2. Compulsory Closure by the Registrar of Companies (ROC)
If a company fails to obtain a Certificate of Commencement of Business within 180 days, does not file financial statements for two consecutive years, and has no business operations during this period, the Registrar of Companies (ROC) may initiate its closure under Section 248(1) of the Companies Act, 2013 after issuing a notice.
In such case;
- The Registrar Of Companies sends a notice to the company and its directors.
- If the company does not respond to the notice in the specified time limit, then ROC issues a public notice.
- The company name will be removed from ROC after 30-60 days.
3. Winding Up by the Tribunal (NCLT)
When the company is unable to pay the debt, this method is getting used. It can apply in two types: If directors and shareholders decide to close the company or creditors file for liquidation.
Voluntary wind up
when directors and shareholders mutually decide to close the company, then use this method. For that, the company needs to follow the below steps;
- Hold a board meeting and approve a resolution for voluntary liquidation.
- Company needs to hire a professional liquidation to handle the asset distribution.
- Needs to submit a petition to NCLT (National Company Law Tribunal).
- Company needs to clear the liabilities.
- When company submits the final report, NCLT issues a dissolution order.
Wind up by creditors
When the company is unable to fulfill the debts, creditors file petition to NCLT for the company closure. In this case,
- Creditors apply to NCLT.
- NCLT appoints liquidator to settle liabilities.
- Once the liabilities are settled, NCLT approves the dissolution order and company is officially dissolved.
4. Fast Track Exit (FTE) Scheme (For Dormant Companies)
Companies who have been active for at least one year or not commenced business since incorporation can apply under this scheme. When a registered company does not generate profit via business operation and has legal existence, It calls Dormant companies.
For these type of companies, RCO processes quickly under Fast Track Exit scheme, the process for closing the company is same but it provides decision quickly than usual.
The required documents for closing the company
- Digital signature of directors
- Signed consent letter and affidavit by directors.
- Indemnity Bond signed by all the directors.
- Copies of consent by at least 75% shareholders.
- Statement of Accounts.
- Bank closure statement and bank closure letter.
Conclusion
How to close a Pvt Ltd company depends on its situation. Whether it’s a voluntary strike-off, compulsory closure, or winding up through NCLT, each method has specific requirements. The company should assess its condition before deciding. For proper guidance, it’s best to consult a professional or expert.
Suggested Read :
Voluntary vs Involuntary Strike Off
Tax Structures for Pvt ltd Company
LLP Vs Private limited company
Monthly Compliance for Pvt Ltd Companies
Advantages & disadvantages of Pvt ltd Company
It’s good to see a comprehensive guide on striking off a company in India. Do you also cover the steps involved in winding up a company with pending liabilities, or is that a separate process?