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Company Closure in India

The Ministry of Corporate Affairs (“MCA”) vide Notification dated 26th December, 2016 notified Sections 248 to 252 of the Companies Act, 2013 (“Act”) dealing with the provision for Removal of Names of Companies from Register of Companies (“ROC”). The provisions relating to strike off provide an opportunity to the non working companies to get their names struck off from the records of the ROC. The MCA had also issued the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 (“Rules”) to be effective from the same date i.e. 26th December, 2016 in order to provide procedural aspects of striking off.

Modes of Striking off of Companies:

A company can be struck off by any of the following modes:

(i) Suo moto by the ROC under Section 248(1) of the Act (Strike off by ROC); or

(ii) An application by the company for removal of name/ strike off of company under Section 248(2) of the Act (Srtike off by Company).

A company which is undergoing the process of ‘Striking Off’ either voluntarily or by an action of the ROC is given the status as ‘Striking Off’ and the status of the company is changed to ‘Dissolved’ or ‘Liquidated’ when affairs of the company are completely wound-up by following the provision of winding-up of company. After dissolution or liquidation, the company ceases to exist.

Strike off by ROC:

Subject to the provisions of section 248(1) of the Act read with Rule 3 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016, in the following cases, the Registrar can suo moto remove the name of the company from the Register:

  • (1) a company has failed to commence its business within one year of its incorporation or;

  • (2) a company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company under section 455 of the Companies Act, 2013; or

  • (3) the subscribers to the memorandum have not paid the subscription which they had undertaken to pay at the time of incorporation of a company and a declaration to this affect has not filed within 180 days of its incorporation under section 10A(i). This provision is applicable to companies incorporated after 02nd November, 2018 ; or

  • (4) the company is not carrying on any business or operations as revealed after the physical verification carried out under section 12(9) of the Act.

Before removal of the name of the company from the Register, the ROC is required to send a notice in Form STK 1 to the company and all the directors of the company, of his intention to remove the name of the company from the register of companies. Such a notice should contain the reasons for which the name of the company is to be removed from the Register of Companies. Such a notice should be sent to all the directors of the company at the addresses available on record, by registered post with acknowledgement due or by speed post. On receipt of such a notice, the company and all the directors of the company are required to send their representations along with copies of the relevant documents, if any, explaining the reasons as to why the name of the company should not be removed from the Register of Companies. Such representations should be given within a period of thirty days from the date of the notice.

Strike off by Company:

Strike off provisions gives a choice or an option to non working companies to remove its name from the Register of Companies. There are many companies which are registered with ROC but due to various reasons they are not operative. The strike off gives an option to such companies to apply to ROC for removal of their name from the Register of Companies. The procedure of this exit is now governed under section 248(2) of Companies Act, 2013 read with Rule 4 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016. This act is a speedy way to close down a company being non–operational over a period of time.

Subject to the provisions of section 248 (2) of companies Act 2013 read with Rule 4 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016, the company can on its own file an application for removal of name of company from the Register of companies.

A company through its board of directors, can file an application for removal of name of company from the Register of Companies on the following grounds:

  • (1) a company has failed to commence its business within one year of its incorporation or;

  • (2) a company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company under section 455 of the Companies Act, 2013; or

  • (3) the subscribers to the memorandum have not paid the subscription which they had undertaken to pay at the time of incorporation of a company and a declaration to this affect has not filed within 180 days of its incorporation under section 10A(i). This provision is applicable to companies incorporated after 02nd November, 2018 ; or

  • (4) the company is not carrying on any business or operations as revealed after the physical verification carried out under section 12(9) of the Act.

Before making an application to the ROC for removal of the name of the company, the board of directors of the company shall take all the steps necessary in order to extinguish all its liabilities. Approval of the shareholders by way of special resolution or consent of seventy five percent members in terms of paid up share capital is also required to be taken for filing an application to the ROC for the removal of the name of the company from the Register of Companies. In the case of a company regulated under a special Act, approval of the regulatory body constituted or established under that Act shall also be obtained and enclosed with the application.

