How to Close
A Private Limited Company that is dormant or wishes to cease operations can apply for strike-off under Section 248 of the Companies Act 2013, using Form STK-2 (Fast Track Exit) — this remains the standard route for shutting down a company that has no assets, no liabilities, and no ongoing business activity. Compared to voluntary winding up under the National Company Law Tribunal (NCLT), strike-off is faster, cheaper, and involves far less procedural complexity, which is why most dormant private companies use it. Since 1 May 2023, all STK-2 applications are filed with and processed by the Registrar, Centre for Processing Accelerated Corporate Exit (C-PACE) — a single centralised authority covering the whole of India — rather than the jurisdictional Registrar of Companies (RoC) that handled these filings previously; the Registrar, C-PACE removes the company's name from the register only after it is satisfied that all statutory dues are cleared, all bank accounts are closed, and no liabilities of any kind remain outstanding. Directors should treat the run-up to filing — clearing tax dues, closing accounts, and catching up on pending annual filings — as the real work of closure, since the STK-2 form itself is filed only once that groundwork is complete. Getting any of these prerequisites wrong is the single biggest reason strike-off applications are rejected or delayed.
Before you start
- Company has not commenced business, or has been inactive for at least 2 consecutive financial years
- No pending litigation, prosecution, or investigation against the company or its directors
- All statutory annual returns filed up to date (Form AOC-4 and MGT-7/MGT-7A) with no backlog
- All bank accounts of the company closed, with closure certificates obtained from each bank
- No assets or liabilities remaining, confirmed by a director affidavit and a CA-certified statement of accounts
- All statutory dues cleared, including GST, TDS, income tax, EPF, and ESI where applicable
- Board resolution and shareholder approval (special resolution or 75% consent by share value) obtained before filing
- Company is not listed, not a Section 8 (non-profit) company, and not undergoing any scheme of merger or amalgamation
Step-by-step
Confirm Eligibility for Fast Track Exit
Before initiating any paperwork, verify the company genuinely qualifies for strike-off under Section 248. It must have either never commenced business after incorporation, or been inactive (no significant accounting transactions) for at least the two immediately preceding financial years.
Companies that are listed, hold public deposits, have pending inspection or investigation proceedings, or are subject to any pending prosecution are barred from using STK-2 and must instead consider voluntary winding up through the NCLT. It is worth a short consultation with a company secretary or CA at this stage to avoid discovering an ineligibility issue mid-process.
Pass Board and Shareholder Resolutions
Hold a Board Meeting to approve the closure and authorise a director (or the company secretary) to file Form STK-2. Then either convene an Extraordinary General Meeting (EGM) or obtain written consent from shareholders holding at least 75% of the paid-up share capital, approving the strike-off application.
- Keep signed minutes of both the Board meeting and the shareholder approval — these are attached to the STK-2 filing.
- If the company has more than one class of shareholders, consent thresholds should be checked class-wise as well.
Settle All Liabilities and Close Bank Accounts
Clear every outstanding liability — statutory dues (GST, income tax, TDS, EPF, ESI), vendor payables, employee dues, and any bank loans or credit facilities. Where dues are disputed or amounts are significant, obtain no-objection certificates (NOCs) from creditors confirming nil balances.
Once liabilities are cleared, close all company bank accounts and obtain formal closure certificates from each bank. This step is often the longest in practice — banks can take several weeks to process closure, especially where the account has been dormant, and a nil-balance statement is a mandatory attachment to STK-2.
File Pending Statutory Returns
File all overdue annual returns (MGT-7/MGT-7A) and financial statements (AOC-4) up to the last completed financial year before making the STK-2 application. The MCA portal cross-checks the company's filing history automatically and will reject an STK-2 filing if any prior-year returns are outstanding.
If the company has multiple years of backlog filings, expect this step alone to take several weeks, since each year's AOC-4/MGT-7 pair typically needs board approval and may attract additional filing fees for delay.
Cancel GST and Other Registrations
Apply to cancel the company's GST registration (Form GST REG-16) and any other statutory registrations — Professional Tax, Shops & Establishment, Import Export Code, etc. — that were obtained for the business. GST cancellation should ideally be completed, or at least applied for, before or alongside the STK-2 filing, since an active GST registration can raise questions during scrutiny by the Registrar, C-PACE.
Retain acknowledgment copies of all cancellation applications, as these may be requested as supporting documents.
Prepare the Statement of Accounts and Supporting Documents
Engage a practising Chartered Accountant to prepare a statement of accounts (Form STK-8) showing nil assets and nil liabilities, dated not more than 30 days before the STK-2 filing. This is one of the most scrutinised attachments, since it is the document that certifies the company genuinely has nothing left to wind up.
Alongside the statement of accounts, prepare: an indemnity bond (Form STK-3) signed by all directors, an affidavit (Form STK-4) from each director confirming no pending liabilities or proceedings, and copies of the Board and shareholder resolutions from the earlier step.
Prepare and File Form STK-2
File Form STK-2 on the MCA portal, digitally signed by a majority of directors using their Digital Signature Certificates (DSCs). The application is filed with, and processed by, the Registrar, Centre for Processing Accelerated Corporate Exit (C-PACE) — a single centralised registrar with jurisdiction across India, not the company's local RoC. Attach the indemnity bond (STK-3), the affidavit (STK-4), the CA-certified statement of accounts (STK-8), the Board/EGM resolution, and bank account closure proof.
Pay the prescribed government filing fee at the time of submission — official filing fees apply and should be confirmed on the MCA portal before filing, as they are revised from time to time and MCA periodically runs limited-time fee-relief schemes for voluntary closure. Any mismatch between the documents (for example, a statement of accounts older than 30 days) is a common cause of the filing being sent back for resubmission.
Registrar (C-PACE) Scrutiny and Public Notice
After filing, the Registrar, C-PACE examines the application and supporting documents. If satisfied that the company meets the strike-off criteria, the Registrar publishes a public notice — Form STK-6 — in the Official Gazette and on the MCA website, inviting objections to the proposed strike-off.
Any interested party — a creditor, tax authority, employee, or regulatory body — has 30 days from the date of the notice to file an objection. During this window, the company should not carry out any further business activity beyond what is necessary to respond to objections, if any arise.
Respond to Objections, if Any
If an objection is raised — most commonly by the GST or income tax department over an unresolved dues query, or by a creditor — the Registrar, C-PACE will typically ask the company to clarify or resolve the issue before proceeding. This can add weeks or months to the timeline depending on how quickly the underlying issue is cleared.
Working with your CA firm to pre-empt likely objections (by obtaining tax clearance confirmations in advance, for instance) reduces the chance of this step causing significant delay.
Final Strike-Off and Gazette Notification
If no objections are received, or all objections raised are satisfactorily resolved, the Registrar, C-PACE issues the final strike-off order and publishes it in the Official Gazette. The company's name is struck off the register of companies and its Corporate Identification Number (CIN) becomes invalid from that date.
Directors should retain the final gazette notification and the STK-7 order as permanent records — these are the documentary proof that the company was formally and legally dissolved, and may be required for future reference (for example, when a director incorporates a new company).
Common mistakes to avoid
- Applying for STK-2 with outstanding GST or income tax dues — tax authorities routinely check and object to strike-off applications where dues remain unpaid, causing the filing to stall.
- Not closing the bank account before filing — the statement of accounts must show a nil balance; an open account with any balance means assets still exist, which invalidates the indemnity bond and affidavit.
- Filing STK-2 while any prosecution, inspection, or investigation is pending against the company — the MCA will reject it outright and the applicant directors may face additional scrutiny.
- Letting annual filings (AOC-4, MGT-7) lapse for multiple years before attempting closure — the backlog must be cleared first, which can add months and late-filing fees to the timeline.
- Assuming strike-off automatically closes GST, PF, ESI, or other registrations — these require separate cancellation applications that are easy to overlook.
- Using a statement of accounts older than 30 days at the time of STK-2 filing — this is a common technical rejection reason that forces a fresh CA certification and resubmission.
- Ignoring minority shareholder or director dissent before filing — disputes among directors or shareholders can surface as objections during the public notice period and derail the process.
- Attempting closure without professional help to save fees, then facing a rejected application, re-filing costs, and a delayed timeline that ends up costing more than the professional fee would have.
