How to Strike Off Company in India: Step-by-Step Procedure & Documents
Starting a business is an exciting journey, but sometimes, things don’t go as planned. Whether it’s due to a change in strategy, lack of operations, or simply the desire to move on to a new venture, you might find yourself needing to close your private limited company. In India, the legal way to do this is through a process called “Strike Off.”
If you are looking for a simplified way to navigate the legalities of closing your business, this guide is for you. We will walk you through the strike off company meaning, the section 248 of the Companies Act 2013 provisions, and the exact steps you need to follow.
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What is Company Strike Off?
The term strike off refers to the removal of a company’s name from the official Register of Companies maintained by the Registrar of Companies (ROC). In simple terms, a strike off means the legal dissolution of a company, where it ceases to exist as a corporate entity.
When you see the company status strike off meaning on the Ministry of Corporate Affairs (MCA) portal, it indicates that the company is no longer active and has been officially closed. For many business owners, a company strike-off means a clean exit from the burden of annual compliance, audits, and tax filings for a non-functional business.
The meaning of strike off is often compared to “winding up,” but striking off is generally faster and less expensive for companies that have no assets or liabilities. It is the most preferred way for “off-business” entities to shut shop legally.
Eligibility for Strike Off Company:
Not every company can simply apply for a strike off. To be eligible to strike off company names from the register, certain conditions must be met:
- No Business Activity: The company must not have commenced business within one year of its incorporation.
- Inoperative Status: The company has not been carrying on any business or operation for a period of two immediately preceding financial years.
- No Assets & Liabilities: Before applying, the company must extinguish all its liabilities (pay off all debts).
- Subscription Money: The subscribers to the memorandum (founders) must have paid their initial share capital, and the declaration (Form INC-20A) should have been filed.
- No Dormant Status: The company has not made an application for obtaining the status of a “Dormant Company” under Section 455.
Legal Provisions (Section 248 of Companies Act 2013):
The entire procedure is governed by Section 248 of Companies Act 2013. This section gives power to the Registrar to remove the name of a company from the register if there is “reasonable cause” to believe the company is not in operation.
There are two sub-sections you should know:
- Section 248(1): Power of ROC to strike off a company on its own (Compulsory).
- Section 248(2): Power of a company to apply for voluntary strike off (Suo-moto).
The law ensures that even if a company is struck off, the liability of every director and officer continues and can be enforced as if the company had not been dissolved.
Types of Company Strike Off:
There are primarily two ways a company’s status is struck off:
- Voluntary Strike Off (Suo-moto): This is when the directors and shareholders decide to close the company. They file an application (Form STK-2) with the ROC. It is a proactive step to avoid future penalties for non-compliance.
- Compulsory Strike Off by ROC: The ROC can strike off a company if it fails to file its financial statements (AOC-4) or annual returns (MGT-7) for two consecutive years. This is an involuntary process and often leads to the disqualification of directors.
Step-by-Step Strike Off Procedure:
To strike off company status voluntarily, follow these steps meticulously:
- Step 1: Authorize the Board: Hold a Board Meeting to pass a resolution for striking off the company. In this meeting, the board authorizes a director to file the application.
- Step 2: Settle All Liabilities: The company must pay off all its debts. This includes bank loans, statutory dues (GST, Income Tax), and payments to creditors. The bank account must also be closed.
- Step 3: Shareholder Approval: Hold an Extraordinary General Meeting (EGM). You need to pass a Special Resolution (75% majority) or get the written consent of 75% of the members (based on paid-up share capital).
- Step 4: Filing Form MGT-14: Once the Special Resolution is passed, file Form MGT-14 with the ROC within 30 days. This notifies the ROC about the shareholders’ decision.
- Step 5: Filing Form STK-2: This is the main application for strike off. You must file Form STK-2 (Note: STK full form is “Strike Off”) along with the required fees and attachments.
- Step 6: Public Notice by ROC: The ROC will review the application. If satisfied, they will issue a public notice (Form STK-6) on the MCA website and in the Official Gazette to invite objections from the public or creditors for 30 days.
- Step 7: Final Strike Off Order: If no objections are received, the ROC will publish a final notice (Form STK-7) in the Official Gazette. At this stage, the company’s status struck off means the entity is officially dissolved.
Documents Required for Strike Off Company:
When filing for a strike-out, which is not applicable or a standard strike-off, you must have the following strike-off sample documents ready:
- Indemnity Bond (Form STK-3): Duly notarized, given by every director. It states that directors will be liable for any future claims.
- Affidavit (Form STK-4): Sworn by every director, confirming the company has no liabilities and has been inactive for the required period.
