Key takeaways
- A company that has stopped business and has no liabilities can usually close through strike-off by filing Form STK-2.
- All overdue annual filings must normally be completed before the strike-off application.
- Strike-off applications are processed centrally by the MCA's C-PACE, with a public notice period before the name is removed.
- Companies with assets to distribute or liabilities to settle should consider voluntary liquidation instead.
Businesses close for many reasons: a pivot, a merger, a founder moving on, or an idea that didn't work. Whatever the reason, it pays to close properly. A company left dormant keeps piling up late fees, and its directors can be disqualified. This guide explains how to close a private limited company in India, step by step.
Three ways to close a company
| Route | Best for | Who decides |
|---|---|---|
| Strike-off (Form STK-2) | Companies with no business and no liabilities | Registrar of Companies, through C-PACE |
| Voluntary liquidation | Solvent companies with assets to sell or distribute | Insolvency professional, with an order of the NCLT |
| Winding up by the Tribunal | Specific grounds such as fraud or a special resolution to wind up | National Company Law Tribunal |
Most small private companies that have simply stopped trading use strike-off, the fastest and cheapest route.
Who can apply for strike-off?
A company can apply under section 248(2) of the Companies Act, 2013 if:
- it has not carried on any business for the two immediately preceding financial years and hasn't applied for dormant status, or
- it did not commence business within one year of incorporation;
- and it has no assets and no liabilities on the date of application.
Strike-off is not available to companies that are listed, under investigation, have pending prosecutions or court cases, or have outstanding loans or charges.
Before you apply: clean up
- Complete pending ROC filings. File overdue AOC-4 and MGT-7 or MGT-7A returns, at least up to the end of the financial year in which business stopped.
- Settle all liabilities: vendors, statutory dues, loans and employee dues.
- Satisfy any charges registered on the company's assets.
- Cancel GST registration and file the final return, and close TDS, PF and ESI obligations.
- Close the bank account once nothing is left to pay or receive.
Documents for Form STK-2
- Board resolution approving the strike-off application
- Special resolution, or written consent of shareholders holding 75% of the paid-up capital
- Indemnity bond from every director (Form STK-3)
- Affidavit from every director (Form STK-4)
- Statement of accounts showing assets and liabilities, certified by a chartered accountant and not older than 30 days
- The government filing fee
Every director must have valid DIN and DSC, with DIR-3 KYC up to date, to sign the documents.
What happens after filing
- The application is examined by the MCA's Centre for Processing Accelerated Corporate Exit (C-PACE).
- If it is in order, a public notice of the proposed strike-off is issued and published, inviting objections within the notice period.
- If no valid objection is received, the company's name is struck off the register, and a notice of dissolution is published in the Official Gazette.
You can track the application on the MCA portal. Defects in the application are notified for correction, so accurate documents save weeks.
When voluntary liquidation is better
If the company owns property, investments or other assets, or has creditors to pay, strike-off is not available. Voluntary liquidation under the Insolvency and Bankruptcy Code lets a solvent company appoint an insolvency professional to sell assets, pay creditors and distribute the rest to shareholders, ending with a dissolution order from the Tribunal. It takes longer and costs more, but it is the correct route for companies with something to wind up. See our voluntary liquidation service.
Timeline at a glance
| Stage | Typical time |
|---|---|
| Review records, settle dues, cancel GST and close accounts | 2 to 6 weeks |
| File overdue AOC-4 and annual returns, if any | 1 to 3 weeks (longer if audits are pending) |
| Prepare and file STK-2 with STK-3, STK-4 and the statement of accounts | About 1 week |
| Processing, public notice and strike-off | Usually a few months |
What it costs
The total cost of closing has four parts: the government fee for STK-2, any additional fees for overdue annual filings (₹100 per day per form, which can be the largest item for long-dormant companies), the chartered accountant's certification of the statement of accounts, and professional fees for preparing and filing everything. Companies that have kept their filings up to date close for a fraction of the cost of those that have been ignored for years, which is another reason not to leave a company dormant.
Common mistakes
- Applying for strike-off with overdue annual filings.
- Forgetting to cancel GST, so returns keep falling due.
- Closing the bank account before paying final dues and fees.
- Signing an indemnity without checking for unknown liabilities, since directors remain liable for past acts.
Directors and shareholders can remain liable for anything done before the strike-off. A careful review of the company's records before applying is the best protection.
Our company closure service handles the pending filings, the STK-2 application and follow-up. If you are closing a different kind of business, see our closure and exit services, and keep our company compliance checklist handy until the closure is complete.
Frequently asked questions
How long does it take to close a private limited company?
Once pending filings are complete and the application is in order, strike-off usually takes a few months, including a public notice period and processing by C-PACE.
Can I close a company that never started business?
Yes. A company that did not commence business within one year of incorporation can apply for strike-off, provided it has no liabilities and its filings are in order.
What happens if I just stop filing instead of closing?
Late fees keep adding up at ₹100 per day per form, directors can be disqualified after three years of non-filing, and the Registrar can strike off the company on its own, which can create problems for the directors later.
Can a struck-off company be restored?
In some cases, yes. A company, member or creditor can apply to the National Company Law Tribunal for restoration within the time allowed by law, for example if the company was carrying on business when it was struck off.