How to Close a Private Limited Company in India: Strike-Off Under Section 248 (Form STK-2)

A private limited company does not end when the business does. Until its name is removed from the register, it remains a legal person with annual filings, director KYC, an auditor to appoint, and a fee meter that runs at ₹100 a day per late form. An empty shell left untended gets more expensive every year, and after three years of non-filing it gets its directors disqualified.

There are three ways to close a company in India. For most small private companies that have simply stopped trading, the right one is voluntary strike-off under Section 248(2) of the Companies Act, 2013, by application in Form STK-2.

Strike-off, liquidation or dormancy?

Strike-off is a summary procedure. The Registrar removes the company's name on the strength of the directors' declarations that nothing is owed and nothing is held. Hence the main condition: all liabilities must be extinguished first. A company with assets to sell, money owed to it, creditors to pay or shareholders to repay does not belong in strike-off. It belongs in liquidation, which is slower and costlier but exists for that.

Who can apply

Section 248(2) lets a company apply on either of two grounds:

1. it has not commenced business within one year of incorporation; or
2. it has not carried on any business or operation for the two immediately preceding financial years, and has not applied for dormant status.

The application needs a special resolution, or the consent of 75% of the members by paid-up share capital. The company must also have extinguished all its liabilities.

Who cannot

The removal rules and Section 249 shut several kinds of company out. The main ones:

• listed companies, and companies delisted for non-compliance;
• companies under inspection or investigation, or where prosecution for an offence is pending;
• companies with an application pending before the Tribunal for a compromise or arrangement, or being wound up;
• a company that, in the previous three months:
• changed its name or shifted its registered office from one state to another;
• disposed for value of property or rights it held before it stopped trading, other than as needed for the strike-off; or
• carried on any activity other than what the application itself requires.

A company that took a regulatory licence (an NBFC, for example) needs the regulator's clearance as well.

Before you file: put the house in order

Most of the work in a strike-off happens before STK-2. In the order it usually has to be done:

1. Bring the ROC filings up to date

The STK-2 rules were amended with effect from 1 May 2023. Under them, a company must first file its overdue financial statements (AOC-4) and annual returns (MGT-7 / MGT-7A) up to the end of the financial year in which it stopped business. Each of those carries the ₹100-a-day additional fee for the time it is late.

If the Registrar has already started its own strike-off action against the company (an STK-1 notice under Section 248(1)), all pending returns must be filed before STK-2 is accepted. If a dissolution notice in STK-7 has already been published, it is too late to file STK-2 at all.

Our post on companies that have not filed ROC returns for years covers how to calculate this backlog, and our post on ROC annual filing covers the forms themselves.

2. Make sure the directors can sign

Every director has to sign an indemnity bond and an affidavit, and at least one has to sign STK-2 digitally. Check that:

• each director's DIN is active — a DIN deactivated for missed KYC cannot sign anything (see our post on DIN deactivation);
• the signing director's DSC is valid.

3. Settle every liability

Pay off creditors and statutory dues. Repay or formally settle director and shareholder loans. Then confirm the following one by one:

• Bank accounts — clear the balance and close the accounts. Keep the bank's closure letter.
• Charges — any charge registered against the company must be satisfied and the satisfaction filed in CHG-4. An open charge on the MCA record will stop the application.
• GST — apply to cancel the registration and file the final return. Our post on GST cancellation covers the procedure.
• Income tax — file the returns that are due, and settle or respond to any outstanding demand or proceeding.
• Other registrations — close or surrender PF, ESI, professional tax, shop and establishment, and any other licences in the company's name.

4. Pass the resolutions

• A board resolution approving the strike-off, authorising a director to file, and approving the statement of accounts.
• A special resolution at a general meeting, or the written consent of 75% of members by paid-up capital. A special resolution must be filed with the Registrar in MGT-14 within 30 days of being passed.

