As per Companies Act, 2013 | Ministry of Corporate Affairs (MCA)
Introduction
Meaning
Methods
Strike Off
Voluntary Liquidation
Compulsory Winding Up
Post-Closure & Risks
FAQs
Closing of a company in India is a legally regulated process governed by the
Companies Act, 2013 and administered by the
Ministry of Corporate Affairs (MCA).
Companies that are inactive, financially unviable, or no longer required
must be closed legally to avoid penalties, director disqualification,
and future legal action.
Failure to close a non-operational company properly can lead to heavy fines,
prosecution, and disqualification of directors.
What Does Closing of a Company Mean?
Closing a company refers to the legal dissolution or removal of the company’s
name from the Register of Companies (ROC).
The company ceases to exist legally
Directors are relieved from future ROC compliance
No annual filings are required after closure
Methods of Closing a Company in India
Method
Applicable To
Governing Provision
Strike Off
Inactive Companies
Section 248 – Companies Act, 2013
Voluntary Liquidation
Solvent Companies
IBC, 2016
Compulsory Winding Up
Defaulters / Fraud
Section 271 – Companies Act, 2013
Strike Off of Company (Fast Track Exit)
Eligibility Criteria
No business operations for last 2 financial years
No pending litigation
No outstanding loans or liabilities
All ROC filings completed
Applicable Companies
Private Limited Company
One Person Company (OPC)
Public Company (limited cases)
Documents Required
Board Resolution
Special Resolution (75% shareholders)
Director Affidavit & Indemnity Bond
CA-certified Statement of Accounts
PAN of Company
Latest ITR (if filed)
Procedure
Pass Board Resolution
Obtain shareholder approval
File Form STK-2 with ROC
ROC issues public notice
Company name removed after verification
Timeline: 3–6 months
Voluntary Liquidation of Company
Voluntary liquidation is chosen when the company is solvent but wants to
shut down permanently.
Applicable Law
Insolvency and Bankruptcy Code (IBC), 2016
Voluntary Liquidation Regulations, 2017
Key Steps
Declaration of Solvency by Directors
Special Resolution by Shareholders
Appointment of Liquidator
Public Announcement
Settlement of debts
Final accounts & application to NCLT
Dissolution Order
Timeline: 6–12 months
Compulsory Winding Up by Tribunal
This method applies in serious legal default cases.
Fraud or misconduct
Continuous default in ROC filings
Inability to pay debts
Company acting against national interest
Authority: National Company Law Tribunal (NCLT)
This is not voluntary and involves strict legal scrutiny and penalties.
Post-Closure Compliance
Directors are discharged from future compliance
DIN remains active
PAN becomes inactive
No annual ROC filing required
Liability for fraud or past misconduct continues even after closure.
Consequences of Not Closing Properly
Penalties from ₹1 lakh to ₹5 lakh
Director disqualification (Section 164)
Prosecution under Companies Act
Freezing of DIN & PAN
Frequently Asked Questions (FAQs)
What is the easiest way to close a company? – Strike Off.
Can a company with GST be closed? – Yes, after GST cancellation.
Can a company with loans be closed? – No, liabilities must be cleared.
Is CA certification mandatory? – Yes.
Can ROC reject strike off? – Yes, if documents are incomplete.
Is company closure reversible? – Limited restoration possible via NCLT.
As per Companies Act, 2013 | Ministry of Corporate Affairs (MCA)
Introduction
Meaning
Methods
Strike Off
Voluntary Liquidation
Compulsory Winding Up
Post-Closure & Risks
FAQs
Closing of a company in India is a legally regulated process governed by the
Companies Act, 2013 and administered by the
Ministry of Corporate Affairs (MCA).
Companies that are inactive, financially unviable, or no longer required
must be closed legally to avoid penalties, director disqualification,
and future legal action.
Failure to close a non-operational company properly can lead to heavy fines,
prosecution, and disqualification of directors.
What Does Closing of a Company Mean?
Closing a company refers to the legal dissolution or removal of the company’s
name from the Register of Companies (ROC).
The company ceases to exist legally
Directors are relieved from future ROC compliance
No annual filings are required after closure
Methods of Closing a Company in India
Method
Applicable To
Governing Provision
Strike Off
Inactive Companies
Section 248 – Companies Act, 2013
Voluntary Liquidation
Solvent Companies
IBC, 2016
Compulsory Winding Up
Defaulters / Fraud
Section 271 – Companies Act, 2013
Strike Off of Company (Fast Track Exit)
Eligibility Criteria
No business operations for last 2 financial years
No pending litigation
No outstanding loans or liabilities
All ROC filings completed
Applicable Companies
Private Limited Company
One Person Company (OPC)
Public Company (limited cases)
Documents Required
Board Resolution
Special Resolution (75% shareholders)
Director Affidavit & Indemnity Bond
CA-certified Statement of Accounts
PAN of Company
Latest ITR (if filed)
Procedure
Pass Board Resolution
Obtain shareholder approval
File Form STK-2 with ROC
ROC issues public notice
Company name removed after verification
Timeline: 3–6 months
Voluntary Liquidation of Company
Voluntary liquidation is chosen when the company is solvent but wants to
shut down permanently.
Applicable Law
Insolvency and Bankruptcy Code (IBC), 2016
Voluntary Liquidation Regulations, 2017
Key Steps
Declaration of Solvency by Directors
Special Resolution by Shareholders
Appointment of Liquidator
Public Announcement
Settlement of debts
Final accounts & application to NCLT
Dissolution Order
Timeline: 6–12 months
Compulsory Winding Up by Tribunal
This method applies in serious legal default cases.
Fraud or misconduct
Continuous default in ROC filings
Inability to pay debts
Company acting against national interest
Authority: National Company Law Tribunal (NCLT)
This is not voluntary and involves strict legal scrutiny and penalties.
Post-Closure Compliance
Directors are discharged from future compliance
DIN remains active
PAN becomes inactive
No annual ROC filing required
Liability for fraud or past misconduct continues even after closure.
Consequences of Not Closing Properly
Penalties from ₹1 lakh to ₹5 lakh
Director disqualification (Section 164)
Prosecution under Companies Act
Freezing of DIN & PAN
Frequently Asked Questions (FAQs)
What is the easiest way to close a company? – Strike Off.
Can a company with GST be closed? – Yes, after GST cancellation.
Can a company with loans be closed? – No, liabilities must be cleared.
Is CA certification mandatory? – Yes.
Can ROC reject strike off? – Yes, if documents are incomplete.
Is company closure reversible? – Limited restoration possible via NCLT.