- Statement of Accounts: A certified statement of assets and liabilities (Form STK-8). It must be certified by a Practicing Chartered Accountant (CA) and should not be older than 30 days from the date of application.
- Bank Account Closure Letter: Proof that all company bank accounts are closed.
- Special Resolution/Consent: Copy of the resolution passed by shareholders.
- PAN & Aadhaar: Self-attested copies of the ID proofs of all directors.
Fees & Time Required:
Closing a company is not an overnight process, nor is it free. Since you’ve asked not to use a table, here is the breakdown of what you can expect in terms of costs and timelines:
- Government Fees: The primary expense is the government filing fee for Form STK-2, which is currently ₹10,000. This is a non-refundable fee paid to the Ministry of Corporate Affairs.
- Professional Fees: You will need the services of a Practicing Chartered Accountant (CA), Company Secretary (CS), or Cost Accountant to certify your Statement of Accounts and sign the STK-2 form. Professional fees typically range between ₹10,000 and ₹30,000, depending on the complexity of your company’s history.
- Miscellaneous Costs: You should also account for minor costs like stamp duty for the Indemnity Bond and Affidavit, notary charges, and potential digital signature (DSC) renewals. These usually total around ₹1,000 to ₹3,000.
- Timeline: From the moment you pass the Board Resolution to the day the final notice is published in the Official Gazette, the process usually takes 3 to 6 months. This includes the mandatory 30-day public notice period, where the ROC waits for any objections.
Consequences After Strike Off:
Even after the striking off meaning is realized and the name is removed, there are certain legal implications:
- Cessation of Operations: The company cannot enter into new contracts or trade.
- Liability of Directors: Under Section 248 of Companies Act 2013, the liability of every director, manager, and member continues.
- Government Ownership: Any property or assets remaining in the company’s name may vest with the government (Bona Vacantia).
- Disqualification Risk: If the ROC strikes off the company compulsorily due to non-filing, the directors might be disqualified for 5 years.
Revival of Struck-Off Company:
If a company was struck off by mistake, or if the owners now wish to restart operations, they can apply for Revival. This is done under Section 252 of the Companies Act.
- Who can apply? Any person aggrieved by the strike-off order (Directors, Shareholders, Creditors).
- Where to file? An appeal must be filed with the National Company Law Tribunal (NCLT).
- Time Limit: 3 years from the date of the order (for general cases). Up to 20 years if the company was voluntarily struck off but needs revival for legal reasons (like recovering property).
Conclusion:
Navigating the company status strike off process requires patience and legal precision. While the definition of strike off sounds simple—removing a name from a list—the underlying documentation, from the indemnity bond to the audited statement of accounts, must be flawless to avoid rejection by the ROC. By following this step-by-step procedure, you ensure that your exit from the business world is as professional and compliant as your entry.
For the most accurate and recent updates on financial laws, always refer to My Finance Gyan. Closing a business is a big decision. For any Legal Help, choose Startup Portal to ensure your strike-off process is handled by experts who understand the nuances of the Ministry of Corporate Affairs’ requirements.
FAQ's on Company Strike Off in India:
The strike off company meaning is simple: it is the process of removing a company’s name from the official government records. Once this happens, the company is legally closed and cannot do any more business.
All closures are done under section 248 of companies act 2013. This law gives the government the power to remove a company that is no longer working or has not started its operations.
The STK full form is “Strike Off.” It is the name used for all the official forms (like STK-2) that you need to file with the Registrar to close your company.
If you see company status strike off means that your company has been successfully removed from the register. It is the final company status strike off, and shows the business is officially dissolved.
No. To be off business through this method, you must pay off all your debts first. The strike-off definition requires a company to have “Nil” assets and “Nil” liabilities before applying.
If you don’t file your papers for 2 years, the ROC might start striking off meaning on its own. This is called a compulsory strike off, and it can lead to the directors being banned from starting new companies.
The meaning of strike off is a fast-track, cheaper way to close a defunct company. Winding up is a much longer and more expensive legal process used for companies that still have a lot of assets or complicated debts.
You will need a strike off sample of an Indemnity Bond and an Affidavit. While filling these out, you must strike out which is not applicable to make sure the information is 100% correct for your specific case.
In simple terms, strike off meaning in hindi is “कंपनी को बंद करना” (Closing the company). It means the company’s name is “struck out” from the government’s list of active businesses.
Yes, but it is difficult. If your strike off company status was updated by mistake or you need to recover assets, you must go to the NCLT court to ask for a “Revival.”
