How to close a company in India: what you need to know first
If your company is no longer operational, knowing how to close a company in India properly will save you from penalties, compliance notices, and director disqualification down the line. Many founders assume that simply stopping operations is enough – it is not. A company legally exists until the Registrar of Companies (RoC) removes it from the register. Until that happens, annual returns, financial statements, and other filings remain mandatory regardless of whether the business is active.
This guide covers every method available in 2026, the step-by-step process for each, documents required, timelines, and what happens if you skip the formal closure route.
Methods to close a company in India
There are two main routes for closing a private limited company:
- Voluntary strike off under Section 248 of the Companies Act, 2013 – the faster, cheaper option for companies that have been inactive or never commenced business.
- Winding up by the National Company Law Tribunal (NCLT) – a formal court-driven process, applicable when there are creditors, pending litigation, or disputed assets involved.
For the vast majority of small and medium businesses with no significant liabilities or active disputes, voluntary strike off is the practical path. The NCLT route is expensive, time-consuming, and typically used in situations where stakeholders cannot reach agreement outside the tribunal.
Voluntary strike off: eligibility under Section 248
Your company qualifies for voluntary strike off if all of the following conditions are met:
- The company has been inactive for at least two years, or it never commenced business after incorporation.
- There are no outstanding assets or liabilities on the company’s books.
- All bank accounts in the company’s name are closed.
- There are no pending legal proceedings against the company or its directors.
- No pending statutory dues are owed to any government authority.
- The company is not involved in any regulated activity requiring special approval (such as NBFC, insurance, or securities-related businesses).
If your company has assets (even cash in a bank account), those must be distributed or settled before applying. An application filed with outstanding assets will be rejected by the RoC.
Prerequisites before filing for strike off
Before you submit the strike off application, complete each of the following steps. Skipping any of them is a common reason for rejection or delay.
1. File all pending returns with MCA
All overdue annual returns (Form MGT-7 / MGT-7A) and financial statements (Form AOC-4) must be filed with the MCA. The RoC will check compliance history during processing. Outstanding filings do not automatically block submission, but they significantly increase the chance of rejection or additional queries.
2. Close all company bank accounts
Obtain a closure certificate or no-dues letter from the bank. This is a mandatory document in the STK-2 application. If you have multiple current accounts, all of them must be closed.
3. Cancel GST registration
File your final GSTR-10 (final return) and apply for cancellation of GST registration through the GST portal. For a detailed walkthrough of that process, see our guide on how to close GST registration. The RoC does not directly verify GST status during strike off, but pending GST returns or dues can trigger notices from the tax department after the company is struck off – leaving directors personally liable.
4. Cancel other registrations
Depending on your business, also cancel: Import Export Code (IEC) with DGFT, Shops and Establishments registration with the local municipal authority, any professional tax registration, EPF/ESI registration if employees were on the payroll, and any trade licences or sector-specific registrations. Each authority has its own closure procedure.
5. Pass a board resolution and special resolution
Directors must pass a board resolution authorising the application. Additionally, a special resolution of shareholders (or consent of 75% of shareholders by paid-up share value) must be passed to approve the strike off application. These resolutions must be passed before the application is filed.
Step-by-step process to file Form STK-2 on the MCA portal
- Prepare and audit the company’s books. Confirm nil assets and nil liabilities as of the application date. Get an affidavit and indemnity bond signed by all directors confirming there are no pending liabilities.
- Pass resolutions. Board resolution first, then special resolution or shareholders’ consent (consent of members holding not less than 75% paid-up capital).
- File pending MCA returns. Ensure MGT-7/MGT-7A and AOC-4 are up to date for all financial years.
- Close bank accounts. Collect bank account closure certificates from each bank.
- Prepare STK-2 form. Download the latest version of Form STK-2 from the MCA portal. Fill in company details, CIN, reason for closure, and director particulars.
- Attach required documents. See the documents table below.
- DSC and certification. The form must be digitally signed by a majority of directors. It also requires certification by a CA, CS, or Cost Accountant in practice.
- Pay the filing fee and submit. File Form STK-2 on the MCA21 portal. The current government fee is Rs. 10,000.
- Publication of notice by RoC. After submission, the RoC will publish a notice in the Official Gazette and on the MCA website for 30 days, inviting objections from creditors or other interested parties.
- Strike off order. If no valid objections are received, the RoC issues a strike off order and publishes the final notice in the Official Gazette. The company’s name is removed from the register.
Documents required for STK-2 filing
| Document | Details |
|---|---|
| Indemnity bond | Signed by all directors on non-judicial stamp paper (value as per state); notarised |
| Affidavit by directors | Confirming nil assets and liabilities; individually sworn by each director |
| Statement of accounts | Certified by a CA; dated not more than 30 days before filing |
| Special resolution / shareholders’ consent | Signed by members holding 75%+ of paid-up share capital |
| Board resolution | Authorising filing of STK-2 and designating authorised signatory |
| Bank account closure certificates | From each bank confirming account closure and zero balance |
| Copy of pending litigation disclosure | If applicable; declaration that no proceedings are pending |
| DSC of directors | Class-3 digital signature required for all signing directors |
Timeline after filing Form STK-2
Once STK-2 is submitted and the filing fee is paid, the typical end-to-end timeline is 3 to 6 months. The RoC’s 30-day public notice period runs first. After that, processing time at the RoC varies by jurisdiction and current workload. Mumbai and Delhi RoCs historically take longer than smaller registries.
You will receive an acknowledgement on MCA21 immediately after filing. The strike off order and gazette notification are the final steps – until you see these, the company remains legally alive.
