Company law and LLP · Closing a company
How can a company be closed: by strike-off or by winding up?
Short answer
A company that has not carried on business for two years, or never started within a year of incorporation, and has no liabilities, can apply to be struck off in STK-2 after a special resolution and filing its pending returns. A solvent company with assets or creditors to settle is closed by voluntary liquidation under the Insolvency and Bankruptcy Code, through an insolvency professional. Close GST, income tax and bank accounts before you apply.
Which route
| Strike-off (STK-2) | Voluntary liquidation (IBC) | |
|---|---|---|
| Suits | Company with no business and no assets or liabilities | Solvent company that must sell assets and pay creditors |
| Conditions | No business for the last two years, or not started within one year of incorporation | Directors declare the company can pay its debts in full |
| Who handles it | Registrar, through the Centre for Processing Accelerated Corporate Exit (C-PACE) | An insolvency professional as liquidator, then the NCLT |
| Time | Usually a few months | Usually around a year |
Strike-off steps
- Extinguish all liabilities and close the bank accounts.
- File pending AOC-4 and MGT-7 up to the end of the financial year in which business stopped.
- Pass a special resolution (or get the consent of 75% of members by paid-up capital).
- File STK-2 with:
- an indemnity bond from each director (STK-3);
- an affidavit from each director (STK-4);
- a statement of accounts (STK-8) certified by a Chartered Accountant, not older than 30 days;
- the fee of ₹10,000.
- The Registrar publishes a public notice (STK-6), and after the objection period strikes off the name and dissolves the company (STK-7).
A company cannot apply if, in the last three months, it changed its name or registered office or sold property; or if it is listed, under investigation, or has pending legal proceedings.
After closure
- Directors and members remain liable for any liability that comes to light later.
- A struck-off company can be restored by the NCLT on application within 20 years.
Before you start
Cancel the GST registration, file final income-tax and TDS returns, surrender the TAN, and close EPF and ESIC registrations. Officials ask for these when they process the closure.
LLPs
An LLP with no business for a year can apply to be struck off in Form 24.
Legal basis
- Sections 248 to 252, Companies Act, 2013; Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016
- Section 59, Insolvency and Bankruptcy Code, 2016
Official sources
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