Situations in which a company cannot apply for strike off under Section 248(2) of the Act:

The Company shall not make any application for the strike off of the company, if at any time in the previous 3 months, the company has done any of the below mentioned activities:

  • Has changed its name or

  • Has 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 scheme of compromise or arrangement and the matter has not been finally concluded; or

  • is being wound up under Chapter XX of the Companies Act, 2013 or under the Insolvency and Bankruptcy Code, 2016.

An application for striking off the name of the company under Section 248(2) of the Act shall be withdrawn by the company or rejected by the ROC as soon as the above stated conditions are brought to notice. In case of violation of the above provision, the company shall be punishable with fine which may extend to one lakh rupees.

Type of Companies which cannot be removed under these provisions, viz., Section 248(1) & (2) of the Act:

  • Listed Companies;

  • Companies registered under section 8;

  • Companies having charges which are pending for satisfaction;

  • Companies whose application for compounding is pending for compounding of offences committed by the company or any of its officers in default;

  • Companies against which any prosecution for an offence is pending in any court;

  • Vanishing Companies (ie. a Company registered under this act, listed on stock exchange which has failed to file its returns with the Registrar of Companies and Stock Exchange for a consecutive period of 2 years, and not maintaining its registered office at the address notified with the Registrar of Companies or Stock Exchange, and none of its directors are traceable);

  • Companies that have been delisted due to non-compliance of listing regulations or listing agreement or any other statutory laws;

  • Companies where inspection or investigation is ordered and being carried out or actions or such order are yet to be taken up or were complete but prosecutions arising out of such inspection or investigation are pending in the court;

  • Companies which have accepted public deposits which are either outstanding or the company is in default in repayment of the same;

  • Companies which have accepted public deposits which are either outstanding or the company is in default in repayment of the same;

Procedure for Strike off of the Company by ROC:

Herein below is the step by step process involved in sriking off of the Company by the Registrar of Companies (ROC):

  • 1

    Service of notice by ROC

    The ROC is required to send a notice in Form STK 1 to the company and all the directors of the company, of his intention to remove the name of the company from the Register of Companies. Such a notice shall contain the reasons on the basis of which the name of the company is to be removed from the Register of Companies. Such a notice should be sent to all the directors of the company at the addresses available on record, by registered post with acknowledgement due or by speed post.

  • 2

    Reply to the Notice from the company

    On receipt of such a notice, the company and all the directors of the company, are required to send their representations along with copies of the relevant documents, if any, explaining the reasons as to why the name of the company should not be removed from the Register of Companies. Such a representation should be given within a period of thirty days from the date of the notice.

  • 3

    Consideration of the representation made by the company

    The ROC will consider the representation made by the company and all the directors of the company. If the ROC is not satisfied with the representation made by the company and its directors, it may proceed to strike off the name of company.

  • 4

    Publication of notice of strike off by ROC

    The notice for removal of the name of the company should be in Form STK 5 for the information of the general public and should be:

    • placed on the official website of the Ministry of Corporate Affairs on a separate link established on such website in this regard;

    • published in the Official Gazette;

    • published in Form No. STK 5A in English language in a leading English newspaper and at least once in vernacular language in a leading vernacular language newspaper, both having wide circulation in the State in which the registered office of the company is situated.

    Such a publication is required to be given for the information of the general public in order to enable the general public to give their objections, if any, to the proposed removal / striking off of name of the companies from the Register of Companies and requiring them to send their objection to the ROC within thirty days from the date of publication of the notice.

  • 5

    Intimation to regulatory authorities

    Intimation about the proposed action of removal or striking off the names of company should be sent to the Income-tax authorities, GST authorities having jurisdiction over such a company. Such intimation should be given to enable the authorities to give their objections, if any. Such objections are required to be given within a period of thirty days from the date of issue of the letter of intimation.

