Company Closure Procedure in India

Running a business appears with its own challenges. Seldom when things do not work out a business may have to be closed. Companies are also required to provide proper and advance company closure notice to employees before closing operations that include layoffs. There can be certain reasons to close or wind up the company. Here are four methods in which a private limited company can be closed.
• Sell the Company
• Compulsory Winding Up
• Voluntary Winding Up
• Defunct Company Winding Up

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ABOUT

Why should you establish a private limited company?

If the company owners or directors determine to discontinue or wind up the company, they may examine the closure options. The most likely or easiest way to close a company is striking off its name from the Register of Companies. This is favored when a company is inoperative for a specific period. Other options incorporate a winding-up petition, however, that requires more time, investment, and compliance.

On approval of the strike-off, the company’s name is expelled from the register, and therefore, it is not existent in the eyes of laws. The company must satisfy all the compliance before continuing with the strike-off application. The application is followed by various documents and needs assistance from the professional

Ways of winding up of a company in India

Registering your business as a private limited company holds many advantages, some of which are as follows:

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Winding-up

This option is preferred when the company is in the operative stage and has assets and liabilities. It will include approval fromMembers, Directors, and creditors. It also requires appointing a liquidator for the said process to manage the company’s affairs during the whole process. It is often a time-consuming process.

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Striking off

Striking off is preferred by a company that has relatively no or less outside liabilities. When a company is inoperative since its inception or in the past two years, it may apply for strike-off, often referred to as fast-track exit. The primary condition is that the company has no assets or liabilities and has complied with relevant applicable provisions.

PROCESS FOLLOW

With Pareek G, it is refreshingly simple to register your company online. Here’s what you need to do:

1-2 HOURS
Select Package

Start by selecting the appropriate one, fill out the required forms, or simply speak to our experts online for assistance

2 WORKING DAYS
Collection of basic information and documents

We will collect your basic information and Pre-requisitesfor the initiation of the process

2 WORKING DAYS
Drafting of Affidavit and necessary resolutions

We will draft the affidavit and necessary resolutions and get all the documents signed and reviewed by the company directors.

 
1-2 HOURS
File the application with MCA

We will fill the application and required forms with MCA.

 

Pre-Requisites

  • Company’s MoA & AoA
  • Certificate of Incorporation
  • PAN card
  • PThe financial statement of the Company for the most recent year
  • A statement regarding pending litigations
  • The company must provide NOC for closure from creditors

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Basic Package

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₹ 7,999

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  • Name Search Report
  • Name approval in RUN (Reserve Your Unique Name)
  • DSC(2no) (Extra Dsc Per Director – Rs-1000)
  • Filing Spice Form
  • Issue of Incorporation certificate along with PAN & TAN
  • Include Government Fees & Stamp Duty for Authorized Capital Upto -1 Lakh except for the state of Punjab, MP and Kerala.
  • Msme Registration
  • Share Certificate (Soft Copy)
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Growth Package

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₹ 9,999

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  • Name Search Report
  • Name approval in RUN (Reserve Your Unique Name)
  • DSC(2no) (Extra Dsc Per Director – Rs-1000)
  • Filing Spice Form
  • Issue of Incorporation certificate along with PAN & TAN
  • Include Government Fees & Stamp Duty for Authorized Capital Upto -1 Lakh except for the state of Punjab, MP and Kerala.
  • Msme Registration
  • Share Certificate (Soft Copy)
  • GST Registration
  • Stamp and Company Seal
  • Bank – Current Account Opening
  • 10% Discount on Future Service
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Premium

Save upto-30% cost on this package

₹ 16,999

(Inclusive All)

  • Name Search Report
  • Name approval in RUN (Reserve Your Unique Name)
  • DSC(2no) (Extra Dsc Per Director – Rs-1000)
  • Filing Spice Form
  • Issue of Incorporation certificate along with PAN & TAN
  • Include Government Fees & Stamp Duty for Authorized Capital Upto -1 Lakh except for the state of Punjab, MP and Kerala.
  • Msme Registration
  • Share Certificate (Soft Copy)
  • GST Registration
  • Trademark Registration
  • 1month free GST filing
  • NDA
  • Guideline for Startup India Registration.
  • Stamp and Company Seal
  • Bank – Current Account Opening
  • 10% Discount on Future Service
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FAQs on Company Closure

It can be filed particularly when the company repays or destroys all its liabilities and receive a No Objection Certificate (NOC) from the creditors before registering the closure application. And lead a meeting where all the directors choose upon the closure by signing a special resolution or approval of seventy-five percent members concerning paid-up share capital.
 
The Registrar of Companies can eliminate the company name from the list of companies if, he has understandable cause to believe that:
1. A Company failed to start its business within one year of its establishment; or 2. A company is not carrying on any business or operation for two directly preceding financial years and has not presented any application within such a period for getting the status of a dormant company.
The closure is the most suitable option in case the company is not operating as it:
• Saves the yearly compliance cost
• No non-compliance risk.
• No risk of high penalties and prosecutions
• No risk of getting into default
After registering the application with the Ministry of Corporate Affairs, it takes about 90 days for striking off the Company from MCA reports. On approval for strike-off by RoC, the notice of strike-off is declared on its website to open for any question or representations by third parties.
RoC will declare a list of companies struck off in the Official Gazette. The Company under fast-track exit mode will be recognized closed from the date of notification of the notice in the Official Gazette.
The closing documents have to be registered within 30 days from the date of signing of the assets and liabilities declaration.
It is necessary to suggest the Registrar for the closure of Private Limited Company to update the MCA data and get the company free from all its legal compliances.
 
Fast Track Exit is a scheme launched by the Ministry of Corporate Affairs (MCA) for inactive companies to wind up and take their names scratched off from the MCA record with lesser formalities.
In case the company is scratched off due to its default, then it would have to refer to the National Company Law Tribunal for altering the status of the company from strike off to active by presenting valid reasons for the error.
Yes, Once the companies book closure is said companies keep the ownership records of shareholders as general which enables the investors to have a final outcome to receive dividends by controlling shares in the company.
Yes, Subsection 2 of Section 248 and Rule 4 of The Companies Rules, 2016, a platform to the Companies to practice for voluntary closure of private limited Company after fulfilling some situations and pre-requisites granted the Company has been closed for some period of at least two years or ever since the date of establishment.
Yes, A Defunct or Dormant Company can be wind up with a fast-track method that needs submission of the STK-2 form.