Company Strike Off: Voluntary and Compulsory Closure of a Private Limited Company

Thousands of Private Limited Companies are incorporated every year in India, but not all of them end up doing business. A company that was incorporated but never commenced operations, or one that wound down after a few years, continues to incur compliance obligations every year until it is formally closed. Form STK-2 is the mechanism to voluntarily remove a dormant or defunct company from the Register of Companies under Section 248 of the Companies Act 2013. It is faster and cheaper than a formal winding-up under the Insolvency and Bankruptcy Code, but it comes with strict eligibility conditions: no liabilities, no pending proceedings, and all ROC filings up to date.

This guide covers both voluntary and compulsory strike-off, the eligibility conditions, the STK-2 documents, the ROC publication process, and options for restoring a struck-off company.

Voluntary strike-off under Section 248(2): eligibility

A company can apply voluntarily for strike-off only if ALL of the following conditions are met:

• The company has not commenced business within 1 year of incorporation, OR it has not been carrying on any business or commercial operations for at least 3 months immediately before applying
• The company has no outstanding liabilities: no bank loans, no vendor dues, no statutory dues (GST, TDS, PF, ESI), no income tax demands
• The company has no pending legal proceedings (civil, criminal, or regulatory) in any court, tribunal, or authority
• All annual filings (AOC-4, MGT-7) up to the financial year preceding the application year are filed and accepted by the ROC
• The company has no pending government approvals, licenses, or regulatory NOCs to be surrendered
• Any bank accounts in the company’s name have been closed, or all balances have been transferred and accounts are ready to close

Compulsory strike-off by the ROC: Section 248(1)

The ROC can strike off a company’s name without any application by the company if:

• The company has failed to file its annual return or financial statements for 2 or more consecutive financial years (note: compulsory strike-off starts at 2 years, director disqualification under Section 164(2) starts at 3 years)
• The company has not commenced business within 1 year of incorporation and has not filed INC-20A
• The company has not been carrying on any business for 2 years and has not applied for dormant company status
• The ROC has reasonable grounds to believe that the company is not in operation

Before compulsory strike-off, the ROC must:

1. Send a notice to the company asking it to respond within 30 days
2. Publish a notice in the Official Gazette inviting objections
3. Strike off the name if no satisfactory reply is received

Documents required for STK-2

Step-by-step STK-2 filing process

1. Clear all pending filings: File all pending AOC-4 and MGT-7 returns with the ROC, paying any late fees. The system will not accept STK-2 if filings are pending.
2. Close bank accounts: Close all bank accounts in the company’s name and transfer remaining balances to shareholders in proportion to their holdings.
3. Discharge all liabilities: Pay off all creditors, vendors, statutory dues, and tax liabilities. Obtain closure certificates from vendors where possible.
4. Obtain CA-certified statement of accounts: Have a CA prepare a statement of accounts (balance sheet) dated within 30 days of the STK-2 application, showing zero or minimal closing balances.
5. Pass Special Resolution or collect 75% consent: Hold a general meeting and pass a Special Resolution, or collect written consent of shareholders holding 75%+ of paid-up capital.
6. Execute indemnity bonds and affidavits: All directors execute the indemnity bond and affidavit on stamp paper and get them notarised.
7. File STK-2 on MCA V3: Upload the form with all attachments. Government fee is Rs. 10,000 for strike-off application.
8. ROC publishes public notice: The ROC publishes a First Notice in the Official Gazette inviting objections from creditors and interested parties within 30 days. If no objections, the ROC publishes a final notice and the company name is struck off.

What happens after strike-off: liabilities and directors

After the company is struck off:

• The company ceases to exist as a legal entity from the date of the final ROC publication
• The company’s name is removed from the Register of Companies
• All pending compliance obligations of the company cease
• Personal liability survives: Under Section 248(7), directors remain personally liable for any liabilities of the company that were undisclosed at the time of strike-off. This liability survives the company’s dissolution and can be enforced against the directors personally for up to 20 years from the date of strike-off
• Bank accounts that were not closed become dormant accounts of a non-existent entity; the bank will eventually transfer them to the Depositor Education and Awareness Fund

Restoring a struck-off company under Section 252

Under Section 252 of the Companies Act 2013, a struck-off company can be restored to the Register by making an application to the NCLT within:

• 3 years from the date of strike-off (if the application is by a member, creditor, or workman)
• 20 years from the date of strike-off (if the application is by the company itself through its erstwhile directors, or by the ROC)

The NCLT may order restoration if it is satisfied that the company was active at the time of strike-off or that restoration is just and equitable. On restoration, the company is treated as if it had never been struck off, and any assets that vested in the Central Government after dissolution are returned.

Frequently Asked Questions