Directors or Designated Partners Swear It Before a Voluntary Winding Up
Everything in a voluntary closure hangs off this one document, and it comes first. The declaration comes before the members' resolution, before a liquidator is appointed and before any filing. At that point the people running the entity have to swear that it can meet what it owes. If they cannot say that honestly, the voluntary route is closed.
Nobody signs on their behalf, and no accountant signs in their place. The declaration is verified by affidavit, which puts each person who swears it personally behind what it says.
What is sworn. Three statements, each of which has to be true:
- A full inquiry into the entity's affairs has been made.
- The entity has no debt, or it will be able to pay its debts in full from the proceeds of the assets sold in the voluntary liquidation.
- The liquidation is not being made to defraud anyone.
Note what the second statement is not.
Today the undertaking is about sufficiency: the assets will cover the debts.
Two different documents
A declaration of solvency is the directors' own sworn statement. A solvency certificate is a different document, issued by a chartered accountant for a tender, a court or a contract. Having the position independently checked is covered there.
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Statutory Basis Under the Insolvency Code and the LLP Rules
This ground moved, and older articles still get it wrong.
Voluntary winding up sat in the Companies Act, 2013, sections 304 to 323.
The court-era process, with debts to be paid within a stated period.
Those sections were omitted by the Eleventh Schedule to the Insolvency and Bankruptcy Code, 2016, with effect from 15 November 2016.
Voluntary liquidation runs only under section 59 of the Code, which commenced on 1 April 2017, with the procedure in the IBBI (Voluntary Liquidation Process) Regulations, 2017.
So the declaration of solvency in India is now an Insolvency and Bankruptcy Code document. A note that still describes the Companies Act route, or says both laws provide for the process, is out of date.
Limited liability partnerships.
The undertaking about payment reads the same way for every entity. It is not a deadline in months. The deadlines that do bind are procedural, and they follow immediately after the declaration.
Contents and the Affidavit That Accompanies It
The declaration itself is short. Its weight comes from what stands behind it: every asset at a basis someone can defend and every liability at what is actually owed. The schedule of assets and claims is where a closure holds together or falls apart. The undertaking is only as good as the two columns it rests on.
Each signing director or designated partner verifies the declaration by affidavit in their own name, saying the contents are true and nothing material has been hidden. That is what turns an opinion into a sworn statement.
Two attachments go with it:
How the figures are worked out for a solvency assessment is the same discipline the schedule needs, applied to a different question.
Filing Timelines and the Forms Involved
The sequence is fixed and short:
- Declaration.First
Made first, by a majority of the directors or designated partners, on affidavit.
- Special resolution.Within four weeks
Within four weeks of the declaration, the members pass a special resolution for voluntary liquidation and appoint an insolvency professional as liquidator.
- Creditors' approval, where there is debt.Within seven days
Creditors representing two-thirds in value of the debt approve the resolution within seven days of it being passed.
- Notice.Within seven days
The entity notifies the Registrar and the Insolvency and Bankruptcy Board of India within seven days of the resolution, or of the creditors' approval where that is needed.
- Completion.90 or 270 days
The liquidator works to complete the process in 90 days from the liquidation commencement date where no claims from creditors are received, and in 270 days where claims are received (regulation 37, as amended with effect from 16 September 2022).
Note the test in step 5.
The Auditor's Report Attached to the Declaration
The audited statements are not a formality added at the end. They are the evidence the declaration rests on, and the Code names them: financial statements and a record of business operations for the two years before the declaration, or from incorporation where the entity is younger. A registered valuer's report joins them wherever a valuation has been carried out.
The period catches entities out. A company that stopped trading two years ago has often stopped being audited too. Because the attachment has to be audited financial statements, in practice each open year's audit is finished before the declaration is signed, and unaudited management figures are unlikely to meet it. The point of the attachment is that someone outside the boardroom has looked at the numbers.
What each professional confirms is limited:
- The auditorreports on the financial statements;
- The valuersays what an asset would fetch;
- Neithersays the entity can pay its debts.
That judgement stays with the directors and designated partners who sign. The ratios behind that judgement are worth running before anyone swears to anything.
Personal Liability for a False Declaration
The affidavit is why this is personal. Section 236 of the Bharatiya Nyaya Sanhita, 2023 covers a false statement in a declaration that an authority is bound or authorised by law to receive as evidence, and it is punished in the same way as giving false evidence. That provision replaced section 199 of the Indian Penal Code from 1 July 2024, so a note citing the old section is citing a repealed law.
The process also carries its own check during the liquidation.
It is a reason to establish the position before the affidavit is sworn, not after. An outside examination of the assets and liabilities uses the same evidence the declaration needs, one signature earlier.