Closure of Company
(Strike-Off & Winding Up)
When a business is no longer operational, keeping it alive invites unnecessary annual compliance costs and penalties. Legally close your company to protect directors from future liabilities.
Why Close an Inactive Company?
An inactive or defunct company still carries the legal burden of annual compliances, including AOC-4, MGT-7, and income tax returns. Non-compliance results in compounding daily penalties and can lead to the disqualification of all directors from holding board positions in any other company for 5 years.
Method 1: Fast Track Strike-Off (Form STK-2)
The easiest and most common way to close a private limited company is by striking its name off the ROC register under Section 248 of the Companies Act, 2013.
Eligibility for STK-2 Strike-Off
- The company has failed to commence any business within 1 year of incorporation.
- OR, the company has not carried on any business or operation for the preceding 2 financial years and has not applied for "Dormant" status.
- The company must have NIL assets and NIL liabilities.
The STK-2 Process
Clear all Liabilities
Ensure the company's bank accounts are closed and all creditors are paid off. Obtain NOCs if necessary.
Board & Shareholder Approval
Pass a board resolution and a special resolution (with 75% majority) approving the strike-off.
File STK-2 with ROC
Submit Form STK-2 along with an indemnity bond, an affidavit from all directors, and a statement of accounts certified by a CA.
Method 2: Voluntary Winding Up
If a company is fully active, has ongoing operations, significant assets, or substantial liabilities that need to be settled, it cannot use the fast-track strike-off. It must undergo Voluntary Winding Up under the Insolvency and Bankruptcy Code (IBC), 2016.
This process requires the appointment of an Insolvency Professional as a liquidator who will take control of the company, realize its assets, settle all claims of creditors, and finally distribute the surplus to the shareholders before officially dissolving the corporate entity.
Director Protection
Legally closing a defunct company is the only way to protect directors from severe non-compliance fines and DIN disqualification.
- Fast Track Form STK-2
- Conditions Nil Liabilities
- CA Certified Required