Different ways to Close a Company in India
It is better to abandon a sinking and damaged ship than to sink with it. A business may need to be closed for many reasons that may be due to business failure or any other unavoidable circumstances. This article will help you understand different ways to close a company in India.
Under Companies Act 2013, a Company can be closed in two ways.
- Winding Up
- Fast track Exit
Fast Track exit can be done in two ways:
- Suo Moto by Registrar
- Company has failed to commence any business in a year of its incorporation
- The company is not carrying out any business or Activity for preceding 2 financial years and has not sought the status of Dormant Company.
- Voluntary Removal of Name using Form STK 2
- Incorporation Certificate
- Director Identification Number
- Pending Litigation Proceedings if any
- Application in form STK-2
- Government filing fees: INR 5,000/-
- Copy of Board resolution authorizing the filing of this application;
- A statement of accounts showing the assets and liabilities of the Company made up to a day, not more than thirty days before the date of application and certified by a Chartered Accountant
- The shareholder’s approval by way of Special Resolution
- In the case of a company regulated by any other authority, approval of such authority shall also be required.
- Copy of relevant order for delisting, if any, from the concerned Stock Exchange;
- Indemnity bond in Form No. STK-3;
- Affidavit in Form No. STK-4
Companies that cannot file for voluntary strike-off:
A company cannot fill the form STK 2 at any time in the previous 3 months if the company has
- Has changed its name or shifted its registered office from one State to another;
- Has made a disposal for value of property or rights held by it, immediately
- Before cesser of trade or otherwise carrying on of business, for the purpose of disposal for gain in the normal course of trading or otherwise carrying on of business;
- Has engaged in any other activity except the one which is necessary or expedient for the purpose of making an application under that section, or deciding whether to do so or concluding the affairs of the company or complying with any statutory requirement;
- Has made an application to the Tribunal for the sanctioning of a compromise or arrangement and the matter has not been finally concluded; or
- Is being wound up under Chapter XX of Companies Act or under the Insolvency and Bankruptcy code, 2016
Companies that cannot use Fast Track Exit option:
- Companies Registered Under Section 8
- Listed companies
- Companies that have been delisted due to non-compliance of listing regulations or listing agreement or any other statutory laws;
- Vanishing companies;
- Companies where inspection or investigation is ordered and being carried out or actions on such order are yet to be taken up or were completed but prosecutions arising out of such inspection or investigation are pending in the Court;
- Companies where notices have been issued by the Registrar or Inspector (under Section 234 of the Companies Act, 1956 (old Act) or section 206 or section 207 of the Act)and reply thereto is pending;
- Companies against which any prosecution for an offense is pending in any court;
- Companies whose application for compounding is pending;
- Companies which have accepted public deposits which are either outstanding or the company is in default in repayment of the same;
- Companies having charges which are pending for satisfaction.
After you Strike off your company:
As soon as the name of the company is removed from Register, from the date mentioned in the notice under sub-section (5) of section 248 cease to operate as a company and the Certificate of Incorporation issued to it shall be deemed to have been canceled from such date except for the purpose of realizing the amount due to the company and for the payment or discharge of the liabilities or obligations of the company.