1. Winding Up: Winding up refers to the formal process of bringing a company's business to an end, which involves the realization of its assets, payment of liabilities, and distribution of any surplus to the shareholders. Winding up can occur voluntarily or involuntarily (compulsory) and is generally the process of dissolution of the company. There are two main types of winding up: Voluntary Winding Up: Occurs when the company’s members (shareholders) decide to wind up the company, either because they have achieved their purpose or because they no longer wish to continue business. Compulsory Winding Up: This is initiated by an order of the court, typically when the company is unable to pay its debts or is insolvent. Winding up in this context refers to the formal procedure under the law (like the Companies Act, 2013, in India) to dissolve a company, either voluntarily or through a court order. 2. Liquidation: Liquidation is a specific aspect or stage within the winding-up process. It refers to the process of converting the company's assets into cash (selling off assets), paying off creditors, and distributing any remaining funds to shareholders. Liquidation typically follows winding up, and in some cases, they are used interchangeably, but liquidation is just one part of the broader winding-up procedure.

Answer given by Shubhamm Sir at 06-Feb-2025 11:25 PM