Winding Up of Pvt Ltd Company | Fees, Procedure & Required Documents to Close Company

Winding up of a Private Limited Company

A company winding up is required when the purpose for which company was formed is over or the company has become a defunct entity with NIL Assets and Liabilities. We shall extend our services to provide the required advisory and end to end support service to close the company.

There are various scenarios in which a company can be closed, however, in case the company is inactive, defunct, or when there is no purpose left for the company to remain in existence, it is easier to close them. As the company is a creation of law, it can be closed by procedures established by statute only. To close a company, which has been registered under the Companies Act, 2013 or any previous Companies Act, the application for closure has to be filed as per the procedure established under the law. As of now, there are two methods only.

For active company, or where there are assets or liabilities, file an application under Insolvency and Bankruptcy Code 2016 (IBC) before the National Company Law Tribunal (NCLT). Team setindiabiz is experienced to handle winding up petitions at all benches of NCLT

In case your company is inactive for past two years or company did not start its operations within one year of its incorporation and there is no liability as such, then the company can be closed by filing Form STK-2 with the government fee of Rs. 10,000/-

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Which kind of Company can Be Closed with STK-2 Form

Companies not Commenced Operations

Under section 248(1)(a), only that company can be closed which could not commence its business operations within one year of its incorporation. In other words, there is absolutely no transaction in the company.

Inactive Since Past Two Years

Under section 248(1)(c), a company can be closed even when the company started its business but has been inoperative for the past two financial years.

There is Nil Assets or Liabilities

There is no assets or liabilities in the company. All bank A/c must be closed, and the financial statements must be certified by a Chartered Accountant.

No Litigation Pending

There should not be any litigation or tax assessment pending for the company with the state government or central government or their agencies.

Documents of Company

All ITR and Returns Filed with ROC
Board Resolution Authorising the Closure
Affidavit from all the Directors
Indemnity Bond from all the Directors

Financial Documents

Bank A/c Closure Proof
Financial Statement with NIL Liabilities

Take decision in the shareholders meeting

To close a company with Form STK-2 a meeting of the shareholders of the company must be called in order to decide about the closure with at least 75% voting rights.
Surrender of Registration & Licenses

If the company had registered under GST or obtained licenses under any government department, the same need to be surrendered before an application for closure is filed by the company.
Bank A/c Closure & Prepare Financial Statement

The bank accounts of the company must be closed, and a certificate from the banker is needed. Prepare a financial statement with Nil Assets and Liabilities, A Practicing CA or Auditor shall certify it.
Affidavit & Indemnity Bond of All Director

All directors and shareholders have to swear an affidavit that all information and documents being filed is true and correct and an indemnity bond that if any liability comes up the directors shall pay in person.
Filing of STK-2 Form

Check that the company has filed all pending ITR & ROC Return to the ROC, the application for closure of the company filed online with a digital signature in Form STK-2 with the government fee of Rs. 10,000/-

Video on Winding Up of Company

Winding up of a Company is the right decision if the same is inactive, defunct, or when there is no purpose left for the company to remain in existence. The video explains the easiest method to close a defunct company in India.

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Frequently Asked Questions

What companies are closed as Defunct by filing Form STK-2?

Only following categories of companies can be closed by filing Form STK-2

The companies having No Liabilities in their Balance Sheet
There should not be any Litigation Pending
There is no dispute among the shareholders/directors of the company
The company could not start their business within one year since its incorporation or in case it started its business has been inoperative since past two previous financial year.
The promoters did not pay the capital of the company.

Is it necessary to file ROC Returns and the ITR of the Company before its winding up?

Our advice is to file all pending annual return and balance sheet as non-filing the same is a penal offense with severe consequences. Though at the time of filing an STK-2 Form for winding up there is no requirement to attach or furnish information on past annual compliance, However, if the company gets wound up, you would lose any opportunity to file the pending forms. So far ITR is concerned, like any other tax assessee, you must pay taxes due and file ITR before proceeding for closure. However, in case the business could not commence, or no bank account was ever opened, these may be avoided at your own cost and consequence.

What are the Documents Required for Filing of Form STK-2?

Following is the List of documents required to file Form STK-2 in order to wind up a company as defunct company (application to ROC for striking off the name of the company)

Financial Statement as on a date within 30 days of filing the Form STK-2, duly attested by a Chartered Accountant in practice.
Affidavit from all the directors about correctness and truthfulness of the information, statements made in the application for closure of the company.
An Indemnity bond from all the existing directors that they shall be personally liable for future liabilities.
Bank A/c Closure Certificate attested by Banker
Minutes of Meeting of the Shareholders meeting where the decision to wind up the company was taken.
Digital Signature of Director

What is the stamp duty for the affidavit and indemnity bond for the purpose of filing Form STK-2?

The stamp duty execution on documents like affidavit and indemnity bond is levied by the state government, which differs from state to state. You may find the stamp duty rates by referring to particular state government stamp act, or by inquiring from the stamp vendors. For any assistance, you may also call our customer care number at +91-9899-600-605 or drop a mail at help@setindiabiz.com . We shall be happy to help

Who can sign the application for winding up of a company?

The Form STK-2 (Application for Winding up of the company) is filed online with the digital signature of the applicant. For the purpose of signature, DSC of either shareholder or director can be used as per the approval of the shareholders as taken in the EGM. The eform STK-2 is further required to be attested by a CA, CS or CMA.

What can be done in case the company director has been disqualified?

The disqualification of a director makes him ineligible for holding the office of a director even for a second. Every company must function with at least two directors at all the time. In case the disqualification of any director brings down the statutory limit of two directors then the ideal way is to call for an EGM and appoint a new director in the place of the disqualified director. The Companies Act provides six months of time to the company to fill the vacancy caused in the directorship. Once the directorship is regularised the company can close itself in the usual manner.

Do you need a digital signature?

Yes. As the application to RoC for winding up of the company is filed in electronic format, it has to be signed with the digital signature of any one director or the shareholder. Hence a valid digital signature of Class - 2 is required.

How much time does it require to wind up the company?

After filing the STK-2, the registrar may take two weeks time in accepting the application, once approved, intimation is sent to the commissioner of income tax, for their objection if any. The ROC Further publishes the names of companies who have applied for closure on their website for the public at large inviting their opposition to the closing of the company. If the ROC receives no objection, the company gets wound up. The entire process of company winding up may take around 3-5 months of time.

What I can do if another director/shareholders are not cooperating or not found?

A company can be closed with the majority decision of 75% shareholding in the company. If the dissenting person has a stake of more than 25%, then the company cannot be closed by filing the STK-2 method, which is also referred to as the voluntary method of company winding up. To close a company with dissenting members, an application may be moved before the NCLT under IBC 2016.

What can I do to close an active company?

An active company can be closed by moving a closure application under the Insolvency and Bankruptcy Code 2016 before the National Company Law Tribunal (NCLT).

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Winding up of a Pvt. Ltd. CompanyAn easy method to close Inactive or defunct Company