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Company Winding up By Filing STK-2

Easy to Close Inactive or Defunct Company

Section 248(1) of the companies act provides several grounds on which the ROC can remove the name of the company from the register of companies by the ROC. The application is filed in form STK-2 with the government fee of Rs 10,000/-. We can help you to close your company easily

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Closure of a Private Limited Company

As a Private Limited Company is a creation of law, it can be closed by the procedure established under the law only. The Companies Act, 2013 provides an easy method to close a company without going to NCLT in case that company is inactive or defunct. An inactive or dormant company having no assets or liabilities can file Form STK-2 Form to ROC for easy and fast closure of the company. However, if the company is active, or where there are assets or liabilities, then for winding up, an application needs to be made to NCLT under Insolvency and Bankruptcy Code 2016 (IBC).

STK-2 Form: The is empowered to close a company that has not started its operations or if started, has become defunct and is inactive for over two years. The application of such companies are filed in the prescribed form STK-2, the government fee payable on the STK-2 Form is Rs. 10,000/-

Legal Provisions in the Companies Act, 2013 for Company Closure

Section 248 gives power to the registrar of companies to strike off the name of a company in several situations; the powers of the ROC can be invoked by a company also for its striking off by filing an STK-2 application to the ROC. Here are the situations under which a company can make an application for its closure

Section Particulars
248 (1) a When company failed to commence its business operation with one year of its incorporation
248 (2) c A company that started its business has become defunct or inactive, and such a company has been inactive for the past two financial years.
248 (2) d The MOA subscribers have not paid the share capital within 180 days of the company incorporation. It means that the company just got registered, and its promoter shareholder contributes no capital.

Checklist for filing STK-2 Application for Company Closure

1

Shareholders Consent: The company can file the STK-2 application only when the shareholders of the company adopt a special resolution. A minimum of 75% shareholders vote is necessary for passing a special resolution.

Shareholders Consent

2

Pay all Government Dues: Before the decision to close the company is made, ensure that all government dues such as GST, Income Tax, PF, ESIC or any other company's liability towards the government are fully paid.

Pay all Government Dues

3

Close Bank Accounts: The company's bank accounts need to be closed, and you should obtain a complete bank statement and the Bank Closure letter from the banker. These documents are filed along with STK-2 FormForm

Close Bank Accounts

4

No Assets or Liabilities: Before making the STK-2 application ensure that there is no assets or liabilities in the company; a statement of the assets and liabilities are filed with the STK-2 form after attestation with a Practicing Chartered Accountant.

No Assets or Liabilities

5

No Litigation: There should not be any pending litigation for the applicant company with the state government, central government, or agencies. Also, check that no Income Tax or GST Assessment is pending.

No Litigation

The list of Documents Required for Company Closure

  1. All ITR and Returns Filed with ROC
  2. Board Resolution Authorising the Closure
  3. Affidavit from all the Directors
  4. Indemnity Bond from all the Directors
  5. Bank A/c Closure Proof
  6. Financial Statement with NIL Liabilities

The Process of Company Closure

Section 248(2) of the Companies Act, 2013 and the Companies (Removal of Names of Companies from the Register of Companies) Rules prescribes a detailed process to close the defunct or inactive company. Following are the step wise process for company closure.

Calling of EGM of the shareholders

Step - 1: Calling of EGM of the shareholders

To file the application in STK-2 Form for Company Closure to the ROC, a meeting of the company's shareholders must be called in to decide about the closure with at least 75% voting rights.

Surrender of Registration & Licenses

Step - 2: 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

Step - 3: 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

Step - 4: Affidavit & Indemnity Bond of All Director

All directors and shareholders have to swear an affidavit that all information and documents being filed are true and correct and an indemnity bond that the directors shall pay in person if any liability comes up.

Filing of STK-2 Form

Step - 5: 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/-

FAQ on Winding Up of the Company

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

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

  1. The companies having No Liabilities in their Balance Sheet
  2. There should not be any Litigation Pending
  3. There is no dispute among the shareholders/directors of the company
  4. The company could not start their business within one year since its incorporation or in case it started its business has been inopeartive since past two previous financial year.
  5. 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)

  1. Financial Statement as on a date within 30 days of filing the Form STK-2, duly attested by a Chartered Accountant in practice.
  2. Affidavit from all the directors about correctness and truthfulness of the information, statements made in the application for closure of the company.
  3. An Indemnity bond from all the existing directors that they shall be personally liable for future liabilities.
  4. Bank A/c Closure Certificate attested by Banker
  5. Minutes of the Shareholders meeting where the decision to wind up the company was taken.
  6. 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 a 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 form 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 times. 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 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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Rhanks To Sana For Being An Best Supportive Cordinator All The Time. On Start Had face a Lot of Issues because of mumbai Office but then Got in...See at Google

Divya Kholakiya Divya Kholakiya , 19 Nov, 2019
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Excellent service. Mainly, its the timely update needed which is supplied on regular intervals. Ms. Khushboo & Ms. Swati were very cooperative...See at Google

Radhakrishnan Velayudhan Radhakrishnan Velayudhan , 19 Nov, 2019
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The support given to me by corporate lawyer Mr. Kishore is really commendable. He was very cooperative in her approach towards our requirement and...See at Google

Mukund Tripathi Mukund Tripathi , 30 Sep, 2019
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I had a good experience with SetIndiaBiz for TM registration. Mr. Shubham who was dealing my case was very professional and clear about what is ...See at Google

Sri Nithya Saswathananda Sri Nithya Saswathananda , 20 Sep, 2019
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REALLY FAST AND PROMPT SERVICE.VERY GOOD EXPERIENCE OF SETTING UP ALL THE REQUIREMENTS WITHOUT ANY HINDERANCE. .THANKS TO THE TEAM ESPECIALLY MR. ...See at Google

SANDEEP KUMAR SANDEEP KUMAR , 20 Sep, 2019
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I hardly trust people in business society. However, the people in this company are exception. You can trust them blindly. They are unbelievably ...See at Google

Amit Kumarw Amit Kumar , 20 Sep, 2019

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