Closing an LLP in India: Form 24
Limited Liability Partnerships follow a similar but separate process under the LLP Act, 2008. The equivalent of STK-2 for LLPs is Form 24, filed with the Registrar under Rule 37 of the LLP Rules. Eligibility criteria mirror those for companies: the LLP must be defunct (no business in the past year or never commenced), with nil assets and liabilities. All annual returns (Form 11) and statements of accounts (Form 8) must be filed before applying. The LLP must pass a partner resolution, collect partner consents, and certify a nil-balance statement of accounts. The government fee for Form 24 is Rs. 500. Processing timelines are similar to STK-2 – typically 3 to 6 months.
Consequences of not closing a company properly
Leaving a defunct company on the register without formally closing it creates compounding problems:
- Continuous compliance obligations. Annual return and financial statement filings remain due every year. Missing these attracts late fees of Rs. 100 per day per form, with no upper cap on accumulation.
- Director disqualification. Under Section 164(2) of the Companies Act, a director of a company that has not filed annual returns or financial statements for three consecutive years becomes disqualified from being a director in any company for five years. This disqualification is automatic and affects all companies the person directs – not just the defaulting one.
- Penalty notices from RoC. The RoC periodically issues strike off notices to non-compliant companies. If the RoC strikes off your company involuntarily (under Section 248(1)), you lose the ability to control the process and may find that assets were not properly distributed before strike off, creating personal liability for directors.
- Difficulty obtaining new registrations. Banks, government portals, and compliance filings for new ventures often check director DIN status. A disqualified DIN blocks the director from incorporating new companies or taking up directorships.
Cost comparison: closing vs maintaining a dormant company
A common question is whether it is cheaper to simply let a company sit dormant rather than go through the formal closure process. The numbers generally favour closure.
| Cost item | Voluntary strike off (one-time) | Maintaining dormant company (per year) |
|---|---|---|
| MCA government fees | Rs. 10,000 (STK-2) | Rs. 1,200 – Rs. 3,000+ (annual return + AOC-4 fees) |
| Professional fees (CA/CS) | Rs. 15,000 – Rs. 40,000 (one-time) | Rs. 10,000 – Rs. 25,000 per year |
| Stamp paper (indemnity/affidavit) | Rs. 500 – Rs. 2,000 (varies by state) | Nil |
| Late filing penalties (if overdue) | Paid once during pre-closure clean-up | Rs. 100/day per form if missed |
| Audit fees | Nil (if accounts already audited) | Rs. 5,000 – Rs. 15,000 per year |
Over a three-year horizon, formal closure is almost always less expensive than maintaining a compliant dormant entity – and far cheaper than dealing with disqualification and penalty recovery later.
Cancelling registrations before closure – and what comes next
Before submitting your STK-2, ensure GST registration is cancelled (file GSTR-10), your IEC is surrendered if applicable, and all other statutory registrations are wound down. Once your company is formally struck off, these registrations technically lapse but the associated return obligations may still attract notices if not formally closed. Completing this as part of your pre-closure checklist avoids residual compliance risks. If you are planning a fresh start after closing your current entity – whether incorporating a new company or registering for GST under a new structure – myHQ Virtual Office provides a compliant registered address across 25+ Indian cities to help you get the new company registration process in India started quickly.
Frequently asked questions
How long does it take to close a company in India?
For voluntary strike off via Form STK-2, the typical end-to-end timeline is 3 to 6 months from the date of filing. The 30-day public notice period is mandatory and cannot be shortened. RoC processing time after that varies by jurisdiction.
Can a company be struck off if it has a pending GST return?
The RoC does not directly verify GST filing status before processing STK-2. However, unfiled GST returns remain the directors’ liability even after strike off. The GST department can issue notices and hold directors personally responsible for unpaid tax dues. Always file GSTR-10 and close GST registration before or alongside the strike off application.
What is the difference between strike off and winding up?
Strike off (under Section 248) is an administrative removal from the register – faster, cheaper, and suitable for inactive companies with no creditors. Winding up under the NCLT is a legal process overseen by the tribunal, required when there are creditors, pending legal disputes, or when the company is being closed involuntarily due to insolvency. Winding up can take several years and involves appointing a liquidator.
Can a struck-off company be restored?
Yes. Under Section 252 of the Companies Act, 2013, a company or any aggrieved party can apply to the NCLT for restoration within 20 years of the strike off date. However, restoration is not a straightforward process – it requires demonstrating valid grounds and the NCLT has discretion on whether to allow it. It is always better to close formally and on your own timeline than to have the RoC strike off your company involuntarily.
What happens to a company’s PAN and TAN after strike off?
The PAN and TAN issued to the company are not automatically cancelled when the company is struck off from the MCA register. They remain on record with the Income Tax Department. You should inform the IT department of the closure, file the final income tax return for the company, and ensure there are no outstanding tax dues. The IT department may issue notices for missing returns even after MCA strike off if returns are not filed for the final year.
Is Form STK-2 applicable for Section 8 companies?
No. Section 8 companies (not-for-profit entities licensed under the Companies Act) cannot apply for voluntary strike off. They must apply to the Central Government for surrender of licence before any closure proceedings can begin. The process is more involved and requires NCLT involvement in most cases.
Who signs Form STK-2?
Form STK-2 must be digitally signed by a majority of the company’s directors. In addition, the form must be certified (not just signed) by a Chartered Accountant, Company Secretary, or Cost Accountant in whole-time practice. Both are mandatory – the form will be rejected if either signature is absent.
