Sections 365 and 366 of the Companies Act, 2013: Dissolution and Registration of Existing Entities
Section 365 deals with the final order of dissolution after a company has been wound up under the summary procedure. Section 366 begins Part I of Chapter XXI and identifies existing entities that may register under the Companies Act, 2013, subject to the statutory conditions and the Companies (Authorised to Register) Rules, 2014.
- Section 365 requires the Official Liquidator to submit a final report after the company is finally wound up.
- On receipt of the report, the Central Government or, where applicable, the Tribunal orders dissolution.
- Section 366 covers partnership firms, LLPs, cooperative societies, societies and other eligible business entities applying for registration under Part I of Chapter XXI.
- Following the 2018 amendment, an entity under Section 366(2) may consist of two or more members; an entity with fewer than seven members must register as a private company.
Section 365 - Order of dissolution of company
Meaning: Section 365 is the concluding provision in the summary procedure for liquidation. Once the Official Liquidator is satisfied that the company has been finally wound up, a final report is submitted to the competent authority so that a formal dissolution order can be made.
Section 365(1): The Official Liquidator, when satisfied that the company is finally wound up, must submit a final report to the Central Government where no reference was made to the Tribunal under Section 364(4). In other cases, the report is submitted to both the Central Government and the Tribunal.
Section 365(2): On receiving the final report, the Central Government or, as the case may be, the Tribunal shall order that the company be dissolved.
Section 365(3): After the dissolution order, the Registrar strikes the company's name from the register of companies and publishes a notification to that effect.
How Section 365 operates
The provision follows the preceding summary-liquidation framework. Section 364 permits a creditor aggrieved by the Official Liquidator's decision under Section 363 to appeal to the Central Government and also permits a reference to the Tribunal where necessary. Section 365 then determines where the final report is sent and who makes the dissolution order.
Section 366 - Companies capable of being registered
Meaning: Section 366 provides a statutory route by which specified existing entities constituted under other laws may register as companies under the Companies Act, 2013. For this Part, the expression "company" is wider than a company already incorporated under the 2013 Act.
Entities covered by Section 366(1)
For Part I of Chapter XXI, "company" includes a partnership firm, limited liability partnership, cooperative society, society or another business entity formed under another law for the time being in force that applies for registration under this Part.
Eligibility under Section 366(2)
Subject to the exceptions and conditions in Section 366, an eligible entity duly constituted according to law and consisting of two or more members may register under the Companies Act, 2013 as an unlimited company, a company limited by shares or a company limited by guarantee, in the prescribed manner.
Important statutory conditions under Section 366
- An entity already registered under the Indian Companies Act, 1882, the Indian Companies Act, 1913 or the Companies Act, 1956 cannot use Section 366 for registration.
- An entity whose members' liability is already limited by another Act or law cannot register under Section 366 as an unlimited company or as a company limited by guarantee.
- Registration as a company limited by shares requires a permanent paid-up or nominal share capital of a fixed amount divided into shares, or held and transferable as stock, in accordance with the section.
- Registration requires the assent of the prescribed majority of members present in person or, where permitted, by proxy at a general meeting called for that purpose.
- Where an entity whose members do not already have limited liability seeks registration as a limited company, the required majority must be at least three-fourths of the members present in person or, where allowed, by proxy.
- For registration as a company limited by guarantee, the assent must be accompanied by a resolution specifying the members' guarantee contribution in the event of winding up.
- An entity with fewer than seven members must register as a private company.
Voting majority under Section 366(3)
Where a poll is demanded for computing the statutory majority, the number of votes to which each member is entitled under the entity's regulations is taken into account.
Companies (Authorised to Register) Rules, 2014 and Form URC-1
The registration mechanism under Section 366 is supplemented by the Companies (Authorised to Register) Rules, 2014. Rule 3 applies the incorporation provisions of Chapter II, with necessary modifications, to registration under Section 366 and prescribes the documents and information required for the application. MCA's Form URC-1 is the application form for registration under Section 366. The exact filing requirements depend on the type of existing entity and the proposed form of company.
Official legal resources
For filing or professional use, verify the current text, applicable rules, forms, fees and MCA portal instructions before submission.