Closure of Company2023-08-09T23:09:02+05:30

Closure of Company in India

Strike Off of a Company is a process of closure of a Company by removing its name from the Register of companies, which is maintained by the Registrar of Companies (ROC). Once the Company is struck off, it loses its existence and shall not be eligible to carry out further business operations.

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    Closure of Company

    A registered Company may face difficulties to carry out its business operation due to adverse business conditions or lack of finance. Due to such business conditions, the shareholders/directors may lose interest and intention to carry out further business activities.

    The government has given an option for voluntary closure of the Company, using which a company may apply to strike off or remove its name from the register, which is maintained by the ROC.

    Which Companies can apply for Voluntary Closure of Company?

    Following classes of company can apply for removal of its name company by way of voluntary closure: 

    1. A company which has failed to commence its business within 1 (one) year of its incorporation or
    2. A company which is not carrying on any business or operation for the last 2 (two) financial years and has not obtained the status of a dormant company.

    Advantages Of Closure of Company in India

    • Easy exit opportunity for Entrepreneur’s

      The process of closing a company by way of strike off is easy and convenient for entrepreneurs. The process of application for closure can be done online and further the Registrar will close the company if there is no objection from Regulators within 10-12 months of time.

    • Avoid requirement of yearly Compliances

      A company has to file certain annual returns and documents every year to the Registrar of Companies (ROC) and other regulatory authorities. In a case, the company is not doing any business or does not foresee any business in the coming years, then it can proceed towards closure of the Company in order to avoid the cost of yearly compliances.

    • Avoid burden of Penalties

      When a Company does not comply with the requirement of filing a financial statement, annual return, or any other statutory forms, a heavy monetary penalty and additional government fees may be imposed on the Company and its directors. Therefore, to avoid such consequences, closure of the Company is always a better option.

    Minimum Requirements For Voluntary Closure of Company in India

    • Company has not conducted any business for a period of 1 year since incorporation or has not carried on any business or operations for the last 2 consecutive years

    • Consent of Shareholders and Creditors (if any)

    • Company should not have any Assets or Liabilities

    • Bank account of Company (if any) shall be closed

    • Digital Signature of the authorised Director

    • DIN of Directors must be Approved

    • Company has filed Form INC 20A (Declaration of Commencement)

    • Company has filed Annual returns and financial statement up to the year it has conducted business.

    What Is Included In Our Closure of Company in India package?

    • Consultation on process of Closure of Company

    • Preparation of Affidavit, Indemnity Bond and other documents for the purpose of Closure of Company

    • Preparation of Statement of Accounts, Statement of litigation and other documents duly certified by a Professional (CA/CS/CMA)

    • Filling of Form STK-2 with MCA along with Professional Certification

    • Payment of applicable government fees to the ROC

    • Acknowledgement number

    • Follow up with ROC/MCA after filing of the form

    Company Closure Process in India

    • Collection of required Information and Documents

      In the first step, we shall collect the required information and documents required as per the checklist. We shall verify and confirm the documents and information provided.

    • Preparing the documents for Closure of Company

      In the next step, we shall prepare various documents, forms, resolutions and statement required for application for voluntary closure of company.

    • Submission of Form STK-2 payment of government fees to ROC

      After preparation of all the required documents, an application for removal of name of the company shall be submitted to the Registrar of Companies (ROC) in Form STK-2 which shall be signed by the authorized director and certified by a professional (CA/CS/CMA) by paying the requisite fees for approval purposes and an Acknowledgement Number (SRN) shall be generated.

    • Strike off of Name by ROC within few months

      After filing an application for strike off by the company, the ROC shall publish a public notice inviting objections to the proposed strike off from the general public and regulatory authorities.

      If there are no objections received within a specified time from the general public or government authorities, the ROC can proceed to strike off or remove the name of the company from the Register of Companies (ROC).

    Documents Required for Closure of Company in India

    • Incorporation documents of company such as Certificate of Incorporation, PAN, TAN, MOA and AOA.

    • Digital Signature Certificate (DSC) of Directors

    • Details of Change in Director and Shareholder from the date of Incorporation (if any)

    • Copies of Financial Statement, Auditor report, Income Tax Return (ITR) of the company previously filed.

    • Pending Litigation against company (if any)

    • Details of pending dues towards the Creditors, lender of the Company.

    • KYC documents of directors and shareholders of company such as PAN and Aadhaar Card.

    • Any other documents as may be required

    FAQ

    How much time is required for closing of a company in India?2021-09-20T13:29:41+05:30

    On average, it takes around 15-20 days for making an application for Strike off of company to the ROC. After that, it will take 10 to 12 months for the processing and completion of the process by ROC’s end. However, this is dependent on the workload of the ROC/MCA.

    Do I need to be physically present during this process?2021-09-20T13:29:24+05:30

    No, all the required documents are filed electronically, so you would not need to be physically present at all. You would just need to send us scanned copies of all the required documents.

    Whether a company is required to file Financial Statement in Form AOC-4 and Annual Return in Form MGT-7 before applying for strike off or removal of its name?2021-09-20T13:28:39+05:30

    Yes, a company is required to file overdue returns such as financial Statement in Form AOC-4 and Annual Return in Form MGT-7 up to the financial year where the company carried out its business operations.

    Is the bank account of the company (if opened) required to be closed before filing Form STK-2?2021-09-20T13:11:16+05:30

    Yes, the bank account of company if opened is required to be closed before filing of Form STK-2.

    Our company has formed 1 year ago but till now we have not done any kind of business in it, can I close my company? And do I need to file Annual Return and Financial Statement?2021-09-20T13:10:49+05:30

    Yes, a company which has failed to commence its business within 1 (one) year of its incorporation may apply for closure by way of strike off. In the above case, as the company did not carry out any business activity, it is not required to file Annual Return and Financial Statement.

    Our company has formed 5 years ago, and we had started the business back then but for the last 2 years we have not done any kind of business in the company, can I close my company?2021-09-20T13:10:27+05:30

    Yes, a company which is not carrying on any business or operation for a period of 1 (one) year or more can apply for closure by way of strike off. It is required to file overdue returns such as annual returns and financial statements up to the financial year where the company carried out its business operations.

    Our company has formed just 6 months ago but till now we have not done any kind of business in the company, can I close my company?2021-09-20T13:10:07+05:30

    No, a company can apply for strike off or removal of its name to the ROC, only when it is not has failed to commence its business within 1 (one) year of its incorporation or not carrying on any business or operation for a period of 2 (two) year or more. Therefore, such a company has to wait for at least 1 years to apply for voluntary closure.

    Is the consent of members required for closing the company?2021-09-20T13:06:42+05:30

    Yes, the consent of minimum 75% of members is required for Closing the company by way of strike off.

    Can the Registrar of Companies (ROC) proceed to strike off or remove the name of a company on its own will without any voluntary application by the company?2021-09-20T13:06:19+05:30

    Yes, ROC may proceed to strike off or remove the name of a company, if such company is not carrying on any business or operation for a period of 2 (two) years or more and the Registrar has reasonable cause to believe the same.

    Is Income Tax Return (ITR) acknowledgment required before making an application for strike off or removal of the name of the company?2021-09-20T13:05:46+05:30

    In cases where the company has carried out any business and has filed an Income Tax Return (ITR), then a copy of the acknowledgment of the latest Income-tax return filed shall be required to be provided with Form STK-2. But if company has not done any business and has not filed any ITR, then it is not required to furnish such document.

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