  • 6

    Striking off / Removal of the name of the company

    After expiry of thirty days from the date of issue of the letter of intimation, if there are no objections received within thirty days from the general public or respective authority and unless cause to the contrary is shown by the company, the ROC can proceed to strike off or remove the name of the company from the Register of Companies.

  • 7

    Provision for realisation of amount due

    The ROC before passing an order for Striking off / Removal of the name of the company should satisfy himself that sufficient provision has been made for realisation of all amount due to the company and for the payment or discharge of its liabilities and obligations by the company within a reasonable time. The ROC can obtain necessary undertakings from the managing director, director or other persons in charge of the management of the company. Notwithstanding the undertakings, the assets of the company shall be made available for the payment or discharge of all its liabilities and obligations even after the date of the order removing the name of the company from the Register of Companies.

  • 8

    Notice of dissolution of the company by the ROC

    After the expiry of the time mentioned in the notice, the ROC can strike off the name of the company from the Register. The notice of striking off the name of the company from the Register of Companies and its dissolution should be published in the Official Gazette in Form STK 7 and the same should also be placed on the official website of the Ministry of Corporate Affairs. The company shall stand dissolved on the publication of this notice in the Official Gazette.

Procedure for Strike off by the Company:

The board of directors of the company shall follow the following procedure for removal of name of the company from the Register of Companies maintained by the ROC. Herein below is the step by step process involved in sriking off by the Company:

  • 1

    Call and hold Board Meeting to pass Board resolution for the purpose of striking off of the name of the company from the Register maintained by the ROC, subject to the approval of the shareholders of the company, and to authorize any director to file an application and for fixing date, time and venue for the Extraordinary General Meeting of the shareholder.

  • 2

    After passing of Board resolution, if there is any liability in the company, the company will set off / pay all its liabilities.

  • 3

    Every director of the company should sign and execute indemnity bond duly notarised by every director in Form STK 3 and Affidavit in Form STK 4. In case director is a foreign national or non-resident Indian, the documents should be notarized or apostilled or consularised.

  • 4

    Company should get the statement of accounts in Form STK-8 containing the assets and liabilities of the company made up to a day, not more than thirty days before the date of application. Such a statement should be certified by a Chartered Accountant;

  • 5

    General Meeting should be held on the day, date, time and venue as fixed earlier for passing of the special resolution.

  • 6

    Within thirty days from the date of the passing of the special resolution in the General Meeting or after obtaining consent, company should file Form MGT-14.

  • 7

    Approval of concerned authorities is required in case of a company regulated by any other authority.

  • 8

    Thereafter, an application for removal of the name of the company shall be made in Form STK-2 along with the fee of ten thousand rupees. Following documents will be attached in the Form STK-2. {Rule 4(1)} Attachment – STK-2: Rule 4(3).

    • No objection certificate from the appropriate concerned authority, if applicable (RBI, IRDA, Housing Finance, SEBI etc.) Rule 4(2).

    • Indemnity Bond duly notarised by every Director in Form STK-3. However, in case of a government company or a subsidiary of a government company, a duly notarised indemnity bond in Form STK-3A shall be given by an authorised representative, not below the rank of Under Secretary or its equivalent, in the administrative Ministry or Department of the Government of India or the State Government, as the case may be, on behalf of the company. If the person is foreign national or non-resident Indian, the indemnity bond, and declaration shall be notarized or apostillised or consularised.

    • Statement of Accounts certified by CA in Form STK-8. Statement should not be older than 30 days from the date of application.

    • An Affidavit by every director in Form STK-4.

    • Certified true copy of special resolution duly certified by each of the directors of the company or consent of seventy five per cent of the members of the company in terms of paid up share capital as on the date of application.

    • Statement regarding pending litigations, if any, involving company. (Better to give in affidavit format).

