">It\u2019s always best to let your customers and suppliers know about the company&#8217;s impending close down.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This will help you to maintain their trust, and also capitalise on profits until the company is closed.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Here are three of the most important things you can notify them about:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Inform them that the company is closing<\/li>\n\n\n\n<li>Date of closure + when you will no longer be needing your suppliers\u2019 services<\/li>\n\n\n\n<li>When you will be settling any outstanding contractual obligations (ex: debts and\/or credits) with them<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Remember, you need to pay off all of your company&#8217;s debts before you close down. You cannot have any outstanding liabilities.&nbsp;<\/p>\n\n\n\n<ol class=\"wp-block-list\" start=\"3\">\n<li>End and settle all agreements and services&nbsp;<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\">Any agreements or services the company has become involved in must be terminated before the company shuts down.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">These can include leases, loans, business credit cards, phone lines, utilities, internet connections, and any outstanding payments.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Remember to close all of your company\u2019s bank accounts as well.&nbsp;<\/p>\n\n\n\n<ol class=\"wp-block-list\" start=\"4\">\n<li>Settle your account receivables and account payables<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\">You need to know whether:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Your customers have paid you<\/li>\n\n\n\n<li>You have paid your vendors and suppliers<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Look into your company\u2019s accounts and make sure any shortfalls have been settled.<\/p>\n\n\n\n<ol class=\"wp-block-list\" start=\"5\">\n<li>Sell all business assets&nbsp;<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\">Even if the business is not being sold, the assets will have to be either sold or managed.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">If your business is registered for VAT, then this will have to be added to your selling price.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Some of the common assets businesses have to sell include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Outstanding stock<\/li>\n\n\n\n<li>Equipment and machinery<\/li>\n\n\n\n<li>Furniture<\/li>\n\n\n\n<li>Vehicles&nbsp;<\/li>\n<\/ul>\n\n\n\n<ol class=\"wp-block-list\" start=\"6\">\n<li>Settle all your legal matters and tax&nbsp;<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\">These can include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Cancelling tax registrations such as VAT<\/li>\n\n\n\n<li>Cancelling the business registration at the Registrar of Companies or the Divisional Secretariat<\/li>\n\n\n\n<li>Lodging final tax returns<\/li>\n\n\n\n<li>Notifying the Department of Inland Revenue<\/li>\n\n\n\n<li>Settling any insurance related work<\/li>\n<\/ul>\n\n\n\n<ol class=\"wp-block-list\" start=\"7\">\n<li>Maintain and keep business records<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\">It\u2019s important to continue maintaining all records of your business. This includes your financial records, employee records, and customer records.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Generally, records should be kept for 5 years from the date they are prepared, obtained or when the transaction is completed, whichever is latest.<\/p>\n\n\n\n<ol class=\"wp-block-list\" start=\"8\">\n<li>Get advice<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\">It\u2019s always smart to talk to the right people before you start to close down.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Try consulting your <a href=\"\/srilanka\/company-secretary\/\">company secretary<\/a> or in-house legal counsel first.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Since the process has a lot of legalities, it&#8217;s best to know what you\u2019re getting into.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It\u2019s important to follow all of these steps before you start closing down your company.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This will not only ensure a smooth transition, but also make sure that nothing goes wrong during or after closing down.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Let\u2019s now take a look at all the different ways of closing down a company.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<div class=\"epyt-video-wrapper\"><iframe loading=\"lazy\"  id=\"_ytid_77390\"  width=\"1080\" height=\"608\"  data-origwidth=\"1080\" data-origheight=\"608\"  data-relstop=\"1\" src=\"https:\/\/www.youtube.com\/embed\/cCmImWx4YNQ?enablejsapi=1&#038;autoplay=0&#038;cc_load_policy=0&#038;cc_lang_pref=&#038;iv_load_policy=1&#038;loop=0&#038;rel=0&#038;fs=1&#038;playsinline=0&#038;autohide=2&#038;theme=dark&#038;color=red&#038;controls=1&#038;disablekb=0&#038;\" class=\"__youtube_prefs__  epyt-is-override  no-lazyload\" title=\"YouTube player\"  allow=\"fullscreen; accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen data-no-lazy=\"1\" data-skipgform_ajax_framebjll=\"\"><\/iframe><\/div>\n<\/div><\/figure>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-fe48e5de wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button ctat\"><a class=\"wp-block-button__link wp-element-button\" href=\"\/srilanka\/contact\/\">Get Expert Advice for Free<\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\">What are the different ways of closing down a company?&nbsp;<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Now, there are a few ways to close a business:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>Strike off method<\/li>\n<\/ol>\n\n\n\n<ol class=\"wp-block-list\" start=\"2\">\n<li>Compulsory winding up (this is ordered by the courts)<\/li>\n<\/ol>\n\n\n\n<ol class=\"wp-block-list\" start=\"3\">\n<li>Voluntary winding up:&nbsp;<\/li>\n<\/ol>\n\n\n\n<ul class=\"wp-block-list\">\n<li>By the creditors&nbsp;<\/li>\n\n\n\n<li>By the members&nbsp;<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">We&#8217;ll take a look at each of these methods in this blog.