How to Close (Strike Off) a Private Limited Company in India: STK-2 Process

Many companies are set up for a project or a startup idea that doesn't work out. An inactive company still has to file annual returns and financial statements every year, and missing them leads to late fees and director disqualification. If you don't plan to use the company again, closing it properly is cheaper than keeping it alive on paper.

What "strike off" means

Striking off is the simplest way to close a company. The Registrar of Companies (ROC) removes the company's name from the register and publishes a notice in the Official Gazette. From that date the company is dissolved (Section 248(5), Companies Act, 2013).

It is different from winding up. Winding up (by a tribunal, or voluntary liquidation under Section 59 of the Insolvency and Bankruptcy Code, 2016) involves a liquidator who sells assets and pays creditors. Strike off is meant for companies that have no assets and no liabilities left. If your company still has debts or property to distribute, strike off is the wrong route.

The ROC can also strike off a company on its own under Section 248(1), for example when it has not started business within a year of incorporation or has not filed returns. This guide covers the voluntary route, where the company itself applies.

Who can apply

Under Section 248(2), a company can apply if any of the grounds in Section 248(1) apply to it, most commonly:

• it failed to commence business within one year of incorporation; or
• it has not carried on any business or operation for the two immediately preceding financial years and has not applied for dormant company status under Section 455.

Before applying, the company must have extinguished all its liabilities. It also needs the approval of its members by a special resolution, or the consent of members holding 75% of the paid-up share capital.

The procedure is set out in the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016.

When you cannot apply

Section 249 bars an application if, in the previous three months, the company has:

• changed its name or shifted its registered office to another state;
• disposed of property or rights it held for business, other than in normal trading;
• carried on any activity other than what is needed to close down or wind up its affairs; or
• applied for a compromise or arrangement that is still pending before the tribunal.

It also cannot apply while it is being wound up under the Companies Act or the IBC. The rules additionally exclude certain categories, such as listed companies, companies under investigation or inspection, companies with prosecution pending, and Section 8 (non-profit) companies with undisposed assets. Check the current rules if any of these may apply to you.

The STK-2 process, step by step

1. Close everything down. Pay off creditors, settle tax dues, and close the company's bank account. Cancel GST and other registrations where needed.
2. Bring filings up to date. The ROC generally expects pending annual returns (MGT-7/MGT-7A) and financial statements (AOC-4) to be filed up to the end of the financial year in which the company stopped operating. See the annual compliance checklist.
3. Hold a board meeting. The board approves the proposal to close, authorises a director to file, and calls a general meeting.
4. Pass the special resolution at a general meeting, or collect written consent from members holding 75% of paid-up capital. File the special resolution with the ROC in Form MGT-14 where required.
5. Prepare the supporting documents listed below, including a CA-certified statement of accounts.
6. File Form STK-2 on the MCA V3 portal, signed with a director's digital signature and certified by a practising professional where the form requires it. Pay the fee.
7. Public notice. After examining the application, the Registrar issues a public notice in Form STK-6. It is put on the MCA website, published in the Official Gazette and in newspapers, and sent to regulators such as the income tax department. Anyone with an objection usually has 30 days to raise it.
8. Strike off and dissolution. If there are no objections, the Registrar strikes off the name and publishes a notice of dissolution in the Official Gazette (Form STK-7).

Documents to attach

Fees and timeline

• Government fee: STK-2 carries a fixed fee of ₹10,000 under the Companies (Registration Offices and Fees) Rules, 2014. The MCA sometimes offers reduced fees under special schemes, so check the portal before you file.
• Other costs: stamp duty and notary charges for STK-3 and STK-4, CA certification, and professional fees if a CA or CS handles the filing.
• Time: after C-PACE was set up in 2023, many applications are completed in a few months, provided the documents are in order and nobody objects.

After the name is struck off

• The company is dissolved and its certificate of incorporation is cancelled from the date of the Gazette notice (Section 250). It can no longer do business, except to recover dues or settle remaining claims.
• Liability continues. Every director, manager and member stays liable as if the company had not been dissolved (Section 248(6) and 248(7)). The indemnity bond makes this concrete.
• Restoration is possible. If a member, creditor or the company feels the strike off was wrong, it can apply to the National Company Law Tribunal (NCLT) to restore the name under Section 252, within the time limits given there.

Still deciding which structure suits your next venture? See Pvt Ltd vs LLP vs OPC and directors' duties and liabilities.

Found this useful? Share it with someone who needs it: