Process of Striking Off a Private Limited Company

Introduction

Striking off a private limited company refers to the formal removal of a company’s name from the Register of Companies, thereby dissolving its legal existence. Under the Companies Act, 2013, a company can be struck off either voluntarily by the company itself or by the Registrar of Companies (ROC). This method is an alternative to the lengthier winding-up process and is suitable for companies that are inactive, have no assets or liabilities, or have ceased operations. This article outlines the detailed process of striking off a private limited company in India.

Modes of Striking Off

There are two primary ways a company can be struck off:

1. Voluntary Strike Off under Section 248(2) – Initiated by the company itself.
   
2. Compulsory Strike Off under Section 248(1) – Initiated by the ROC if the company has failed to commence or carry on business.
   

In both cases, once the name is struck off, the company ceases to exist as a legal entity and cannot conduct business.

Eligibility for Strike Off

A company is eligible for strike off if:

• It has not commenced business since incorporation or
  
• It has not carried out any business activity for the last two financial years
  
• It has no outstanding liabilities
  
• It is not involved in legal proceedings
  
• It has not undergone any change in name or business within the last year
  

Companies regulated by SEBI or RBI, listed companies, and Section 8 companies are subject to additional scrutiny or restrictions.

Board Resolution and Special Resolution

The process begins with a board meeting to propose striking off. If approved, a general meeting is convened to pass a special resolution (with 75% shareholder approval). The resolution must be filed with the ROC in Form MGT-14 within 30 days.

Clearance of Liabilities and Closure of Accounts

Before applying for strike off, the company must:

• Pay off all liabilities
  
• Close all bank accounts
  
• Prepare financial statements up to the date of application
  
• Obtain a No Objection Certificate (NOC) from creditors, if applicable
  

These steps ensure that there are no outstanding obligations or unresolved claims against the company.

Filing of Form STK-2

The main application for strike off is made using Form STK-2, which must be filed with the ROC along with the following documents:

• Copy of Board and Shareholders’ Resolutions
  
• Indemnity Bond in Form STK-3
  
• Affidavit in Form STK-4 by directors
  
• Statement of Accounts certified by a Chartered Accountant
  
• Statement regarding pending litigations (if any)
  
• Copy of PAN card and Aadhaar card of directors
  

The government fee for Form STK-2 is ₹10,000.

Publication and Objection Period

Once the application is filed, the ROC will:

• Publish a notice on its official website
  
• Notify the Income Tax Department and other regulatory bodies
  
• Allow a period of 30 days for objections from stakeholders or the public
  

If no objections are received and the ROC is satisfied with the documents, the process moves forward.

Final Strike Off and Dissolution

After verifying the application, the ROC issues a notice in the Official Gazette, striking the company’s name off the register. This notice is the formal proof of the company’s dissolution. The company legally ceases to exist from the date of publication in the Gazette.

Consequences of Strike Off

Once struck off:

• The company cannot carry on any business activity
  
• Its legal identity ends, except for the purpose of settling liabilities or defending legal claims
  
• The directors are released from their responsibilities, unless fraud or misconduct is later discovered
  

However, the company can be revived within 20 years by the Tribunal if any party is aggrieved by the strike off.

Conclusion

Striking off a private limited company is a practical and streamlined method to legally close a defunct or dormant business. The process must be handled with diligence, ensuring that all statutory dues are cleared and compliance formalities are met. When executed properly, it offers a clean and cost-effective exit route for business owners who no longer wish to maintain an inactive company.

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