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">How to: Close down a company&nbsp;<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Like we mentioned before, there are a few ways to close down a company.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">We\u2019re going to explore each option individually. This way, you can decide which method suits your situation best.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Strike off method<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">This is the simplest way to close down a business.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It involves removing your company&#8217;s name from the Registrar of Companies\u2019 (ROC) registered company list.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">People usually chose the strike-off method when they&#8217;re no longer able to maintain their business operations.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Now, there are three things that you need to do before you can initiate the strike off method:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Stop all business operations<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\" start=\"2\">\n<li>Settle all business liabilities&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\" start=\"3\">\n<li>Sell off all business assets&nbsp;<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">If you don\u2019t do all three of these things, you cannot apply for the company to be struck off.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">What are the documents you will need?&nbsp;<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">There are two main documents you need to hand over to the ROC:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>A letter of request from the shareholders giving their approval to proceed with a strike off<\/li>\n<\/ol>\n\n\n\n<ol class=\"wp-block-list\" start=\"2\">\n<li>An affidavit with a covering letter from the directors and shareholders (<a href=\"http:\/\/www.drc.gov.lk\/en\/wp-content\/uploads\/2020\/02\/Affidavit-for-Company-Strike-off-English.pdf\">accessed here<\/a>)<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\">In addition to these two documents, you need a few others to apply for a company strike off:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The Declaration and application for Strike Off<\/li>\n\n\n\n<li>Tax clearance details (if applicable)<\/li>\n\n\n\n<li>A recent copy of an Audited Report (if the company has previously filed audited accounts)<\/li>\n\n\n\n<li>The last Annual Return of the company<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">After you hand in all the documents mentioned above, the ROC will take over.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The registrar\u2019s office will assess your documents and obtain clearance for it from the Labour and Tax department.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Once the strike off is approved, your business will no longer exist.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The company can no longer engage in business activities or sell any company assets.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Useful information: <a href=\"\/srilanka\/file-form-15-in-sri-lanka\/\">How to file your company&#8217;s Annual Returns in Sri Lanka<\/a><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Important things to remember<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The Registrar of Companies (ROC) also has the power to strike off a company. They do this if they have any &#8216;reasonable cause&#8217; to believe that the company is not in operation.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">There\u2019s a process the Registrar will follow if they\u2019re looking to strike off your company:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Step 01:<\/strong> The ROC will first send a letter of inquiry to you.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Step 02:<\/strong> If there is no reply within a month, they will send a second letter.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Step 03:<\/strong> If there is no reply within a month again, the ROC will publish a notice in the Gazette to strike off your company.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Step 04:<\/strong> If:&nbsp;<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>The ROC does not find a liquidator acting on behalf of the company <strong>OR<\/strong>;<\/li>\n\n\n\n<li>The liquidator doesn\u2019t file the returns within 6 months of winding up the company,<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\">The registrar will publish a notice in the Gazette and send it to the company and the liquidator.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This is why it\u2019s important to keep an eye out and respond to the ROC\u2019s notices, especially if you wish to continue to keep your company active.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">One last thing &#8211; if there are any remaining property that belongs to the company once the strike-off method has been completed, it will all be taken over by the state.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Compulsory winding up (ordered by the courts)<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Now, there are a few reasons why a court would close down your company.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Let\u2019s take a look at them.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Mainly, a court would step in the middle, and shut down your company if:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Your company does not commence its business within a year from its incorporation, or suspends its business for one year <strong>OR<\/strong>;<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\" start=\"2\">\n<li>If the number of shareholders fall below the minimum number required by the Companies Act Sri Lanka <strong>OR<\/strong>;<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\" start=\"3\">\n<li>Your company has no directors <strong>OR<\/strong>;<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\" start=\"4\">\n<li>Your company is not able to pay its debts&nbsp;<strong>OR<\/strong>;<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\" start=\"5\">\n<li>The court thinks that it is just and equitable that the company should be wound up <strong>OR<\/strong>;<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\" start=\"6\">\n<li>Your company has decided that it will be wound up by the court through a special company resolution<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">We mentioned that one of the reasons a court will close down a company is if they\u2019re not able to pay their debts.