Did you realize that a considerable quantity of privately held corporations in America discontinue their operations annually? Fortunately, dissolving your business does not have to be a nightmare. From personal experience, I can attest that a company strike off offers a relatively simple method to formally shut down business activities. This guide, refreshed for 2025, spells out the necessary actions, prerequisites and documentation needed for a smooth company closure. Let us clarify the ins and outs of a private limited company strike off, concentrating on what truly matters.
What Does a Company Strike Off Really Mean?
A company strike off is a relatively direct way to shut down a business that has ceased trading. The process involves taking the company’s name off the official business register. Compared with fully winding up the company, this approach tends to be faster and less complicated. This provides formal closure, confirming that all legal requirements have been met. See it as officially archiving your business.
Is a Strike Off the Right Choice?
A strike off is a solid option when:
- No business activity occurred within the company’s first year.
- The company has been inactive for the previous two financial years and did not seek official dormant status.
- The initial investors did not pay their agreed share amounts.
Strike Off Eligibility: Do You Qualify for a Strike Off?
To be eligible for a strike off, your company has to meet these requirements:
- Operational Standing: Complete inactivity from the company’s start, or for the two most recent financial years.
- Solvency Status: The company can pay all outstanding debts before starting the strike off.
- Legal Standing: No ongoing legal issues.
Who Cannot Apply for a Strike Off?
Some company types are not allowed to apply for a strike off:
- Publicly traded entities.
- Companies delisted because of regulatory issues.
- Section 8 companies (charitable organizations), unless they have switched to nonprofit status.
- Companies being investigated.
- Companies that have outstanding public debts or unresolved charges.
Company Strike Off Process: Step by Step
A company strike off includes multiple steps. I will describe each for you:
1. Board Resolution: Get Started
Hold a board meeting to approve the strike off. Appoint a director to send the application to the Registrar of Companies (ROC). This is the first thing to address.
2. Shareholder Approval: The Special Resolution
Call an Extra Ordinary General Meeting (EGM) to approve a special resolution. Secure approval from a minimum of 75% of the shareholders. Without this, you are dead in the water.
3. File Form MGT 14: Resolution Paperwork
Send Form MGT 14 to the ROC within 30 days of passing the special resolution. Do not forget to attach a copy of the resolution itself.
4. Submit Form STK 2: Key Application
Submitting Form STK 2 to the ROC is crucial for the strike off. This form needs comprehensive information about your company and the reasons for its closure. Make it detailed and accurate, or expect delays.
5. STK 2 Documentation: Compile Documents
Make sure these documents accompany Form STK 2:
- Indemnity Bond (Form STK 3): Every director’s bond must be notarized to cover potential future claims.
- Affidavit (Form STK 4): Every director must independently affirm the affidavit, confirming the company’s solvency and compliance.
- Statement of Accounts: A Chartered Accountant must certify the statement, detailing the company’s assets and liabilities. The statement’s date has to be within 30 days of submission.
- Board Resolution: Proof of board authorization.
- Special Resolution: Proof of shareholder approval.
- Bank Account Closure Statement: Official proof that the company’s bank accounts are closed.
- Copies of Aadhar and PAN cards for all directors.
6. ROC Review and Public Notice
The ROC will carefully check your application. If it is approved, the ROC will publish a notice using Form STK 6, requesting any objections to the strike off. This is a required step.
7. Final Approval: Strike Off Complete
Assuming no major objections are received within 30 days, the ROC will strike the company from the registry. The official dissolution notice will appear in the Official Gazette via Form STK 7, officially dissolving the company. This is the last step; celebrate responsibly.
Keys to a Successful Strike Off
- Liabilities: Settle all outstanding debts before you apply.
- Bank Accounts: Fully close all company bank accounts.
- Accuracy: Provide up to date and correct information.
When Is a Company Strike Off Application Rejected?
A company is not allowed to apply for a strike off if it has done any of these actions within the prior three months:
- Changed its name or moved its registered office to another state.
- Sold off valuable property or rights.
- Engaged in activities beyond preparing the application.
- Sought a compromise with the Tribunal.
How Long Does a Strike Off Take?
The strike off usually takes three to six months. The precise timeline depends on any potential complications or objections that might arise.
What Happens After the Strike Off?
After a company strike off:
- It no longer exists as a legal entity.
- Its name is removed from the official registry.
- The directors are no longer responsible for the company’s affairs.
Why Choose Vakilsearch?
Vakilsearch makes the company strike off easier. From my perspective, the paperwork and legal requirements often seem overwhelming. Our experienced team offers guidance during each step, ensuring compliance and a simplified experience. We aim for maximum clarity, removing all the guesswork.
If you choose Vakilsearch, you will have:
- Expert Guidance: Comprehensive knowledge of the Companies Act, 2013 and the strike off procedures.
- Document Preparation: Help compiling all needed documents.
- ROC Filing: Monitoring of all form submissions to the ROC.
- Ongoing Support: Assistance throughout the entire process.
Undertaking a company strike off requires careful planning. Vakilsearch ensures your strike off is handled correctly, letting you focus on what is next. I work to make this as straightforward as possible.
Are you ready to begin the company strike off? Contact us for a no cost consultation. We are ready when you are.
