Section 226 of the Companies Act, 2013
Here is a detailed explanation of Section 226 of the Companies Act, 2013:
📘 Section 226 – Voluntary Winding Up Not to Prevent Investigation Proceedings
🔍 Text and Purpose of Section 226
This section deals with situations where a company is under investigation and attempts to go into voluntary winding up.
It ensures that:
Voluntary winding up by a company does not obstruct or prevent an ongoing or ordered investigation under the Act.
⚖️ Key Provision
If an application for the voluntary winding up of a company is made after an investigation has been ordered or is ongoing, then:
The National Company Law Tribunal (NCLT) must not proceed with such voluntary winding up without considering the report of the investigating authority.
This provision protects the interests of stakeholders and ensures accountability, particularly in cases involving fraud, mismanagement, or serious irregularities.
✅ Purpose of Section 226
| Objective | Explanation |
|---|---|
| Prevent evasion | Stops companies from using voluntary winding up to avoid investigations |
| Support enforcement | Allows regulatory bodies to complete their inquiries and take appropriate action |
| Ensure fairness | Protects interests of creditors, shareholders, and the public |
📄 Practical Example
If SFIO or any authority is investigating Company XYZ for suspected fraud, and the company tries to initiate voluntary winding up:
The Tribunal must wait for the investigation report before allowing or proceeding with the winding up.
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