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Let\u2019s look at all the debt related scenarios.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Your company will be considered unable to pay its debts when:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>It has failed to settle a debt that exceeds Rs. 50,000. This is if it misses its deadline to pay its creditor this amount within 3 weeks of the due date.&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\" start=\"2\">\n<li>The company does not follow the actions given by a court when it sides with a creditor.&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\" start=\"3\">\n<li>The court is satisfied that the company cannot pay its debts (the court will consider the current and prospective liabilities).<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Now, the court doesn\u2019t randomly step in to close your company down.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Someone has to request it from them.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This request has to be submitted to the courts as a petition by either:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>The company <strong>OR<\/strong>,<\/li>\n\n\n\n<li>Its creditors <strong>OR<\/strong>,<\/li>\n\n\n\n<li>Contributors (shareholders etc.)<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\">The petition has to be accompanied with an affidavit that verifies the facts given in the petition.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The \u2018facts\u2019 are the reasons why they think that the company should be shut down.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">When this petition is filed, the court will appoint a &#8216;provisional liquidator&#8217; for the company. This liquidator will be in charge of settling liabilities, settling creditors, dividing surplus assets and liquidating the assets.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Like before, the powers of the Directors of the company will cease to exist once the liquidator is appointed.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Voluntary winding up&nbsp;&nbsp;<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">This is when the company begins the process of liquidation by themselves.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Now, there are two types of people that can start this process:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>Members of the business (this process is known as \u2018members voluntary winding up\u2019).&nbsp;<\/li>\n<\/ol>\n\n\n\n<ol class=\"wp-block-list\" start=\"2\">\n<li>Creditors of the business (this process is known as \u2018creditors voluntary winding up\u2019).<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\">The difference between the two is pretty straightforward. It&#8217;s based on whether the company is solvent or insolvent.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A solvent company is basically a financially healthy company. A financially healthy company can meet its debts and financial obligations.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">An insolvent company is a financially unhealthy company. We give this term to companies that can\u2019t pay off their debts and meet their financial obligations in the long run.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">So, when the company is solvent &#8211; its members will begin the close down process.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">And, when the company is insolvent &#8211; its creditors will begin the close down process.&nbsp;&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Legally, there are a few ways you can do this:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>By passing a special resolution to wind up the company voluntarily.<br><\/li>\n\n\n\n<li>By passing a special resolution since it cannot continue business transactions because of its liabilities.<br><\/li>\n\n\n\n<li>The company passes a resolution to wind up the company at a general meeting. For this, the company\u2019s <a href=\"\/srilanka\/articles-of-association\/\">\u2018Articles of Association\u2019<\/a> has to specify a period of time after which it must be dissolved.<br><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">You can start the closing down process the moment the resolution passes.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">When the process starts however, you need to stop all of your business activities.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">And remember, the company has to publish a notice of closing in a Gazette within 14 days of passing the resolution.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Let\u2019s take a look at how members and creditors can initiate the close down process.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Members\u2019 voluntary wind up&nbsp;<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">As the title reads, members &#8211; or more specifically, shareholders of the company are in charge of starting the liquidation process.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">To do this, the Directors have to first look into the affairs of the company. Once they do that, they have to make a statement that the company can pay off its debts within a year of the close-down process starting.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The reason that they have to make a statement claiming that they will pay off all of its debts within a year is because they are solvent.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">You have to pass this statement within 5 weeks of passing and delivering the resolution to the Registrar of Companies.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">When you deliver the statement to the ROC, it&#8217;s known as a \u2018shareholders voluntary winding up\u2019.