Strike Off or Winding Up a Private Limited Company | File Form STK-2
Being a business owner is not easy since there are many underlying difficulties. A stretch of unsuccessful years seldom forces enterprises to shut down and choose to close a private limited company.
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- Expert-assisted closure of Pvt Ltd Companies under the Companies Act, 2013
- Strike off support through Fast Track Exit and voluntary winding up
- STK-2 form preparation and filing for a smooth strike-off process
- Full ROC coordination and compliance handling till final closure
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OVERVIEW
Close a Private Limited Company in India
A Private Limited Company in India has a unique legal status, and its dissolution is governed by the Companies Act, 2013. The process is more complicated than the incorporation of the company and necessitates complete adherence to the legal requirements. The closure can be voluntary, initiated by the company or compulsorily done by the ROC in case of the company being inactive or non-compliant. Typical causes of closure are business inactivity, financial problems, restructuring, or achieving business goals.
The process of closing a company generally consists of several stages, such as getting the necessary approvals from the board and shareholders, paying off all debts, submitting certain applications to the Registrar of Companies (ROC), and finally getting the company erased from the official register. It is very important to carry out these steps very carefully and precisely so as not to encounter any legal problems, have to deal with future liabilities and incur penalties.
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Process
Pvt Ltd Company Closure Process
Closing a Pvt Ltd company can be done through various methods, including compulsory winding up and voluntary winding up. With years of experience, our professionals have successfully assisted numerous clients in navigating the company closure process.
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Step 1: Board Meeting and Special Resolutions
- Conduct a board meeting granting approval for liquidation.
- A director is appointed to undertake the entire process of a company’s liquidation.
- Next, convene a General Meeting wherein the shareholders enact a special resolution aimed at winding up the company.
- A minimum of 75% approval by the shareholding is necessary.
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Step 2: Settlement of Liabilities
Settle all dues with lenders, suppliers, workers, statutory authority, tax, and others. Get a no-objection certificate from creditors where it is applicable.
Step 3: Documentation Preparation
Gather, write and group together:
- Resolutions passed by directors and shareholders.
- Affidavits and indemnity bonds (on stamp paper) by directors (STK-3).
- A statement of accounts (STK-8), indicating no assets or liabilities, certified by a CA and less than 30 days old from the date of your application.
- Copies of directors' PAN and Aadhaar numbers.
- Closure certificate of the bank account.
- Letters of consent from creditors, if necessary.
Step 4: Submit STK-2 Application to ROC
- STK-2 Form is uploaded on the MCA portal along with all the required documents.
- The prescribed government fee (currently ₹10,000) is paid.
- This application can be made only if the company is not under regulatory scrutiny and has no liabilities.
Step 5: Disclosure and ROC
- The company registrar scrutinizes your request.
- The name of your firm appears on the ROC site, which invites anyone with a grievance (including creditors or tax authorities) to respond within 30 days.
- If there are no negative comments, then ROC issues a public notice of ‘strike-off’, and the name of your company is deleted from the official records.
Step 6: Company’s Final Dissolution
- When ROC gives its nod, you are no longer legally bound by the compliance requirements.
- The directors and shareholders are relieved of the liabilities except for the commitments made through indemnities
The process of closing a private limited company is not straightforward. You have to abide by governmental laws and regulations, including filing your final accounts, paying your outstanding taxes and submitting documents.
Different Methods
Different Methods for Closing a Private Limited Company
✅ Closure of a Private Limited Company by ROC (Registrar of Companies) as Defunct
If a private limited company has been inactive for over two years or has not conducted any business since its incorporation, it can be declared defunct. The simplest and most straightforward method is to file an application in Form STK-2 with the Registrar of Companies (ROC). This legal process ensures that the company is officially recognized as inactive and can be closed without any ongoing obligations.
✅ Voluntary Winding Up of a Private Limited Company
A company can choose voluntary winding up with the approval of three-fourths of its shareholders. The Board of Directors can apply to the National Company Law Tribunal (NCLT) for voluntary liquidation. During this process, an insolvency professional addresses financial difficulties and legal claims, providing a liquidation strategy and dissolution plan. Once the NCLT reviews the plan, it passes an order to wind up the company and officially dissolve its operations.
✅ Compulsory Winding Up of a Company by NCLT
In cases where creditors, the central government, or ROC initiate compulsory liquidation, the National Company Law Tribunal (NCLT) oversees the process. An official liquidator is appointed, and the company’s assets and liabilities are evaluated. The NCLT then sanctions the liquidation order based on the findings. This is a legal way to shut down a company when voluntary closure is not an option.
Required Documents
Documents Required for Closing a Pvt Ltd Company in India
When closing a private limited company, you need to submit specific documents to ensure the process is legally compliant. Here are the essential documents required for the closure.
