How To Close A Private Limited Company?

How to close company

In the current situation, a big question arises in the mind of the people is how to shut down a company. Is it as simple as locking the registered office or stop working in the company? Well if you think so then you are wrong.

Closing a company is a very big and complicating thing in comparison to its registration. The company registration process is very simple and straight first select the name and gets it approved then prepares all necessary documents, then apply for company registration and then wait for the government approval. But if you want to shut down your company then you need to fulfill all the conditions as mentioned in the Companies Act, 2013 as well as imposed by the relevant authorities, if any.

Why Do People Want To Shut Down Their Business?

The answer is depending upon many factors depend upon person to person but there are some general factors and those are:

  • Unable to operate their business activity means they cannot make the business survive in today’s competitive market, as the business needs the proper funding as well as a proper business strategy to compete with the competitor.
  • Unaware of maintenance from annual compliances rules made under the Companies Act, 2013 and other compliance as applicable to the company. If the company fails to comply with these compliances the government charges a huge penalty not only from the company but also from the officers of the company.
  • Deadlock in the management or dispute between the directors or members of the company.
  • Any amendments in the law due to which it is hard to operate the business activity of the company; many other reasons due to which the members will plan to close their company.

Directly closing the company is not allowed under the Companies Act, 2013, if the member does so they will liable to pay penalty. As there are proper section and rules made under the Companies Act, 2013.

How To Close A Private Limited Company?


As per section 248 of the Companies Act, 2018 there are some conditions for strike off the Company and these are:

  1. If a company has failed to commence its business within one year of  its incorporation
  2. If subscribers to the memorandum have not paid the subscription money within 180 days of its incorporation  and declaration has not been filed within 180 days to the registrar  to this effect
  3. If a company is not carrying any business activities for a period of 2 years immediately preceding financial year and has not made application to the registrar for obtaining the status of the dormant company under section 455.

The registrar will send notice in STK-1 to the company and all the directors of the company, mentioning that his intention to remove the name of the company from the register of companies and requesting them to send the authorized representative along with a copy of all relevant documents within 30 days of the notice.

Same notice shall be published by the registrar in the Official Gazette in STK-5. After the expiry of mentioned time in the notice, the registrar will strike off the name of the company from the register of companies unless a sufficient cause shown by the company and same action shall be published in the Official Gazette that the same company shall stand dissolved. Before passing order of strike off the registrar satisfy him that sufficient provision shall be made for discharging all the liabilities and obligations of the company within a reasonable time.


The company may file the application for strike off to the registrar after extinguishing all the liabilities, by special resolution or consent of 75% members in terms of paid-up capital. If a company is regulated by any special authority then approval must be taken from that authority before filing an application to the registrar. The company shall:

  1. Hold the board meeting and pass a resolution for strike off of the company and the same shall be approved by the shareholders in the form of Special Resolution at Extra-Ordinary General Meeting 
  2. If a company is regulated by any other authority then approval shall be taken from that authority.
  3. Application for strike off shall be filed by the company in STK-2 form with the following documents:
  4. Duly notarized indemnity bond by every director of the company in the STK-3 form
  5. Affidavit by every director of the company in the STK-4 form
  6. Statement of accounts inclusive the details of assets and liabilities of the company but the statement shall not be older than 30 days before filing an application and the same shall be certified by the Chartered Accountant
  7. Statement of litigation pending, if any
  8. After receiving an application, the ROC will publish a public notice in STK-6 in Official Gazette for the purpose of any objection raised by the creditors or any other person who’s interested get affected.
  9. After complying all the process the ROC will strike off the name of the company and dissolve it by sending notice in Official Gazette in STK-7 form.

This is the complete and legal process to shut down the company. If anyone wants to shut down his company then he must follow the legal procedure as it contains proper government approval and no further litigation shall be leviable on the company as well as the directors of the company.




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