How to Close a Private Limited Company?

Close your inactive private limited company to prevent non-compliance penalties. Our professional Chartered Accountants or Udaipur Consultants guide you through a seamless and efficient closure process.

A Private limited company need to comply with many compliances including following the various rules and regulations. If   anybody has formulated a private limited company but not carrying on the business or could not start the business for whatsoever reason.   In fact all these types of companies are accumulating various non-compliances which are generally need to be complied and under the circumstances it is better to close it to avoid various fines and penalties or additional fees.

The private limited company can be closed by way of two systems:-

1. Removal of name of the company from ROC under FAST  TRACK EXIT SCHEME
2. Voluntary winding up

FAST TRACK EXIT  (FTE) under Section 248 Of The Companies Act, 2013

Closure under this route is governed by the provisions of Section 248 of the Companies Act, 2013 read with Rule 4 of The Companies (Removal of Name of companies from the Registrar of Companies) Rules, 2016. FTE process is different from both a voluntary winding up process, which is court driven process as well as a compulsory removal of a defaulting company from the register on account of action taken by the Government.

Under this system all applications for strike off under Section 248 of the Companies Act, including STK-2 forms, is being processed through the “STP (Straight Through Processing) mode.

Under this system, the STK-2 applications are automatically processed without any manual intervention, provided that all the requirements and conditions for striking off a company have been fulfilled.

The process of closure of the Private Limited Company under section 248 of the Companies Act 2013 includes handing over the assets of the company, paying its  liabilities and distribution of remaining assets to its members  as per their rights. The management of the Company is responsible for ensuring that the interests of all stakeholders are protected and winding up process is carried out smoothly with fair and transparent manner.

The closure of a company under this route is much easier and takes much less time if the company has complied with all the statutory regulations.

Which company are covered under   Fast track exit Scheme for closure?

The following types of companies can be closed under this scheme:-

1.    Defunct Company

Company has failed to commence its business within one year of its incorporation or;

2.    Dormant company  

A company is not carrying on any business or operation for a period of two immediately preceding financial year  and has not made any application within such period for obtaining the status of a dormant company under section 455;

3.    Unsubscribed Company

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 effect has not been filed within one hundred and eighty days of its incorporation under sub­-section (1) of section 10A; or

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

Procedure for closure of these types of companies

For closure aforesaid types of companies under this route, the company need to make an application to the registrar in Form STK-2.

What is the meaning of the company which has complied with all statutory regulations?

The company which has complied with the following:-

• The company has filed Form AOC-4/AOC-4 XBRL and Form MGT-7 upto the end of the financial year in which the company ceased to carry on its business operations.
• The company should have filed INC – 20A.
• DIR – 3 KYC in respect of all the directors should have been filed.
• The said conditions should be satisfied for filing Form STK-2.

Note: Though filing of Form INC 20A and DIR 3- KYC is not mandatory for filing Form STK-2 as per Rule 4 of The Companies (Removal of Name of companies from the Registrar of Companies) Rules, 2016 but practically, e form STK -2 cannot be filed without filing INC -20A and DIR- 3 KYC.

Requirement to file e Form STK-2.

1. Indemnity bond duly notarized by every director or collectively in Form STK 3 to effect   that any losses, claim and liabilities on the company, shall be met in by full by every director individually or collectively, even after the name of the company is struck off by the Registrar of the Companies.
2. A statement of accounts containing assets and liabilities of the company made up to a day, not more than thirty days before the date of application and certified by a Chartered Accountant.
3. An affidavit in Form STK 4 by every director of the company duly notarised, to the effect that the company did not carry on any business since incorporation or that the company did some business for a period up to a date and then discontinued.
4. Copy of Board Resolution – the Board of Directors resolution for the closure of the company under Section 248 of the Companies Act 2013 and resolution authorising a director to file an application under STK-2 for the closure of the company with the Registrar of Companies (RoC).
5. a copy of the 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.
6. Bank Closure Certificate
7. The Latest ITR Copy
8. Self-attested KYC of Directors of the Company along with the copy of PAN Card of the Company;
9. A statement regarding pending litigations, if any, involving the company.

Companies which cannot file Form STK-2

1. Section 8 (NOT FOR PROFIT) company
2. Any company, which at any time in the previous 3 months,
   • Has made an application to the Tribunal for the sanctioning of a compromise or arrangement and the matter is yet to finalised.
   • 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;
   • shifted its registered office from one State to another and changed its name or  
   • is being wound up under Chapter XX of this Act or under the Insolvency and Bankruptcy Code, 2016
   • Immediately before cessation of trade or otherwise carrying on of business, has made a disposal for value of property or rights held by it , for the purpose of disposal for gain in the normal course of trading or otherwise carrying on of business.

How efficiently to close private limited company to avoid non-compliance penalties. Ensure a hassle-free process with expert guidance of our Chartered Accountants or Udaipur Consultants .