How to Close a Private Limited Company in India: Strike Off Under Section 248

Kaustav Chowdhury
Jun 26
4 min read

Closing a private limited company in India is a structured process governed by the Companies Act, 2013. The most common route for small and inactive companies is voluntary strike off under Section 248 of the Act. This guide explains the eligibility requirements, step-by-step procedure, required forms, and key timelines for striking off a company from the register maintained by the Registrar of Companies (RoC).

When Can a Company Apply for Strike Off

Under Section 248(2) of the Companies Act, 2013, a company may apply for strike off if it meets the following conditions. First, the company has not commenced business within one year of incorporation, or has not carried on any business or operations for the immediately preceding two financial years. Second, the company has no existing liabilities. All debts, obligations, and dues owed to any creditor, government authority, or other party must be cleared before filing. Third, the company must not have any pending litigation or regulatory proceedings.

It is important to note that Section 248 applies to both voluntary strike off (initiated by the company) and compulsory strike off (initiated by the RoC). This guide focuses on the voluntary route. The RoC may also strike off a company under Section 248(1) if it has reasonable cause to believe the company is not carrying on business, but that is a separate process initiated by the registrar.

Step 1: Board Resolution and Shareholders' Approval

The first step is to convene a board meeting and pass a board resolution authorising the company to apply for strike off. The resolution should specifically authorise a director to sign and file the necessary forms with the RoC. Following the board resolution, the company must obtain the consent of all shareholders by way of a special resolution passed in a general meeting or through written consent of all members holding at least 75 per cent of the paid-up share capital. The special resolution must be filed with the RoC in Form MGT-14 within 30 days of passing.

Step 2: Clear All Liabilities and Close Bank Accounts

Before filing the strike off application, the company must ensure that all liabilities are cleared. This includes outstanding statutory dues (income tax, GST, provident fund, professional tax), employee-related obligations, and any amounts owed to creditors or vendors. All bank accounts in the company's name should be closed, and a certificate from the bank confirming closure should be obtained. If the company holds any assets, these must be disposed of or transferred before filing. (Related: How to File Annual Returns for a Company Under the Companies Act 2013)

Step 3: File Form STK-2 with the RoC

The company must file Form STK-2 (Application by Company for Removal of Name) on the MCA21 portal. The form requires the following attachments: a statement of accounts prepared not more than 30 days before the date of application, showing nil assets and nil liabilities; an indemnity bond from every director, signed and notarised, agreeing to meet all liabilities if any arise after the company is struck off; an affidavit from every director confirming that the company has no pending liabilities; and a copy of the special resolution or consent of members. The filing fee for Form STK-2 is Rs 10,000.

Step 4: RoC Issues Public Notice

After receiving Form STK-2, the RoC publishes a public notice on the MCA portal, giving a period of 30 days for any objections from creditors, regulators, or other stakeholders. The notice is also sent to relevant regulatory authorities, including the income tax department, GST authorities, and the concerned state government. If no objections are received within 30 days, the RoC proceeds to strike off the company.

Step 5: Strike Off Order and Gazette Publication

If no objections are raised and all requirements are met, the RoC passes an order striking the company's name from the register. A notification of the strike off is published in the Official Gazette. The company stands dissolved from the date of the Gazette publication. The entire process, from filing Form STK-2 to dissolution, typically takes three to six months, depending on the workload of the concerned RoC office.

Documents Required for Strike Off Application

The following documents are required for filing Form STK-2: board resolution authorising the strike off application; special resolution or written consent of 75 per cent shareholders; statement of accounts showing nil assets and nil liabilities (not older than 30 days); indemnity bond from each director (notarised); affidavit from each director; CIN of the company; bank account closure certificate; and copies of the latest income tax return, GST return, and any other statutory filing clearances.

Consequences of Strike Off

Under Section 248(7) of the Companies Act, the liability of every director, manager, and member of the company continues even after the company is dissolved. This means that creditors or regulators can pursue claims against directors personally even after the company ceases to exist. The directors' indemnity bond filed with Form STK-2 formalises this continuing liability. Additionally, under Section 250, any aggrieved person, member, or creditor may apply to the National Company Law Tribunal (NCLT) within 20 years of the strike off to have the company's name restored to the register. (See: How NCLT Handles Insolvency Cases: Step-by-Step Process)

Alternative: Winding Up by the Tribunal

If a company has existing liabilities, pending litigation, or disputed claims, it cannot use the strike off route. In such cases, the company must be wound up by the NCLT under Sections 271 to 365 of the Companies Act, 2013. The winding up process is more complex and expensive, involving the appointment of a liquidator, realisation of assets, and distribution of proceeds to creditors in a prescribed order. For companies with no liabilities and no pending disputes, strike off under Section 248 remains the most efficient and cost-effective route. (Related: CIRP Under IBC: Step-by-Step Guide)