Frequently asked questions
What is the difference between strike-off and winding up?
Strike-off (fast track exit via STK-2) is a simplified administrative process meant for companies with no assets and no liabilities — the Registrar, Centre for Processing Accelerated Corporate Exit (C-PACE) simply removes the company's name from the register. Voluntary winding up, by contrast, is used when a company has assets to realise or liabilities to settle; it involves appointing a liquidator, settling creditors, distributing any surplus to shareholders, and is supervised by the NCLT. Winding up is considerably more complex, time-consuming, and expensive than strike-off.
Can a company be restored after being struck off?
Yes. Under Section 252 of the Companies Act 2013, a member, creditor, or the company itself can apply to the NCLT for restoration, generally within 20 years of the strike-off, if it can be shown the company was actually in operation or that the strike-off was otherwise unjust. Restoration is granted at the Tribunal's discretion and typically requires legal representation, so it is best avoided by ensuring the original strike-off application is accurate and complete.
What happens to a struck-off company's GST registration?
Company strike-off does not automatically cancel GST registration — this must be done separately by filing Form GST REG-16 on the GST portal, along with a final GST return. Ideally, GST closure should be completed before, or at least filed alongside, the STK-2 application, since an active GST registration can prompt questions or objections during scrutiny by the Registrar, C-PACE.
How long does the STK-2 process take?
From filing STK-2 to the final gazette notification, the typical timeline runs about 3 to 6 months, factoring in the mandatory 30-day public objection window and the Registrar, C-PACE's internal processing time (the centralised C-PACE process has cut average processing time substantially compared to the pre-2023 jurisdictional RoC system, but 3-6 months remains a realistic planning estimate). This does not include the preparatory work — clearing dues, closing bank accounts, and catching up on pending annual filings — which for a company with several years of backlog can itself take a few months before STK-2 is even ready to file.
Can a company with outstanding loans or overdrafts apply for strike-off?
No. The statement of accounts filed with STK-2 must show nil liabilities, so any outstanding loan, overdraft, or credit facility needs to be fully repaid and formally closed with the lender before the application can be filed. Directors who personally guarantee such facilities should also confirm the guarantee is released.
What documents does a director need to sign for strike-off?
Directors typically sign the Board resolution, the indemnity bond (Form STK-3), and the affidavit (Form STK-4) declaring there are no pending liabilities, litigation, or investigations. All directors, or at least a majority as prescribed, must digitally sign these using valid DSCs — an expired DSC is a common last-minute hold-up.
Does strike-off release directors from all past liabilities of the company?
Strike-off does not automatically extinguish personal liability for directors where fraud, misfeasance, or statutory non-compliance is later discovered — the liability of every director, manager, or officer continues as if the company had not been dissolved, for matters that existed before strike-off. It is not a mechanism to escape existing obligations, which is precisely why the Registrar, C-PACE checks for pending litigation and dues before approving the application.
Can a company with employees still on its books apply for strike-off?
All employee dues — final salary, gratuity where applicable, and provident fund settlements — must be cleared and employment formally terminated before applying, since outstanding employee claims count as liabilities that block the nil-liability declaration required for STK-2.
Is a company secretary or CA mandatory for filing STK-2?
There is no strict legal requirement to route the filing through a professional, but in practice the statement of accounts must be certified by a practising Chartered Accountant, and the overall documentation (resolutions, affidavits, indemnity bond) is detailed enough that most companies engage a CA or company secretary firm to avoid rejections and resubmissions.
What if the company has unclaimed dividends or unpaid share application money?
A company with unclaimed dividends, matured deposits, or unpaid share application money sitting on its books is generally not eligible for the STK-2 fast-track route until those amounts are dealt with — such balances have to be transferred to the appropriate fund or otherwise resolved before the company can declare nil liabilities.
Can directors incorporate a new company after a strike-off?
Yes, directors of a company that has undergone a clean, voluntary strike-off under Section 248(2) are generally free to incorporate or be directors of new companies. This is different from a company struck off by the Registrar for non-compliance (under Section 248(1)), where director disqualification issues can arise — another reason a proactive, voluntary strike-off is preferable to letting the Registrar initiate removal.
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