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">To begin the process, you have to appoint a \u2018company liquidator\u2019. Once the liquidator is appointed, the powers of the Directors will cease.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This liquidator will then wind up the company and distribute its assets.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Now, this type of company closedown is usually better than other methods.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This is because:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>You can sell assets of the business for cash.&nbsp;<\/li>\n<\/ol>\n\n\n\n<ol class=\"wp-block-list\" start=\"2\">\n<li>Save money on taxes (you will only be charged Capital Gains Tax instead of Income Tax).<\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\">Creditors\u2019 voluntary winding up<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">This is similar to the previous \u2018Members voluntary wind up\u2019 method.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The biggest difference is that all the assets of the company will go to the creditors instead of the members.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The company must call for a meeting with all the creditors either:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>&nbsp;On the day of passing the resolution for voluntary winding up or;&nbsp;<\/li>\n\n\n\n<li>The day after the resolution for the voluntary winding up of the company is proposed.&nbsp;<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\">The notice of this meeting must be published in the Gazette and 2 local newspapers sold within the district of the company.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Here, the creditors of the company can select a liquidator.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The liquidator will solely be responsible for winding up the company.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">As usual, the powers of the directors will no longer exist when the liquidator is assigned.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Once that\u2019s done, the liquidator will make an account detailing the entire process. This will be presented to the company and its creditors during a general meeting.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Within a week of the meeting, the liquidator will send the account to the ROC.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Then, the ROC will register the accounts.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Three months after this, the company will be dissolved.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What happens after a company closes down?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">If you follow the right procedure when closing down, things should run smoothly afterwards.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Once the company is dissolved, the Registrar\u2019s office will issue a certificate stating the dissolution.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This is similar to a death certificate. This way, the registrar gets to keep a track of all the liquidated companies as well.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">After the company ceases to exist, they can no longer engage in business activities.<\/p>\n\n\n[et_pb_section global_module=\"25606 \"][\/et_pb_section]\n\n\n\n<h2 class=\"wp-block-heading\">Who is a company liquidator?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">You might have noticed that the liquidator plays a very important role when it comes to closing down a company.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But who are they exactly and what do they do?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Well, a liquidator is basically an officer who is appointed to wind up the affairs of a company when it goes into liquidation.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Depending on the situation, either the courts, creditors or the shareholders can appoint them.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">When they\u2019re appointed, the powers of the directors cease to exist.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">They\u2019re also given the legal authority to act on behalf of the company.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>Control of assets&nbsp;<\/li>\n\n\n\n<li>Financial affairs of the business&nbsp;<\/li>\n\n\n\n<li>The conducts of the business&nbsp;<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\">are transferred to the liquidator.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">They\u2019re responsible for closing up business activities in a way that is as cost effective as possible.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">According to the Companies Act Sri Lanka, some of their responsibilities include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Investigating the company\u2019s financial affairs<\/li>\n\n\n\n<li>Looking into the reasons why the company failed<\/li>\n\n\n\n<li>Taking control of the company\u2019s property once a winding up order has been given<\/li>\n\n\n\n<li>Bring or defend any action in a legal proceeding on behalf of the company<\/li>\n\n\n\n<li>Carry on the business of the company until it is wound up<\/li>\n\n\n\n<li>Settling the payments to the creditors<\/li>\n\n\n\n<li>Selling the company assets<\/li>\n\n\n\n<li>Act on behalf of the company in settling any receipts, deeds or documents<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Get Simplebook\u2019s help when closing down your company<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">You\u2019ve probably noticed that there\u2019s a lot of paperwork you need to process when closing down your company.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">With everything you will already need to take care of, this can be a bit of a hassle.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This is where Simplebooks can help you.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">As a registered company secretary, we\u2019ve advised and helped hundreds of business owners legally wind up their businesses.