Company Strike Off and LLP Closure
There are multiple ways a company can cease to exist, one of which is striking off its name from the register of companies. A company that is inactive and wants to remove its name from the registrar’s records may opt for this method.
Before diving deeper, it is important to distinguish between striking off and liquidation. Striking off refers to the process where a company’s name is removed from the register, while liquidation or dissolution is the final stage where the company is officially wound up.
This process can be initiated either by the Registrar of Companies (ROC) or voluntarily by the company.
Grounds for Striking Off by ROC
- The company has failed to commence business within one year of incorporation.
- The company has not carried out any business operations for the last two financial years and has not applied for dormant status.
- Physical verification by the ROC confirms that the company is not operating.
- The company’s subscribers have not paid subscription money and have not filed a declaration within 180 days of incorporation.
If the ROC identifies any of these conditions, it sends a notice to the company and its directors with 30 days to respond. Unsatisfactory responses may lead to continuation of the strike-off process. Notices are also published on the ROC website and in newspapers.
Voluntary Company Closure Process
Inactive companies may opt for voluntary striking off to avoid compliance obligations. The procedure includes:
- Board meeting to appoint an authorized director and schedule an Extraordinary General Meeting (EGM).
- Clear all liabilities and sign indemnity bond and affidavit using Forms STK-3 and STK-4.
- Prepare a statement of accounts certified by a Chartered Accountant (not older than 30 days).
- Pass a special resolution in the EGM approving closure; regulatory authority approval (RBI, SEBI, IRDAI) if applicable.
- File Form STK-2 with ₹10,000 fee along with attachments: NOC, indemnity bond, affidavit, statement of accounts (Form STK-8), EGM resolution.
ROC invites objections from public and authorities. After settling dues and addressing objections, the company is officially liquidated.
Restoration of a Struck-Off Company
A company struck off despite being active can appeal for restoration with the National Company Law Tribunal (NCLT) within three years of the final order.
Forms Involved in the Striking Off Process
- Form STK-1: Notice by ROC for intention to strike off.
- Form STK-2: Application for voluntary striking off.
- Form STK-3: Indemnity Bond by directors.
- Form STK-4: Affidavit by directors.
- Form STK-5, 5A, 6: Public notices.
- Form STK-7: Final notice by ROC.
- Form STK-8: Company’s statement of accounts.
Certain companies cannot opt for strike off, including Section 8 companies, listed companies, vanishing companies, or companies with pending charges, prosecutions, or winding-up proceedings.
LLP Closure Process
The closure process for a Limited Liability Partnership (LLP) is similar but involves fewer documents. LLPs can be closed voluntarily or by ROC by filing LLP Form-24.
- Designated partners authorize a partner to file LLP Form-24.
- Ensure pending forms (Form-8, Form-11) are submitted and regulatory approvals obtained if necessary.
- File Form-24 with required attachments.
- ROC publishes a public notice for one month to invite objections.
- Once no valid objections exist and debts are cleared, ROC publishes notice of dissolution in the official gazette, and the LLP is dissolved.
Restoration of LLPs
Unlike companies, LLPs cannot appeal to the NCLT. The only remedy is filing a writ petition in the High Court.
Professional Assistance for Company and LLP Closure
Closing a company or LLP in India is straightforward, but professional guidance is recommended. Naveen Pandey & Associates provides expert services for private limited company strike-off and LLP closures, ensuring a hassle-free and cost-effective process.
For assistance, contact us at:
📧 admin@twindeskllp.com