      It must be noted that Form STK-2 cannot be filed by a company unless it has filed its overdue returns in Form No. AOC-4 (Financial Statement) or AOC-4 XBRL, as the case may be, and Form No. MGT-7 (Annual Return), up to the end of the financial year in which the company ceased to carry its business operations. Also, in case a company intends to file Form No. STK-2 after the action under sub-section (1) of section 248 has been initiated by the ROC, it shall file all pending overdue returns in Form No. AOC-4 (Financial Statement) or AOC-4 XBRL, as the case may be, and Form No. MGT-7 (Annual Return) before filing Form No. STK-2. Form No STK-2 also cannot be filed once notice in Form No. STK-7 has been issued by the ROC pursuant to the action initiated under section 248(1).

    The company shall also place the application on its website, if any, till the disposal of the application.

  • 9

    E-Form STK-2 shall be signed by an authorized director.

  • 10

    E-Form STK-2 shall be certified by Company secretary in whole time practice or Chartered Accountant in whole time practice or Cost Accountant in whole time practice.

  • 11

    Public notice by ROC: After filing application for strike off by the company, the ROC shall publish a public notice in Form STK-6 inviting objections to the proposed strike off, if any. The notice will also be published for information of the general public in the following ways:

    • (a) placed on the official website of the Ministry of Corporate Affairs on a separate link established on such website in this regard;

    • (b) published in the Official Gazette;

    • (c) Published in English language in a leading English newspaper and at least once in vernacular language in a leading vernacular language newspaper, both having wide circulation in the State in which the registered office of the company is situated.

  • 12

    Intimation to regulatory authorities: Intimation about the proposed action of removal or striking off the name of the company should be sent to the Income-tax authorities, GST authorities having jurisdiction over the company to seek their objections, if any, which shall be furnished within a period of thirty days from the date of issue of the letter of intimation.

  • 13

    Striking off / Removal of the name of the company: After thirty days from the date of issue of the letter of intimation and unless cause to the contrary is shown by the company, if there are no objections received within thirty days from the general public or respective authority, the ROC can proceed to strike off or remove the name of the company from the Register of Companies.

  • 14

    Provision for realisation of amount due: The ROC before passing an order for striking off / Removal of the name of the company should satisfy himself that sufficient provision has been made for the realisation of all amount due to the company and for the payment or discharge of its liabilities and obligations by the company within a reasonable time. The ROC can obtain necessary undertakings from the managing director, director or other persons in charge of the management of the company. The assets of the company should be made available for the payment or discharge of all its liabilities and obligations even after the date of the order removing the name of the company from the Register of Companies.

  • 15

    Notice of dissolution of the company: After the expiry of the time mentioned in the notice, the ROC can strike off the name of the company from the Register. The notice of striking off the name of the company from the register of companies and its dissolution should be published in the Official Gazette in Form STK 7 and the same should also be placed on the official website of the Ministry of Corporate Affairs. The company shall stand dissolved on the publication of this notice in the Official Gazette.

No objection certificate from appropriate Regulatory Authority

No objection certificate (“NOC”) from appropriate Regulatory Authority concerned is required in case a company is regulated under a special Act which shall be attached to the application in Form STK- 2. The said NOC is required in case of the following companies:

  • (1) companies which have conducted or conducting non-banking financial and investment activities as referred to in the Reserve Bank of India Act, 1934 (2 of 1934) or rules and regulations thereunder;

  • (2) housing finance companies as referred to in the Housing Finance Companies (National Housing Bank) Directions, 2010 issued under the National Housing Bank Act, 1987 (53 of 1987);

  • (3) insurance companies as referred to in the Insurance Act, 1938 (4 of 1938) or rules and regulations thereunder;

  • (4) companies in the business of capital market intermediaries as referred to in the Securities and Exchange Board of India Act, 1992 (15 of 1992) or rules and regulations thereunder;

  • (5) companies engaged in collective investment schemes as referred to in the Securities and Exchange Board of India Act, 1992 (15 of 1992) or rules and regulations thereunder;

  • (6) asset management companies as referred to in the Securities and Exchange Board of India Act, 1992 (15 of 1992) or rules and regulations thereunder;

  • (7) any other company which is regulated under any other law for the time being in force.