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Our team could advise you and take care of your paperwork while you handle the important stuff.&nbsp;<\/p>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-fe48e5de wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button ctat\"><a class=\"wp-block-button__link wp-element-button\" href=\"\/srilanka\/contact\/\">Book a Free Consultation<\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\">FAQs<\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1610821001604\"><strong class=\"schema-faq-question\">How do I close my business in Sri Lanka?<\/strong> <p class=\"schema-faq-answer\">There are a few ways you can close your business in Sri Lanka:<br\/><br\/> &#8211; Strike off methods<br\/> &#8211; Winding up by the courts\u00a0<br\/> &#8211; Voluntary winding up\u00a0<br\/><br\/>Depending on what type you pick, the way in which you have to close down your business is different.\u00a0<br\/><br\/>Read our detailed blog <a href=\"https:\/\/simplebooks.com\/srilanka\/articles-of-association\/\">here<\/a> for a step by step guide of all of these methods.\u00a0<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1610821050837\"><strong class=\"schema-faq-question\">What happens after I close down my business?<\/strong> <p class=\"schema-faq-answer\">Once you close down your company, the Registrar\u2019s office will issue a certificate of dissolution.\u00a0<br\/><br\/>After this, your company can no longer engage in business anymore.\u00a0<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1610821064954\"><strong class=\"schema-faq-question\">What do I do before I close down my business?<\/strong> <p class=\"schema-faq-answer\"> &#8211; Notify and pay your employees<br\/> &#8211; Pay your suppliers\u00a0<br\/> &#8211; Let your customers know<br\/> &#8211; End all of your services and settle all of your agreements\u00a0<br\/> &#8211; Sell all your business assets\u00a0<br\/> &#8211; Settle all legal matters and pay all your taxes<\/p> <\/div> <\/div>\n\n\n\n<p class=\"wp-block-paragraph\">&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>There comes a time in an entrepreneur\u2019s journey when they might have to close down their company.&nbsp; You might or might not have planned for this occasion. However, it\u2019s always important to follow the right protocols when it comes to things like company liquidation.&nbsp; Closing down, just like any other company activity has its own [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":25315,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[18],"tags":[26],"class_list":["post-9037","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-en","tag-secretarial-service"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.8 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>How to Close Your Company \u2013 A Step-by-Step Guide - Simplebooks<\/title>\n<meta name=\"description\" content=\"If you&#039;re looking to close down your business, there&#039;s a right, legal way to do it. 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As a Chartered Accountant, Certified Tax Advisor, and Registered Company Secretary with a Bachelor's in Business (Finance), he offers expert insights on company registration, tax, accounting, and auditing to empower entrepreneurs and SMEs","sameAs":["https:\/\/simplebooks.com\/"]},{"@type":"Question","@id":"https:\/\/simplebooks.com\/srilanka\/close-a-business#faq-question-1610821001604","position":1,"url":"https:\/\/simplebooks.com\/srilanka\/close-a-business#faq-question-1610821001604","name":"How do I close my business in Sri Lanka?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"There are a few ways you can close your business in Sri Lanka:<br\/><br\/> - Strike off methods<br\/> - Winding up by the courts\u00a0<br\/> - Voluntary winding up\u00a0<br\/><br\/>Depending on what type you pick, the way in which you have to close down your business is different.\u00a0<br\/><br\/>Read our detailed blog <a href=\"https:\/\/simplebooks.com\/srilanka\/articles-of-association\/\">here<\/a> for a step by step guide of all of these methods.\u00a0","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/simplebooks.com\/srilanka\/close-a-business#faq-question-1610821050837","position":2,"url":"https:\/\/simplebooks.com\/srilanka\/close-a-business#faq-question-1610821050837","name":"What happens after I close down my business?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"Once you close down your company, the Registrar\u2019s office will issue a certificate of dissolution.\u00a0<br \/><br \/>After this, your company can no longer engage in business anymore.\u00a0","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/simplebooks.com\/srilanka\/close-a-business#faq-question-1610821064954","position":3,"url":"https:\/\/simplebooks.com\/srilanka\/close-a-business#faq-question-1610821064954","name":"What do I do before I close down my business?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":" - Notify and pay your employees<br \/> - Pay your suppliers\u00a0<br \/> - Let your customers know<br \/> - End all of your services and settle all of your agreements\u00a0<br \/> - Sell all your business assets\u00a0<br \/> - Settle all legal matters and pay all your taxes","inLanguage":"en-US"},"inLanguage":"en-US"}]}},"_links":{"self":[{"href":"https:\/\/simplebooks.com\/srilanka\/wp-json\/wp\/v2\/posts\/9037","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/simplebooks.com\/srilanka\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/simplebooks.com\/srilanka\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/simplebooks.com\/srilanka\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/simplebooks.com\/srilanka\/wp-json\/wp\/v2\/comments?post=9037"}],"version-history":[{"count":0,"href":"https:\/\/simplebooks.com\/srilanka\/wp-json\/wp\/v2\/posts\/9037\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/simplebooks.com\/srilanka\/wp-json\/wp\/v2\/media\/25315"}],"wp:attachment":[{"href":"https:\/\/simplebooks.com\/srilanka\/wp-json\/wp\/v2\/media?parent=9037"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/simplebooks.com\/srilanka\/wp-json\/wp\/v2\/categories?post=9037"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/simplebooks.com\/srilanka\/wp-json\/wp\/v2\/tags?post=9037"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}