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Income Tax Returns (ITR) and Returns Submitted to the ROC
All ITRs and returns that have been filed with the Registrar of Companies (ROC) need to be provided as part of the company closure process.
Board Resolution Authorizing Company Closure
A formal board decision (resolution) from the company's directors authorizing the closure of the company must be submitted.
Statements from Each Director
Statements made by all directors regarding the closure process, confirming their consent and involvement.
Indemnity Bond from Each Director
An indemnity bond signed by each director, ensuring they take responsibility for the company’s closure and liabilities.
Shareholder Approval (75%)
A resolution passed by at least 75% of the shareholders agreeing to the closure of the company.
Bank Closure Statement
A statement from the company’s bank confirming that the company’s accounts have been closed.
Bank Closure Statement
A statement from the company’s bank confirming that the company’s accounts have been closed.
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Certified Accounting Statement (by a Chartered Accountant)
A final certified accounting statement from a Chartered Accountant (CA), confirming the financial status of the company.
Proof of Identity and Address of Partners
Valid proof of identity and current residential addresses of the company’s directors and partners.
Strike Off Vs Winding Up
Differences Between Company Closure (Winding Up) and Strike Off
|
Criteria |
Strike Off (Company Closure) |
Winding Up (Company Closure) |
|---|---|---|
|
Applicability |
Inactive or dormant businesses devoid of any liabilities |
Operational companies, insolvent firms, or those managed by a tribunal |
|
Governing Law/Section |
Section 248, Companies Act, 2013 |
Sections 271/272, Companies Act, 2013 |
|
Authority |
Registrar of Companies (ROC) |
National Company Law Tribunal (NCLT), Court |
|
Process Involvement |
Filing of STK-2 form with the least documentation |
Involves the formal appointment of a liquidator and a judicial process. |
|
Time Taken |
3–6 months (often faster) |
6–12 months or more (might be lengthy). |
|
Cost |
Lower; less legal/professional expenses |
Higher; involves a court, a liquidator, and compliance fees. |
|
Purpose |
To erase defunct/inactive companies from the ROC register |
To liquidate assets, pay off debts, and dissolve legal existence. |
|
Asset Liquidation |
Not engaged- all liabilities/assets must be cleared beforehand |
Assets are sold to repay the creditors as part of the process. |
|
Directors’ Liability |
Only for liabilities that are not disclosed or known |
The company ceases to exist only after the final order is given, and proper compliance is done. |
|
Suitability |
Dormant, non-operational and liability free companies |
Companies with assets/liabilities or under legal disputes. |
|
Revival Possibility |
Can be NCLT revived on the request of the stakeholders |
Rare after liquidation and discharge. |
Why Choose JustStart?
Why Choose JustStart for Private Limited Company Closure?
At JustStart, we pride ourselves on being a fully automated and tech-enabled portal for company incorporation and its compliance management. We have a team of legal professionals with years of experience behind us, and we use our tech capabilities to execute all legal work for our valuable clients.
Here’s why JustStart is the ideal partner:
Fully Automated, Tech-Enabled Platform
At JustStart, we leverage technology to create an efficient, streamlined portal for company incorporation and compliance management, ensuring fast and accurate service.
Experienced Legal Professionals
Our team of seasoned legal experts brings years of experience, providing trustworthy guidance and support through every step of your company’s legal processes.
Client-Centric Approach
We prioritize the needs of our clients, using technology and expertise to deliver quality services that simplify complex legal procedures.
Reliable and Transparent Service
JustStart maintains a commitment to reliability and transparency, ensuring that clients are fully informed and supported throughout their company’s lifecycle.
Locations
Procedure to Close Pvt Ltd in Other States and Cities
FAQs
LET'S CLEAR ALL THE DOUBTS!
The closure of a company is the best thing to do when a company isn’t running properly or not generating revenue. The closure of a private limited company would be beneficial in the following ways:
- Reduces the annual compliance expense.
- No danger of noncompliance.
- No possibility of severe sanctions or legal action.
- There is no chance of foreclosure.
Within 30 days after the day the assets and liabilities statement were signed, the closing paperwork must be submitted.
It usually takes 90 days after submitting the application to the Ministry of Corporate Affairs for the company to be removed from MCA records.
You are not permitted to trade or undertake any commercial operations via that limited company once your company has been shut off. Any assets still in the company’s possession when it is struck off become the crown’s property.
Yes, a certain amount of tax may be payable on the surplus of assets available in the company before its distribution with the shareholders.
The co is no longer included on the register of companies maintained by ROC.
Yes, shareholders can close a company if approved by a 75% majority.
Common reasons for business failure include poor location, inexperience, poor management, insufficient cash, unplanned expansion, personal use of funds, excessive investment in fixed assets, and unsatisfactory credit arrangements. But not every company fails and closes.