Penalty: If an application is made in violation of section 248(1), it shall be punishable with fine which may extend to one lakh rupees. An application filed under sub-section (2) of section 248 shall be withdrawn by the company or rejected by the Registrar as soon as conditions under sub-section (1) are brought to his notice.

Status of Strike off Company

If a company stands dissolved under section 248, it shall on and from the date mentioned in the notice of dissolution cease to operate as a company and the Certificate of Incorporation issued to it shall be deemed to have been cancelled from such date except for the purpose of realising the amount due to the company and for the payment or discharge of the liabilities or obligations of the company.

Liabilities of directors, managers, officers and members to be continue

The liability, if any, of every director, manager or other officer who was exercising any power of management, and of every member of the company dissolved under section 248(5) of the Act, shall continue and may be enforced as if the company had not been dissolved.

List of STK Forms

The following STK Forms are used in strike off of the Company.

  • Form STK-1: Notice by ROC for removal of name of a company from the Register of Companies.

  • Form STK-2: Application by company to ROC for removing its name from register of Companies.

  • Form STK-3: INDEMNITY BOND (to be given individually or collectively by every director).

  • Form STK-4: AFFIDAVIT (to be given individually by every Director).

  • Form STK-5: Public Notice (Section 248(1) & (4) of the Companies Act, 2013 & rule 7 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016).

  • Form STK-5A: Public Notice (Section 248(1) & (4) of the Companies Act, 2013 & rule 7(1) of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016).

  • Form STK-6: Public Notice (Section 248(2) & (4) of the Companies Act, 2013 & rule 7 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016).

  • Form STK-7: Notice of Striking Off and Dissolution.

Let's Clear Your Doubts


How to close my Company?

The board of directors of the company shall follow the following procedure for removal of name of the company from the Register of Companies maintained by the ROC. Herein below is the step by step process involved in sriking off by the Company:

  • 1

    Call and hold Board Meeting to pass Board resolution for the purpose of striking off of the name of the company from the Register maintained by the ROC, subject to the approval of the shareholders of the company, and to authorize any director to file an application and for fixing date, time and venue for the Extraordinary General Meeting of the shareholder.

  • 2

    After passing of Board resolution, if there is any liability in the company, the company will set off / pay all its liabilities.

  • 3

    Every director of the company should sign and execute indemnity bond duly notarised by every director in Form STK 3 and Affidavit in Form STK 4. In case director is a foreign national or non-resident Indian, the documents should be notarized or apostilled or consularised.

  • 4

    Company should get the statement of accounts in Form STK-8 containing the assets and liabilities of the company made up to a day, not more than thirty days before the date of application. Such a statement should be certified by a Chartered Accountant;

  • 5

    General Meeting should be held on the day, date, time and venue as fixed earlier for passing of the special resolution.

  • 6

    Within thirty days from the date of the passing of the special resolution in the General Meeting or after obtaining consent, company should file Form MGT-14.

  • 7

    Approval of concerned authorities is required in case of a company regulated by any other authority.

  • 8

    Thereafter, an application for removal of the name of the company shall be made in Form STK-2 along with the fee of ten thousand rupees. Following documents will be attached in the Form STK-2. {Rule 4(1)} Attachment – STK-2: Rule 4(3).

    • No objection certificate from the appropriate concerned authority, if applicable (RBI, IRDA, Housing Finance, SEBI etc.) Rule 4(2).

    • Indemnity Bond duly notarised by every Director in Form STK-3. However, in case of a government company or a subsidiary of a government company, a duly notarised indemnity bond in Form STK-3A shall be given by an authorised representative, not below the rank of Under Secretary or its equivalent, in the administrative Ministry or Department of the Government of India or the State Government, as the case may be, on behalf of the company. If the person is foreign national or non-resident Indian, the indemnity bond, and declaration shall be notarized or apostillised or consularised.

    • Statement of Accounts certified by CA in Form STK-8. Statement should not be older than 30 days from the date of application.

