Closure of Private Limited Company via Strike Off

When a private limited company becomes inactive or no longer wishes to continue business operations, opting for Closure of Private Limited Company is a logical and legal step. Among the various modes available, closure via strike off under Section 248 of the Companies Act, 2013 is the most time-saving and cost-effective.

This blog will guide you through the complete process, eligibility criteria, documentation, and FAQs related to the Closure of Private Limited Company through the strike-off method.

Table of Contents

What is Strike Off under the Companies Act, 2013?

Strike off refers to removing the company’s name from the official Register of Companies maintained by the Registrar of Companies (ROC). Once a company is struck off, it ceases to exist legally. The procedure for Closure of Private Limited Company via strike off is governed by Section 248(2) of the Companies Act, 2013 and Rule 4 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016.

When to Choose Strike Off Over Other Closure Methods?

The Closure of Private Limited Company via strike off is ideal when:

The company is non-operational or dormant for two or more years.
There are no liabilities or pending litigation.
Directors/shareholders wish to voluntarily close the business.
The company has not commenced operations since incorporation.

Other methods like liquidation or winding-up involve court intervention and longer timelines. In contrast, strike off is simpler and completed online via the Ministry of Corporate Affairs (MCA) portal.

Eligibility for Strike Off

Before initiating the Closure of Private Limited Company via strike off, ensure that your company meets the following conditions:

No business activities conducted in the last two financial years.
No pending dues or liabilities to banks, creditors, or authorities.
No application pending for compromise or arrangement.
Not de-listed due to non-compliance with any law.
No shares issued beyond the subscribed capital.

If these conditions are not met, you must explore alternate closure methods like voluntary liquidation.

Step-by-Step Procedure for Closure of Private Limited Company via Strike Off

The entire procedure for Closure of Private Limited Companyvia strike off is explained below:

Step 1: Hold Board Meeting and Pass Resolution

Convene a Board Meeting to:

Approve the proposal for Closure of Private Limited Company via strike off.
Authorize a director to proceed with filing the application.

Step 2: Clear Outstanding Liabilities

Ensure:

All debts and statutory dues are cleared.
Bank accounts are closed, and NOC is obtained from financial institutions.

Step 3: Conduct General Meeting

Hold an Extra-Ordinary General Meeting (EGM) to pass a special resolution with at least 75% shareholder approval.

Step 4: File e-Form MGT-14 (if applicable)

If a special resolution is passed, file MGT-14 within 30 days of the EGM.

Step 5: Prepare Documents for Strike Off

Documents required for Closure of Private Limited Company via strike off:

Board and Special Resolution copies
Statement of Accounts certified by CA
Indemnity Bond (STK-3), notarized
Affidavit by directors (STK-4)
Consent of directors
PAN, Aadhaar, DIN of directors
Bank Closure Letter/NOC

Step 6: File Form STK-2

Submit e-Form STK-2 with the ROC along with ₹10,000 fee and necessary attachments.

Step 7: ROC Review and Strike Off

The ROC will:

Publish a notice in the Official Gazette inviting objections (30 days).
If no objections arise, strike off the company name and issue a dissolution notice.

Post Strike Off: What Happens?

After the Closure of Private Limited Company is completed:

The company’s name is removed from the Register of Companies.
Certificate of Incorporation is cancelled.
No business activity can be conducted post-closure.
Directors remain liable if any fraud or hidden liabilities arise.

Advantages of Strike Off Process

Opting for Closure of Private Limited Company via strike off offers the following benefits:

Cost-effective and faster than other closure methods
No court involvement
Can be completed in 3-6 months
Entirely online through MCA portal
Fewer legal hurdles

Common Mistakes to Avoid

For smooth Closure of Private Limited Company, avoid:

Leaving tax or statutory dues unpaid
Submitting outdated or unaudited financials
Filing incomplete or incorrect documentation
Not obtaining proper shareholder approval

Timeline for Strike Off

The average time required for Closure of Private Limited Company via strike off is around 3 to 4 months, depending on:

Document accuracy
MCA workload
Objections (if any)

Cost of Closure of Private Limited Company

The government filing fee for Form STK-2 is ₹10,000. Additional professional fees for CA certification, digital signature, and documentation may apply. On average, the total cost ranges from ₹25,000 to ₹30,000.

Documents Checklist

Document	Description
Board Resolution	For closure authorization
Special Resolution	Passed by shareholders
STK-2	Application for strike off
STK-3	Indemnity Bond
STK-4	Affidavit by directors
Statement of Accounts	Not older than 15 days, CA certified
PAN, Aadhaar, DIN	Of all directors
NOC	From concerned authorities (if applicable)

Frequently Asked Questions (FAQs)

1. Can a company with liabilities apply for strike off?

No. For Closure of Private Limited Company via strike off, all liabilities must be cleared beforehand.

2. Is Director’s KYC required for strike off?

Yes- for the purpose of filing Form STK‑2 (Strike Off), only one director with an “active DIN” is required to digitally sign and file the form on the MCA portal.

3. Can ROC reject the STK-2 application?

Yes. If the documents are incomplete or objections are raised, ROC can reject or put the application on hold.

4. Is the strike off application reversible?

Once approved and notified in the Gazette, the company cannot be revived unless an appeal is made to the NCLT within 20 years.

5. Does the company need to file Income Tax returns before strike off?

Yes, the company must complete all pending Income Tax and ROC filings up to the financial year in which it actually carried out business operations.

Conclusion

The Closure of Private Limited Company via strike off is a streamlined and practical method for shutting down dormant companies. By adhering to MCA regulations, submitting accurate documents, and following the correct procedure, you can avoid future liabilities and complete the process with ease.

Need expert assistance for filing STK-2 or document preparation. Contact our professionals to start the Closure of Private Limited Company process today.