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Home > GST > Help Center > Registered Company closure Last Updated: Dec 11th 2023

Private Limited Company Closure - Explained

Running a business comes with its own challenges. Sometimes the contract ends, business will not start, and at other times, the operational cost of business increases when compared to revenue. In these cases, the directors or shareholders wish to close the company.

Private Limited Company Closure

In these cases, the company can apply for striking of the company. The process of striking off is an alternative way to the winding up of a company.

Understand the difference between Closure, Strike Off, Who can file such, the fees associated and the processing timelines.

This document covers

  1. Reasons for Closure or Strike off
  2. Private Limited Company statistics
  3. Strike off by ROC
  4. Voluntary Strike off by the Company
  5. Companies who cannot file for voluntarily strike off
  6. Government Fee

1. Reasons for Closure or Strike off

The company can apply for closure in the following cases.

  1. If the company has not commenced its business within 1 year of incorporation
  2. The company is not carrying out any business activity for preceding 2 financial years and has not acquired the status of dormant company.
  3. The subscribers to memorandum have not paid the subscription money and the company has not filed INC 20A
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If you are an existing or new client seeking expert advice on Company Closure Process, Convert Company, or related problems, take the Tax Consultation Service

If you have decided to close the company, visit Private Limited Company Closure Plan, Pricing

2. Private Limited Company Statistics

  • Average number of companies incorporated every year - 1,09,200
  • Number of active companies as at the end of 2022 - 14,00,000
  • Number of companies above 10 Cr turnover - 1,10,000
  • Widely believed most companies are non-operational, showing < Rs. 5 Lakhs turnover

3. Strike off by ROC

  • The Registrar of Companies will issue a notice to the companies and its directors in STK-1 for removal of names of companies from the Registrar of Companies
  • The notice will be issues if the ROC officer has a valid reason that the company has not commenced its business or directors are disqualified.
  • Once the notice is received the company or director, they should send the representation for non-removal of company name within 30 days of such notice.

4. Voluntary Strike off by the Company

The company might wish to close the company due to various reasons. The company can file an application to the Registrar of Companies (ROC) in form STK-2 after closing the bank account and paying the liabilities

  1. Held Board Meeting to decide for voluntary strike off and pass the special resolution
  2. Conduct EGM and pass the special resolution
  3. File the resolutions passed in MGT 14 with 30 days of passing special resolution
  4. Statement of Accounts in STK-8 should be drawn (not less than 30 days from the date of application) and should be certified by CA
  5. File Form STK-2 along with the attachments

5. Companies who cannot file for voluntarily strike off

The following companies cannot file for voluntarily strike off with ROC

  • Listed Companies
  • Companies delisted due to non-compliance of listing regulations or listing agreement
  • Vanishing companies
  • Companies where inspection or investigation is ordered
  • Companies against which prosecution or offence is pending in court
  • Companies having charges which are pending for satisfaction.
  • Companies registered u/s 25 or 8 of companies act

6. Government Fee

Form STK-2 should be accompanied by a Government fees of Rs 10,000. It needs to be payable at the time of uploading STK-2

How to get help from

Disclaimer: This article provides an overview and general guidance, not exhaustive for brevity. Please refer Income Tax Act, GST Act, Companies Act and other tax compliance acts, Rules, and Notifications for details.