The process whereby a company is prepared for dissolution, involving cessation of its operations, realisation of its assets, payment of its debts, and distribution of any balance to its members.
The winding up may be compulsory, i.e. by a court order or on the application of certain persons on certain grounds, or voluntary, i.e. by special resolution of company members. The term is also used in the context of the dissolution of a partnership. An order for the compulsory winding-up of a company does not rescind its insurance contacts.
The steps for winding up a company differ depending on whether the company is solvent or insolvent. The Australian Securities and Investment Commission (ASIC) provides fact sheets for directors on winding up for both situations: solvent and insolvent.