Close Your Company Legally

There are three main routes: 1) Strike Off (STK-2) - For defunct companies with no operations for 2+ years, no assets/liabilities. Simplest and cheapest. 2) Fast Track Exit (FTE) - For companies that can obtain creditor consent and have minimal compliance history. 3) Voluntary Winding Up - Through NCLT for companies with assets/liabilities needing formal liquidation. The right route depends on your company's financial position, operations status, and stakeholder complexity.

To be eligible for Strike Off: 1) Company should be inoperative for 2+ years from incorporation or last operation, 2) No assets and no liabilities, 3) No pending litigation, 4) Not raised any public deposits, 5) No dues to banks/creditors, 6) All statutory returns filed up to date, 7) Bank accounts closed, 8) No pending prosecution. If these conditions are not met, you will need FTE or Voluntary Winding Up route.

Timeline varies by route: Strike Off (STK-2) takes 3-6 months including MCA processing and 30-day public notice period. Fast Track Exit takes 4-6 months including creditor clearance time. Voluntary Winding Up through NCLT takes 6-12 months depending on asset/liability complexity and NCLT schedule. Delays can occur if objections are raised during the public notice period or if compliance is pending.

If you do not close properly: 1) Company continues to have annual compliance obligations (AOC-4, MGT-7), 2) Penalties of ₹100/day apply for non-filing without maximum cap, 3) Directors face disqualification after non-compliance, 4) Company may be struck off suo moto by MCA leading to director liability, 5) Directors cannot incorporate new companies while disqualified, 6) Personal assets may be at risk for undisclosed liabilities. Proper closure protects directors and allows clean exit.

Required documents vary by route but generally include: 1) Board Resolution approving closure, 2) Indemnity Bond by directors, 3) Affidavit by directors declaring no liabilities, 4) CA Certificate on nil assets/liabilities, 5) Bank account closure proof, 6) Statement of accounts, 7) Copy of PAN and COI, 8) For FTE: Creditor NOCs, tax clearance, 9) For NCLT: Declaration of solvency, creditor list, asset valuation. We guide you through exact requirements based on your chosen route.

Companies with significant liabilities typically cannot use Strike Off route. Options are: 1) Settle all liabilities first then apply for Strike Off, 2) Use Fast Track Exit if creditors give NOC, 3) Opt for Voluntary Winding Up where liquidator settles liabilities from assets, 4) Creditors may file for compulsory winding up if debts unpaid. Directors must be careful - hiding liabilities to get strike off can result in personal liability and prosecution.

Directors must: 1) Pass Board Resolution approving closure, 2) Execute Indemnity Bond taking responsibility for undisclosed liabilities, 3) Swear Affidavit confirming no liabilities/assets, 4) Ensure all compliance is up to date, 5) Obtain creditor NOCs, 6) Close bank accounts, 7) Make statutory declarations. Directors remain liable for any fraud or misrepresentation in closure documents. If company had undisclosed liabilities, directors may be personally liable even after closure.

Yes, a struck-off company can be revived by filing an appeal with NCLT within 3 years of strike off. The process involves: 1) Filing appeal with NCLT showing valid reasons for revival, 2) Demonstrating company was carrying on business or in operation, 3) Proving strike off was erroneous or without proper notice, 4) Paying all pending compliance and penalties, 5) Obtaining NCLT order for revival. Revival restores company to active status with all assets and liabilities. It is a lengthy and expensive process - better to avoid improper closure.

Strike Off (STK-2) is an administrative removal of company name from MCA register for defunct companies without formal liquidation. It is suitable for companies with no operations, assets, or liabilities. Winding Up is a formal legal process of liquidating company affairs, settling liabilities, distributing assets, and then dissolving the company. Winding Up can be Voluntary (members/creditors) or Compulsory (by NCLT). Winding Up is required for companies with significant assets/liabilities or complex stakeholder situations.

Asset handling depends on closure route: For Strike Off/FTE: All assets must be disposed of or distributed before filing. Assets can be sold and proceeds distributed to shareholders, or assets distributed in specie. For Voluntary Winding Up: Liquidator takes control of assets, realizes them, settles liabilities, and distributes surplus to shareholders. Assets cannot remain in a struck-off company - they may vest with government if not properly distributed. Proper documentation of asset distribution is essential.