Sections 305 and 306 of the Companies Act 2013: Declaration of Solvency and Meeting of Creditors

Sections 305 and 306 originally formed part of the voluntary winding up provisions in Part II of Chapter XX of the Companies Act, 2013. Both provisions have been omitted with effect from 15 November 2016 following the introduction of the Insolvency and Bankruptcy Code, 2016.

Current legal status Sections 305 and 306 of the Companies Act, 2013 are no longer operative. They were omitted by section 255 read with the Eleventh Schedule to the Insolvency and Bankruptcy Code, 2016, with effect from 15 November 2016. Voluntary liquidation of eligible corporate persons is now principally governed by section 59 of the Insolvency and Bankruptcy Code, 2016 and the IBBI (Voluntary Liquidation Process) Regulations, 2017, as amended.
Provision Earlier subject Present status
Section 305, Companies Act 2013 Declaration of solvency in case of proposal to wind up voluntarily Omitted with effect from 15 November 2016
Section 306, Companies Act 2013 Meeting of creditors Omitted with effect from 15 November 2016

Section 305 - Declaration of solvency in case of proposal to wind up voluntarily

Section 305 dealt with a declaration of solvency in the former Companies Act framework for voluntary winding up. The section now stands omitted. Accordingly, it should not be presented as a currently operative procedure under the Companies Act, 2013.

Section 306 - Meeting of creditors

Section 306 dealt with the meeting of creditors in the former voluntary winding up framework. This section also stands omitted with effect from 15 November 2016 and is no longer an operative provision for commencing voluntary liquidation.

Why were Sections 305 and 306 omitted?

The Insolvency and Bankruptcy Code, 2016 reorganised the legal framework for insolvency and liquidation. Section 255 and the Eleventh Schedule to the Code amended the Companies Act, 2013 and omitted Part II dealing with voluntary winding up, including sections 304 to 323. As a result, sections 305 and 306 ceased to operate from 15 November 2016.

What law now governs voluntary liquidation?

For a corporate person that intends to liquidate voluntarily and has not committed a default, the principal statutory provision is section 59 of the Insolvency and Bankruptcy Code, 2016, read with the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017, as amended from time to time.

Meaning and key requirements under section 59

In the case of a company, section 59 requires, among other matters, a declaration by a majority of the directors verified by affidavit. The directors must state, after making full inquiry into the affairs of the company, that the company has no debt or will be able to pay its debts in full from the proceeds of assets to be sold in voluntary liquidation, and that the liquidation is not intended to defraud any person.

The statutory declaration is accompanied by prescribed financial information and, where applicable, a valuation report. The members must then pass the resolution required by section 59 within the statutory period and appoint an insolvency professional as liquidator. Where the company owes debt, the creditor approval requirement under section 59 must also be complied with.

Important: The historical headings of sections 305 and 306 remain useful for understanding the legislative history, but current voluntary liquidation compliance should be checked under the Insolvency and Bankruptcy Code, 2016 and the latest IBBI Voluntary Liquidation Process Regulations.

Official legal resources

Last reviewed: 17 September 2026. This page explains the statutory position generally and should be read with the latest Act, rules, regulations, notifications and applicable judicial decisions.