How to Close a Private Limited Company in India – As per Latest Strike off/winding up rules

1.0 Introduction

The company latest strike off/company closure rules have been notified, and the earlier rules have been rescinded. So, if you are planning to file the company closure for your company, then you must read this article and decide on its merits.
Company winding up or strike off is the procedure through which company is closed and directors/shareholders need not take care of the compliances. Let us understand everything about the company closure.

2.0 Is this article only Closure of Private Limited Company?

No, the process of closing a company is same for any type of company except for section 8 company. Section 8 company i.e. non-profit organisation (NPO) cannot be strike off under this procedure.

Hence, if you want to close a public company, one person company or Nidhi Company or private limited company, then also you can proceed to file closure under the process explained in this article.

3.0 When a Closure of Company can be filed?

The company closure can be filed only after completing of following conditions:

1. Repay or extinguish all your liabilities: The company closure under section 248 can be filed only after repaying or extinguishing all your liabilities. Further, as a documentary proof, you must take No Objection Certificate (NOC) from the creditors before filing the closure application.
   Further, in case you have a bank loan pending, kindly repay it and take the No Objection Certificate (NOC) from the respective bank.

2. A Special Resolution: To authenticate and approve the company closure application, you need a special resolution from the directors duly certified by each of the directors of the company or the consent of seventy-five percent members regarding paid up share capital.

4.0 Documents required as per Rules: The application for Company closure/strike off shall be filed in Form STK 2 along with the following list of Documents:

• Indemnity bond duly notarized by every director in the prescribed format. The prescribed format is mentioned in form STK 3.
• A Statement of accounts duly certified by a Chartered Accountant (CA). It should be made prior to 30 days.
• An affidavit filed by the every director of the Company. The format is given in form STK 4.
• A statement regarding pending litigations, if any involving the company.

5.0 Other documentation requirement: Apart from the mandatory documents mentioned in the law, you must also gather the following documents to avoid any problem later on. However, if your company is a dummy company, then this point is not applicable to you.

• Take NOC from Income Tax Department: If your company is filing the Income tax return, then you must take NOC from the tax department that all taxes have been paid and they have no objection if the company is closed. You need to take the NOC from the jurisdictional officer of your PAN number.

• Take NOC from Sales Tax or Service Tax department: If your company is in trading of goods or in the service sector, then you also need to get No Objection Certificate (NOC) from the sales tax or service tax department. Further, if you also into the manufacturing sector, then you need to comply with the excise norms as well.

• Take NOC from the Bank: If you have the pending bank loan, then you need to repay the entire loan and then request for NOC from the bank to avoid any litigation later on.

• Take NOC from Public and Clear all deposits: If you have taken any advance or public deposit from the general public, then you must repay it, file it to MCA and take NOC from them, before filing the closure application.
   
• Surrender PAN: Ideally, you should also surrender your PAN card Number.

6.0 In which Form company closure application is to be filed: The company closure application can be filed in FORM STK 2. Earlier, the fast track exit scheme was there, and company closure is filed under the FORM FTE. But now, it is not recommended to file the Company closure with FORM FTE, because it may be withdrawn anytime soon and new forms shall be available, i.e. form STK 2.

7.0 Can Registrar of Company also remove the Company, i.e. mandatory company closure by Registrar of Companies (ROC):  The Registrar of Companies can participate also in his own motion can send notice to the company and all the directors of the companies of his intention to remove the company name from the list of companies if he has reasonable cause to believe that:

• A Company failed to commence its business within one year of its incorporation or
• A company is not carrying on any business or operation for two immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company.

8.0 The Latest Fast Track Exit (FTE) Scheme: Yes, this is the latest fast track exit scheme which can be filed by any company. If you have registered the company and looking forward to fast track exit, then you can easily place your request to deregister the company in India.

9.0 Why it worthwhile to close the Company in India: If you have registered a company and due to any reason you were not able to start your business in India then you can file for company closure due to following benefits:

Benefits of filing the company closure/winding up/strike of:

• Gives you ease of mind
• Saves your yearly compliance cost
• No non-compliance risk.
• No risk of high penalties and prosecutions
• No risk of getting into default

Apart from the mentioned, above, there are various other benefits to close your company in India.

10.0 The record of Companies Closed during the Year: The MCA every month list down the record of the company closed or strike off during the year.

11.0 Conclusion

We have tried to cover as many aspects as required in private company closure, however, in case you still have any doubt, you can ask us directly in our CONTACT FORM.