Streamlining Closure: A Company Secretary's Guide to Striking Off Your Private Limited Company in India 

Before we dive into the process, it's essential to understand the difference between striking off and winding up:

• Striking Off (Section 248 of the Companies Act, 2013): This is a simpler and less expensive procedure applicable to companies that are not carrying on any business or operation for a period of two immediately preceding financial years and  have not sought the status of a dormant company. It can also be initiated by the Registrar of Companies under certain circumstances.

• Winding Up: This is a more formal and often lengthy legal process involving the liquidation of assets, settlement of liabilities, and ultimately the dissolution of the company. It's typically undertaken by companies that are operational but facing insolvency or other significant issues.

This blog focuses specifically on the striking off process.

A Private Limited Company can apply for striking off if it meets the following criteria:

• It has not commenced any business or activity since its incorporation.

• It is not carrying on any business or operation for a period of two immediately preceding financial years.

• It has made an application to the Registrar for striking off its name.

• It has paid all its outstanding liabilities.

• It has obtained the consent of 75% of the members in terms of paid-up share capital.

• It has filed all statutory returns up to the date of application.

• It does not have any assets or liabilities as on the date of application.

Here’s a breakdown of the key steps involved in striking off a Private Limited Company in India:

1. Convene a Board Meeting:

• Hold a Board Meeting to discuss and approve the proposal for striking off the company's name.

• Pass a Board Resolution authorizing a director to make the application and sign the necessary documents.

2. Pass a Special Resolution:

• Convene an Extra-Ordinary General Meeting (EGM) of the company's members.

• Obtain the consent of at least 75% of the members in terms of paid-up share capital by passing a Special Resolution for striking off the company's name.

3. File Form STK-2 with the Registrar of Companies (RoC):

• Prepare and file Form STK-2 electronically with the RoC. This is the application for striking off the name of the company.

• Key Attachments to Form STK-2 typically include:

  • A statement of accounts (certified by a Chartered Accountant) made up to a date not more than thirty days preceding the date of application.

  • An indemnity bond duly notarized by all the directors.

  • A special resolution passed by the members or consent of 75% members in terms of paid-up share capital.

  • A statement declaring that the company has ceased to operate from a specific date and has no assets or liabilities.

  • An affidavit in Form STK-4 by each of the directors.

  • A copy of the Board Resolution authorizing the filing of the application.

  • Any other document as may be required by the RoC.

4. Publication by the Registrar:

• Upon being satisfied with the application, the Registrar will publish a notice in the official gazette and also on the website of the Ministry of Corporate Affairs (MCA) inviting objections to the proposed striking off within a period of thirty days from the date of publication.

5. Striking Off the Name:

• If no valid objections are received within the stipulated time, the Registrar will strike off the name of the company from the Register of Companies and publish a notice of the same in the official gazette.

• From the date of publication of this notice, the company shall stand dissolved.

• Timelines: While the process is generally faster than winding up, the entire striking off procedure can take approximately 3-6 months from the date of application, subject to the RoC's processing time and any potential objections.

• Professional Assistance: It is highly recommended to seek the assistance of a Practicing Company Secretary to ensure proper documentation, compliance with all legal requirements, and a smooth process. We can guide you through the complexities of Form STK-2 and its attachments.

• Nil Assets and Liabilities: Ensure that the company genuinely has no outstanding assets or liabilities at the time of application. Any undisclosed liabilities discovered later can lead to serious legal consequences.

• Statutory Filings: Make sure all pending Annual Returns (Form AOC-4) and Financial Statements (Form MGT-7) are filed up to the date of application. The RoC will not process the STK-2 application if there are any outstanding filings.

• Bank Account Closure: It is advisable to close the company's bank accounts before filing Form STK-2.

• Income Tax Returns: Ensure that all Income Tax Returns have been filed up to the date of cessation of business.

• Objections: Be prepared to address any objections raised by the RoC or other stakeholders within the stipulated timeframe.

• Post Striking Off: Once the company is struck off, it ceases to exist as a legal entity. However, the liability of the directors/members continues and can be enforced as if the company had not been dissolved, up to a period of 20 years.

Navigating the legalities of striking off your Private Limited Company in India requires careful attention to detail and adherence to the prescribed procedures. As a Practicing Company Secretary based in Ahmedabad, I am well-equipped to guide you through each step of this process, ensuring compliance and minimizing any potential hurdles.

If you are considering striking off your Private Limited Company in Ahmedabad or anywhere in India, don't navigate this process alone. You can contact us on info.pknassociates@gmail.com or +91 9426173791 for expert guidance and a seamless closure experience.