Close Company Procedure

Running a business comes with its own challenges. Some times when things don't work out a business may be closed down. There can be several reasons to close or strike off the organization. You can close your company with expert consultation and guidance of professionals with us. This will ensure no stone unturned to check the accuracy of documentation.

A company can be strike off
adopting the following way

Strike off a company
Section 248, of the Companies Act, 2013, manages strike-off provisions of an outdated company. Any dead organization burning to strike off its name from the register of Registrar of the organization can apply in Form STK-2 for strike off its name from the register kept up by ROC.
Similarly, ROC has also the ability to strike off any defunct company after satisfying himself of the need to strike off an old company and has reasonable cause. But prior to passing any request in such a manner, a chance of being heard should be given to the outdated company by following the due strategy u/s 248.

What is Strike off of Company?
A company is always incorporated with a long term objective to do some legitimate business. But if such company fails to commence its business or comply with necessary compliances, it may lead to closure of a company. In other words, Strike off refers to removal of name of the company from the Register of Companies maintained by Registrar of Companies. It is a fast track exit mode to close a company. Section 248 of Companies Act, 2013 defines Strike off broadly classified into two categories:

• (a) Section 248(1) : Strike off by ROC
• (b) Section 248(2) : Strike off by company

• What is strike off by ROC?

Whenever Registrar of Companies (ROC) believes that a company is not functioning or is inactive for quite a while, such company suo moto can be Stiked off by ROC and its name can be removed from the Register of companies.

Grounds for Strike Off by ROC
• (a) When a company fails to commence its business within 1 year from its incorporation;
• (b) When a company is not carrying out any business for the last two years and has not applied for dormant status;
• (c) When the subscribers to the memorandum have not paid the subscription amount of the company and a declaration to this effect has not been filed within one hundred and eighty days of its incorporation under subsection (1) of section 10A; or
• (d) When a company is not carrying on any business or operations, as revealed after the physical verification carried out at the registered office of company.

The Registar shall send a notice to the company and its director of his intention to strike off the company from the Register of Companies. Such a notice gives a 30 days time to the company and all its director within which they can send their representation to the Registrar. Such a representation helps the Registrar to take informed decision to strike off the company.Strike off is an online process that can be done through completing all the documentation, filing of strike off form and getting approval from concerned Registrar.

When a company itself does not want to continue, it can apply to registrar for strike off under section 248(2).
Below are few steps to be followed:

• The company must pay off all its liabilties;
• Through special resolution or sevent five percent consent of members in terms of paid up share capital, file an application of strike off to the registrar stating its intention to close its business.

• That has changed its name in the last three months;
• That has changed its registered office from one state to another in the last three months;
• That has made a disposal for value of property or rights held by it, immediately before cesser of trade or otherwise carrying on of business, for the purpose of disposal for gain in the normal course of trading or otherwise carrying on of business;
• That has engaged in any other activity except the one which is necessary or expedient for the purpose of making an application under that section and so on;
• That has an application pending before the tribunal santioning compromise or arrangement;
• Being wound up under Insolvency and Bankruptcy Code, 2016.

Note: If any company falls under the above criteria applies for stike off, it shall be penalised with a fine upto one lakh rupees.

• Status of a company after strike off
• Once the company is granted the status of stike off, it shall cease to operate as a company.
• Its certificate of incorporation will be deemed to cancelled.