Closing a company usually means one of two routes: strike-off of a defunct company under Section 248 of the Companies Act 2013, done entirely on the MCA portal, or voluntary liquidation of a solvent company under Section 59 of the Insolvency and Bankruptcy Code 2016, done through the National Company Law Tribunal. You choose by whether the company has liabilities, assets or any real history of trading. A company with no business, no dues and no assets goes the strike-off way; a company with assets to realise goes the liquidation way.
Before you start
- All the company's pending annual returns and financial statements filed up to date — the Registrar will not accept the closure while the record is incomplete.
- A position with no outstanding liabilities, dues or pending litigation.
- The members' consent, and the board's approval to go ahead.
- The indemnity bond and the statement of accounts that the strike-off route requires.
- For the liquidation route, a declaration of solvency by the majority of the directors, and a registered insolvency professional willing to act as liquidator.
- The company's registrations — GST, professional tax and the like — identified so they can be cancelled as part of closing.
Steps
Route A — strike-off of a defunct company (Section 248(2)).
- Board meeting. The board approves the closure and authorises the filing of the application.
- Members' approval. The members give the consent the rules require for the application.
- Settle everything first. Clear the dues, close the bank accounts, cancel the registrations. A strike-off application sits uneasily over a live bank balance or an unclosed tax account.
- Prepare the papers. The statement of accounts, drawn as at a recent date within the permitted window, the indemnity bond from every director, and copies of the required returns.
- File Form STK-2 with the Registrar. The route is not open to every company — a listed company, a company registered under Section 8, an NBFC, and a company with a charge still registered cannot use it. Confirm the company's category before filing.
- Wait for the notice and the dissolution. The Registrar publishes a notice inviting objections, and after the period allowed the name is struck off the register and the company is dissolved. The dissolution is published in the official gazette.
Route B — voluntary liquidation of a solvent company (Section 59, IBC 2016).
- Members' special resolution. The members resolve to liquidate the company, and the majority of the directors make a declaration of solvency.
- Appoint a liquidator. A registered insolvency professional is appointed to conduct the liquidation.
- Notify and announce. The resolution and the declaration are filed with the Registrar and the Insolvency and Bankruptcy Board, and a public announcement is made inviting claims.
- Realise and pay. The liquidator takes control of the assets, realises them, admits and pays claims in the order the law requires, and deals with any remaining surplus as the resolution provides.
- Apply for dissolution. The liquidator files the final report and applies to the NCLT, which passes the order dissolving the company. Strike-offs and liquidations sit at the meeting point of corporate compliance and insolvency and bankruptcy, and the papers are set out in the corporate and company law formats.
Documents to keep
- The board and members' resolutions approving the closure.
- Form STK-2 with the service request number and challans, or, on the liquidation route, the filings with the Registrar and the IBBI.
- The strike-off notice and the gazette publication, or the NCLT dissolution order and the liquidator's final report.
- The books of account, kept for the period the Act requires after the relevant financial year (Section 128(5)), because liability for earlier defaults survives the closure.
What goes wrong
- A strike-off refused because returns are pending. The commonest reason an application is rejected is a gap in the annual filings or a charge still showing on the register.
- Assets or balances left behind. On dissolution, property that nobody has dealt with can vest in the State, and recovering it later is difficult and expensive.
- Believing the closure wipes the past default. It does not. Section 250 keeps the liability of every director and officer for acts done before dissolution, and Section 251 deals with a name removed to escape liability. You close the company; you do not close your record.
- Forgetting personal guarantees. Dissolution of the company does not release a director who gave a personal guarantee, and it does not extinguish a personal tax liability.
- Choosing the wrong route. A solvent company with real assets that tries to strike off instead of liquidating leaves creditors unpaid and invites the Registrar and the creditors to object.
Common questions
Can I strike off a company that still owes money?
No. The strike-off route assumes the company has no outstanding liabilities. If it owes money to creditors, banks or the tax authorities, the proper route is voluntary liquidation, where the claims are advertised and paid from the assets.
What happens to the company's bank balance on strike-off?
It should not be left behind. Close the account and transfer or settle the balance before the application; a company struck off with a live account leaves funds that nobody can easily withdraw once it is dissolved.
Does the closure remove a director's disqualification risk?
No. If the company got into default before the closure, the directors who were on the board during that default remain exposed to the consequences, including disqualification where the law applies. Closure is not a cure for the past.
How long does the process take?
It depends on the route and on the state of the company's record. A clean defunct company moves through the portal faster than a liquidation, which runs until the assets are realised, the claims settled and the NCLT disposes of the dissolution application.
Closing a company cleanly is as much about what you leave behind as what you file. FileX Advocates & Legal Consultants, Kolkata, handles strike-off applications under Section 248 and voluntary liquidation under Section 59 of the IBC, and tells you which route your company actually qualifies for. Call +91 7439811422 or WhatsApp us before you stop filing.