Close Private Limited Company

Closing a Private Limited Company in India

Closing a company is a formal legal process. In India, a Private Limited Company can be closed primarily through two methods: Strike Off (for defunct companies) and Voluntary Winding Up (for solvent companies). Choosing the right method depends on your company's status, assets, and liabilities.

Methods of Closure

• Strike Off (Fast Track Exit): Best for companies with no business activity for 2+ years and zero assets/liabilities. It is faster and cheaper.
• Voluntary Winding Up: Best for active companies that want to shut down. It involves appointing a liquidator to sell assets and pay off debts.

Process 1: Strike Off (Form STK-2)

This is the most common route for inactive companies.

1. Board Resolution: Approve the proposal to strike off the name.
2. Extinguish Liabilities: Ensure all debts are paid and bank accounts are closed.
3. Shareholder Approval: Pass a special resolution (75% consent).
4. File Form STK-2: Submit the application to the ROC with indemnity bonds and affidavits.
5. Public Notice: ROC publishes a notice inviting objections (30 days).
6. Dissolution: If no objections, the company name is struck off.

Documents Required: Indemnity Bond (STK-3), Affidavit (STK-4), Statement of Accounts (certified by CA).

Process 2: Voluntary Winding Up

This is for solvent companies with assets and liabilities, governed by the IBC, 2016.

1. Declaration of Solvency: Directors declare the company can pay its debts.
2. Shareholder Resolution: Approve liquidation and appoint a Liquidator.
3. Public Announcement: Invite claims from creditors.
4. Asset Realization: Liquidator sells assets and pays creditors.
5. Final Report: Liquidator submits the final report to the NCLT.
6. Dissolution Order: NCLT passes the order to dissolve the company.

Strike Off vs. Voluntary Winding Up