Closing a company is not a matter of just ceasing business activities. Though a company may have stopped all of its operations, it is still required to go through the legal dissolution process, which in turn will prevent annual compliance issues, penalties, and also avoid unnecessary regulatory notices.
In India, the process of striking off is the simplest way to legally end an inactive company. As per Section 248 of the Companies Act of 2013, which details the process, eligible companies may apply to the Registrar of Companies (ROC) to take their name out of the register. Once the ROC approves the company, the company in question ceases to be a legal entity.
This guide goes over what is required for, and the process of, striking off a company in easy terms.
What Is a Strike Off of a Company?
The Registry action which strikes a company off the Register of Companies kept by the Registrar of Companies (ROC) is a process which also serves as an alternative to winding up for companies which have ceased business and which have no outstanding liabilities.
Once the ROC issues the strike off order the company dissolves and no longer has legal standing.
Unlike windup the strike off is a faster, more affordable option which also works for dormant businesses that have no outstanding issues.
Voluntary Strike Off vs ROC Strike Off
There are two ways a company can be struck off.
| Particulars | Voluntary Strike Off | ROC Strike Off |
| Initiated By | Company | Registrar of Companies (ROC) |
| Applicable Provision | Section 248(2) | Section 248(1) |
| Reason | Company voluntarily closes its business | ROC removes inactive or non-compliant companies |
| Application | Company files Form STK-2 | ROC issues a strike-off notice |
| Control | Company controls the closure process | ROC controls the strike-off process |
Most businesses prefer voluntary strike off because they can complete the closure on their own terms instead of waiting for regulatory action.
When Can a Company Apply for Strike Off?
A company may apply for the strike off of a company provided it meets the set out requirements as specified in the Companies Act.
Generally, a company should:
- Stop carrying on business operations.
- Have no outstanding liabilities.
- Close all bank accounts.
- Obtain approval from shareholders.
- Settle outstanding tax and creditor issues.
- Ensure no legal proceedings remain pending.
Also, some companies do not qualify for strike off, for example, listed companies, companies that are under investigation, companies that have pending prosecutions, and companies that have accepted public deposits that are still unpaid.
Before you file Form STK-2, it is recommended that you review your compliance status, which will, in turn, help to avoid the rejection of your application by the ROC.
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Get StartedProcess of Company Strike Off (Step-by-Step)
The removal of a company goes through a detailed process. If each step is completed correctly, it will avoid delays and objections from the ROC.
Step 1: Conduct a Board Meeting
The Board of Directors has put forth a resolution that is in support of the proposal to close down the company, which also authorizes a director to see the filing process through.
Step 2: Get Shareholder approval
Members pass the resolution for strike off through a special resolution or by getting consent from at least 75% of shareholders based on the paid-up share capital.
Step 3: Shut Down Business Operations
The company is to cease all business operations, liquidate bank accounts, and pay out what is due before they file the application.
Step 4: Gather Supportive Documents
The company files out affidavits, issues indemnity bonds, a statement of accounts which is certified by a Chartered Accountant, and also other supporting documents.
Step 5: File STK-2 Form
The authorized representative files Form STK-2 with the Registrar of Companies along with the required government fee and support documents.
Step 6: Risk Assessment ROC Analysis
The ROC looks at the application. Should all requirements of the Companies Act be met, it issues a public notice which brings the matter to the notice of the public for objection within the prescribed time.
Step 7: Final Notice Of Strike Action
If no proper objections are raised, the ROC will remove the company’s name from the Register of Companies and publish the final notice in the Official Gazette. The company at that point stands dissolved.
The process usually takes between three and six months, which is dependent on the application’s completeness and ROC processing time.
Documents Required for Company Strike Off
Preparing accurate documentation plays an important role in obtaining timely approval.
The commonly required documents include:
| Document | Purpose |
| Form STK-2 | Application for strike off |
| Board Resolution | Approval from the board of directors |
| Special Resolution | Consent from shareholders |
| Indemnity Bond (STK-3) | Protects against future claims and liabilities |
| Affidavit (STK-4) | Declaration by the directors |
| Statement of Accounts | Certified by a Chartered Accountant to confirm the company’s financial position |
| PAN and CIN Details | Identify the company |
| Proof of Bank Account Closure | Confirms that the company’s bank accounts have been closed |
| Statement of Pending Litigation (if any) | Discloses any ongoing legal cases involving the company |
Submitting incomplete or inaccurate documents often leads to delays or additional queries from the ROC.
Consequences of Company Strike Off
The dissolving of a company, which in turn removes its legal standing. Before you do, business owners should be aware of the legal issues at hand.
Key consequences include:
- The company is out of business.
- The firm is unable to conduct business or enter into contracts.
- Directors are held responsible for pre dissolution issues.
- The company dissolves and legal standing ceases.
- Any pending legal issues or unknown assets may arise.
In appropriate cases a party that is affected may approach the National Company Law Tribunal (NCLT) for restoration.
Businesses also should see to it that all liabilities, taxes, and compliance issues are resolved before starting the strike off process.
Expert Insight: Many which withdraw applications report delay in the process which is due to companies’ failure to close out bank accounts, file out pending ROC forms, or pay tax liabilities. If these tasks are completed before we file out Form STK-2 the chances of getting a quick approval are improved.
How FinGuru India Can Help
Closing a company is not a simple process of filling out one form. You have to fulfill outstanding compliance issues, pay off liabilities, prepare accurate records, and comply with each element of the Companies Act, 2013. Also a small error may cause delay in approval or rejection by the Registrar of Companies (ROC).
FinGuru India we provide full support for company strike off. We look at your company’s eligibility, put together all the required docs, file Form STK-2, and we handle ROC issues on your behalf. We take you through each step of the process which we do to make it smooth, compliant, and free of stress.
Looking to wind up an inactive company? Reach out to FinGuru India today for expert help with company strike off and full ROC compliance support.