    • An Affidavit by every director in Form STK-4.

    • Certified true copy of special resolution duly certified by each of the directors of the company or consent of seventy five per cent of the members of the company in terms of paid up share capital as on the date of application.

    • Statement regarding pending litigations, if any, involving company. (Better to give in affidavit format).

      It must be noted that Form STK-2 cannot be filed by a company unless it has filed its overdue returns in Form No. AOC-4 (Financial Statement) or AOC-4 XBRL, as the case may be, and Form No. MGT-7 (Annual Return), up to the end of the financial year in which the company ceased to carry its business operations. Also, in case a company intends to file Form No. STK-2 after the action under sub-section (1) of section 248 has been initiated by the ROC, it shall file all pending overdue returns in Form No. AOC-4 (Financial Statement) or AOC-4 XBRL, as the case may be, and Form No. MGT-7 (Annual Return) before filing Form No. STK-2. Form No STK-2 also cannot be filed once notice in Form No. STK-7 has been issued by the ROC pursuant to the action initiated under section 248(1).

    The company shall also place the application on its website, if any, till the disposal of the application.

  • 9

    E-Form STK-2 shall be signed by an authorized director.

  • 10

    E-Form STK-2 shall be certified by Company secretary in whole time practice or Chartered Accountant in whole time practice or Cost Accountant in whole time practice.

  • 11

    Public notice by ROC: After filing application for strike off by the company, the ROC shall publish a public notice in Form STK-6 inviting objections to the proposed strike off, if any. The notice will also be published for information of the general public in the following ways:

    • (a) placed on the official website of the Ministry of Corporate Affairs on a separate link established on such website in this regard;

    • (b) published in the Official Gazette;

    • (c) Published in English language in a leading English newspaper and at least once in vernacular language in a leading vernacular language newspaper, both having wide circulation in the State in which the registered office of the company is situated.

  • 12

    Intimation to regulatory authorities: Intimation about the proposed action of removal or striking off the name of the company should be sent to the Income-tax authorities, GST authorities having jurisdiction over the company to seek their objections, if any, which shall be furnished within a period of thirty days from the date of issue of the letter of intimation.

  • 13

    Striking off / Removal of the name of the company: After thirty days from the date of issue of the letter of intimation and unless cause to the contrary is shown by the company, if there are no objections received within thirty days from the general public or respective authority, the ROC can proceed to strike off or remove the name of the company from the Register of Companies.

  • 14

    Provision for realisation of amount due: The ROC before passing an order for striking off / Removal of the name of the company should satisfy himself that sufficient provision has been made for the realisation of all amount due to the company and for the payment or discharge of its liabilities and obligations by the company within a reasonable time. The ROC can obtain necessary undertakings from the managing director, director or other persons in charge of the management of the company. The assets of the company should be made available for the payment or discharge of all its liabilities and obligations even after the date of the order removing the name of the company from the Register of Companies.

  • 15

    Notice of dissolution of the company: After the expiry of the time mentioned in the notice, the ROC can strike off the name of the company from the Register. The notice of striking off the name of the company from the register of companies and its dissolution should be published in the Official Gazette in Form STK 7 and the same should also be placed on the official website of the Ministry of Corporate Affairs. The company shall stand dissolved on the publication of this notice in the Official Gazette.

Do I need to pay any fee to close my company?

Yes. You need to pay Rs.10,000/- challan apart from stamp duty, notary and professional charges etc.,

How long it takes to close my company?

Normally 3 to 6 months.

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Am I liable even after closure of my company?

The liability, if any, of every director, manager or other officer who was exercising any power of management, and of every member of the company dissolved under section 248(5) of the Act, shall continue and may be enforced as if the company had not been dissolved.

Am I eligible to start a new company after closure of existing company?

Yes. You are eligible to open new company after closure of existing company.

Do I need to apply for fresh DIN to open new company?

Existing DIN is used for all companies provided the DIN should be in active status.

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