The STK-2 application

STK-2 is filed on the MCA V3 portal and goes to the Centre for Processing Accelerated Corporate Exit (C-PACE). Since the 2023 amendment, C-PACE acts as the Registrar for all Section 248(2) applications across India, in place of the state ROC offices.

Government fee: ₹10,000.

The attachments:

The STK-8 thirty-day limit is where timing usually slips. If the notarised bonds and affidavits take two weeks to collect from directors in different cities, the CA's statement can go stale before the form is filed. Collect the signatures first and have the statement certified last.

The bank closure letter, a copy of the latest income-tax return and similar supporting papers are usually attached as well, because C-PACE is likely to ask for them.

After filing: notice, objections, dissolution

1. Scrutiny by C-PACE. If the application is defective it is marked for resubmission with remarks. Correct and resubmit within the time given, or it lapses.
2. Public notice — STK-6. Once the application is in order, the Registrar publishes a notice of the proposed removal on the MCA website and in the Official Gazette, and arranges publication in newspapers. Regulators such as the income-tax department and GST authorities are also informed. The notice invites objections within 30 days.
3. Objections. Any creditor, regulator or other person can object. A valid objection — an unpaid demand, a pending case — will hold up or defeat the application until it is resolved.
4. Dissolution — STK-7. If there is no objection, or the objections are disposed of, the Registrar strikes the company's name off the register and publishes a notice in the Official Gazette. The company stands dissolved from the date of that notice.

Indicatively, plan for the following:

Keep the company's compliance current until the STK-7 notice is out. A company whose application is still pending has not been closed. Its annual filings, and its directors' KYC, can still fall due.

What strike-off does not do

It does not end personal liability. Under Section 248(7), the liability of every director, manager, officer and member continues after dissolution and can be enforced as if the company had not been dissolved. Section 251 deals with applications made to avoid liabilities or to defraud creditors. Everyone involved becomes jointly and severally liable, and can face the fraud provisions of Section 447.

It does not hide the past from the tax department. Proceedings for periods when the company was alive can still reach the directors, and in some cases the directors of a private company can be pursued personally for tax dues the company cannot pay.

It does not stop a later winding up. Section 248(8) preserves the Tribunal's power to wind up a company that has been struck off.

This is why the STK-4 affidavit and the STK-8 statement should be true in every detail, not just technically complete. They are the documents the directors will be held to.

What if it goes wrong

C-PACE marks the application for resubmission

The usual causes are a stale STK-8, an unsigned or un-notarised bond or affidavit from one director, an open charge on the record, pending annual filings, or a mismatch between the STK-8 and the last filed financial statements. Fix what is listed and resubmit within the time allowed. If the STK-8 has crossed 30 days in the meantime, have it re-certified.

An objection is filed after the public notice

Respond to the substance. If it is an unpaid tax demand or a creditor's claim, pay or settle it and produce proof. If it is a pending case, the application will generally not proceed until the case does. Where the company has real liabilities it cannot settle, strike-off is the wrong route, and liquidation is the honest one.

The Registrar has already started strike-off on its own

If you have received an STK-1 notice, the company can still apply voluntarily, provided the dissolution notice has not been published. To do so, it must first file all pending returns. Alternatively, it can reply to the notice to keep the company alive.

The company was struck off and you need it back

Restoration is by application to the National Company Law Tribunal under Section 252. An appeal against the Registrar's order lies within three years. Separately, the company, a member, a creditor or a workman can apply within twenty years of the dissolution notice. Restoration usually requires every overdue filing to be brought up to date, and it is worth pursuing only where there is something to recover — land, a bank balance, a licence, live litigation.

You only want to stop the meter for now

If the company may trade again, dormant status under Section 455 keeps it on the register with a lighter compliance load and protects the name. It is a holding pattern, not a closure.

If you would like the closure handled from start to finish — the backlog calculation, overdue filings, the bank, GST and charge closures, and the STK-2 application through to dissolution — our company closure service covers each step.