Private Limited Company Closure: Process, Fees, Documents & ROC Filing

If you are not planning to use your firm anymore, carrying on with statutory compliance may lead to unnecessary obligations. A legally performed closure allows you to delete the firm from the register, provided you comply with the regulations of the Companies Act, 2013.

The closure of Pvt Ltd company usually involves settling liabilities, completing compliance requirements, acquiring the necessary shareholders’ approval, and submitting the required application to the MCA. The firm needs to check the compliance report and fulfil statutory requirements first prior to requesting removal of its name.

If you have a question in your mind like how to close a private limited company in India? Then the answer would be: The strike-off of the company means that the firm name is erased from the Registry of Companies. In accordance with Section 248 of the Companies Act, 2013, a firm can apply to the Registrar of Firms for deletion of its name from the Register only after all liabilities of the organization are cleared.

Only after the Registrar announces the final decision regarding deletion of the company in the Official Gazette, the company is termed dissolved. However, this means that the directors, employees, and members still bear little or no responsibility.

If a company ceases to operate, keeping it alive means that you have to comply with rules and requirements like annual filings. To avert possible problems, it is better to close pvt ltd company according to due process.

You may want to proceed with closure if

• The business has stopped functioning.

• The entity is no longer needed.

• The company has no outstanding liabilities.

• The business has become inactive.

• The operation is not expected to be resumed.

• The firm is not bringing any profit anymore.

A qualified company may, under section 248(2), voluntarily approach the Registrar for the deletion of its name if certain conditions are satisfied. The application must also demonstrate that the company has paid off its debts and received approval from its shareholders.

Certain companies will not be able to go to the Registrar for removal of their name, e.g., companies under section 8 of the Companies Act.

Before you close private limited company, it is necessary to ensure that the company fulfills the conditions under voluntary strike-off. The following are the things to verify:

• Outstanding debts

• Pending filings

• Ongoing legal proceedings

• Company’s assets

• Registered charges

• Recent corporate changes

• Recent business operations

• Approval from the regulatory authority where applicable

Section 248 of the Companies Act also restricts applications in certain cases such as when the company has changed its name or has changed its registered office from one state to another, disposed of assets under certain circumstances, etc.

The necessary documents required for company closure consist of documents and declarations needed for the STK-2 application.

The following will generally be required:

• Indemnity bond in Form STK-3

• Statement of accounts certified by a Chartered Accountant

• Affidavit in Form STK-4 from each director

• Certified copy of special resolution or requisite member consent

• Statement regarding pending litigation

• Relevant MCA filing documents

According to MCA rules, the statement of accounts must be prepared no earlier than 30 days prior to the application.

The procedure to close a private limited company involves 8 steps, including completing pending compliances, settling liabilities, getting shareholders’ approval, and then filing with the MCA.

Step 1: Review Company Status

The procedure to close pvt ltd company requires that first, we look at its MCA (company) records to find out about pending filings and liabilities, as well as its assets and other relevant info.

Step 2: Complete Pending Compliances

Please advise on addressing of all applicable outstanding filings as well as ensuring that the company will be suitably positioned to carry out closure.

Step 3: Settle Liabilities

The company should extinguish its liabilities to apply for a voluntary strike-off under section 248 (2) of the Companies Act.

Step 4: Obtain Board Approval

Directors approve this proposal and authorise taking all necessary steps for filing the closure application.

Step 5: Obtain Shareholder Approval

The Company shall obtain, by way of Special Resolution, such sanction(s) if required to be obtained by the Company, either by passing the necessary Special Resolution or obtaining Consent from at least 75% members (in terms of Paid-Up Share Capital).

Step 6: Prepare STK-2

Preparation of the required declaration, indemnity bonds, statements of account and other relevant documents.

Step 7: File With MCA

The prescribed application will be filed with the MCA as per the applicable mechanism. The Current MCA instruction kit says "STK-2 for Application to Centre for Processing Accelerated Corporate Exit(C-PACE)for Closure/removal of Name of Company".

Step 8: ROC Processing and Final Strike Off

After this stage, the application will be examined, and you need to follow all necessary steps of giving public notices. Once the last notice for removal gets published, your company becomes dissolved.

The timeline depends on the company’s compliance status, documents required and prepared, and MCA processing time also plays an important factor.

The private limited company closure fees depend on the professional and government charges. Also, the company's circumstances and pending compliances.

Note: Government and other statutory fees can vary and you need to confirm them. For the latest fees, you can contact Companyregister.co.in

After successfully processing the filing, a notice regarding the process of striking off a company and dissolving it is published by the Registrar. STK-7 is the notice published in accordance with Section 248(5) and relevant rules.

The final notice along with the necessary documents for deregistration must be filed with the records of the company.

The strike off means that the company has been removed from the register of companies, and upon publication of the required final notice, the company gets dissolved.

Nevertheless, dissolution does not mean that all obligations have been canceled. Certain obligations of company officers, directors, managers, and members can still be enforced under the provisions of the Companies Act.

The company does not have to renew the license after the company name is removed from the register and the final notice is published. However, in case of future requirements, the documents should be stored, as they can be used as evidence of company status in considering other matters.

Yes, there are procedures set out in statute which provide you with avenues to restore your struck-off company back into the register. However, this is a completely different procedure to merely opening up a business that is normally dormant.

If you feel restoration is required, take time to consider why your company was struck off as well as what is available under statute.

In case of non-compliance, you might have to pay additional filing fees as well. It’s important to understand that just because you close your business doesn’t mean you can close your company.

Hence, make sure you fulfill all the applicable statutory requirements and satisfy the necessary conditions for voluntary strike-off before you apply.

Common reasons for which an application could be objected to, resubmitted or rejected are as follows:

• Outstanding liabilities

• Incomplete statutory filings

• Incorrect Statement of Accounts

• Missing director declaration

• Incorrect Shareholder Approval

• Pending litigation

• Incomplete MCA Records

• Existing Regulatory Issues

• Ineligibility on the grounds mentioned under section 248

• Incorrect / Inconsistent Documents

Conduct a compliance review ahead of your filing to spot these issues.

We provide our services to numerous enterprises in the states of Delhi, Maharashtra, Karnataka, Gujarat, Tamil Nadu, Telangana, Uttar Pradesh, Haryana, Rajasthan, Punjab, West Bengal, and others.

The process of company strike-off is determined by the central law on companies and the jurisdiction of the registrar where the company is located.

Our experts provides assistance to clients in various sectors such as:

• Manufacturing

• IT

• Health care

• Education

• E-commerce

• Trading

• Logistics

• Real estate

• Infrastructure

• Consulting

• Professional services

In some cases, there may be additional regulations that companies need to comply with depending on their industry.

The company provides all necessary services for the Pvt Ltd company closure process, starting from eligibility assessment and compliance review, to document preparation, agreement performance, and filing the necessary papers with the authorities.

We will help you organize everything necessary and clarify all pending matters before you submit. If you need help with LLP Strike Off or compliance with corporate regulations as well, we will help you make the right decision.