Company Closure under Section 248(2): Voluntary Strike Off by Company

Is Your Company No Longer Active?

Many companies are incorporated with great plans, but not every business continues operations. If a company has stopped carrying on business and no longer wish to maintain, simply leaving inactive is not right approach. Annual compliances continue to apply, and penalties may accumulate over time.

The Companies Act, 2013 provides a simple and legal mechanism for voluntarily closing such companies through Form STK-2.

What is Form STK-2?

Form STK-2 is an application filed with the Registrar of Companies (ROC) under Section 248(2) of the Companies Act, 2013, read with the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016, requesting Registrar of Companies (ROC) to remove its name from ROC, resulting in the company's dissolution.

Who Can Apply?

A company may apply for strike off if:

• It has not commenced business after incorporation for period of 1 year
• It has discontinued its business operations for a minimum period of 2 years

Eligibility Conditions

Before filing Form STK-2, the company should ensure that:

• The company is not carrying on any business activity.
• All liabilities have been completely discharged.
• There are no outstanding creditors or lenders.
• Bank accounts have been closed.
• All assets have been disposed of, if any.
• There are no pending legal disputes affecting the closure.

All overdue Financial Statements in Form AOC-4 (or AOC-4 XBRL, as applicable) and Annual Returns in Form MGT-7 have been filed up to the end of the financial year in which the company ceased to carry on its business operations

When Company Cannot Apply?

A company is not eligible to file STK-2 if, during the previous three months, it has:

• Changed its name.
• Shifted its registered office from one State to another.
• Made application to National Company Law Tribunal (NCLT) for compromise or arrangement.
• Been wound up under other provisions of law.

Company ineligible to apply for voluntary strike off

• Listed companies.
• Companies registered under Section 8 of the Companies Act, 2013.
• Companies against which inspection or investigation has been ordered or is pending.
• Companies against which prosecutions are pending.
• Companies having outstanding public deposits.
• Vanishing companies.

Documents Required

The following documents are required:

• Board Resolution approvingstrike-off
• Special Resolution or consent of at least 75% of members in terms of paid-up share capital
• Statement of Accounts certified by a Chartered Accountant (not older than 30 days from the date of filing)- Form STK-8
• Affidavit executed by every Director- Form STK-4
• Indemnity Bond executed by every Director- Form STK-3
• Statement regarding pending litigations, if any
• No Objection Certificate from Regulatory Authority (where applicable)
• Other documents as required by Registrar such as KYC documents of Directors

Situations where No Objection Certificate (NOC)required from Regulatory Authorities

An application under Form STK-2 must be accompanied by No Objection Certificate (NOC) from appropriate regulatory authority if company falls under any of the following categories:

• Non-Banking Financial Companies (NBFCs) or companies carrying on non-banking financial or investment activities regulated by the RBI.
• Housing Finance Companies (HFCs).
• Insurance Companies.
• Capital Market Intermediaries regulated by SEBI.
• Companies operating Collective Investment Schemes (CIS).
• Asset Management Companies (AMCs).
• Any other company regulated under any other law for the time being in force.
• Failure to attach applicable NOC may result in application being treated as incomplete or liable to rejection.

Government Filing Fee

The prescribed government filing fee for Form STK-2 is Rs.10,000 and payable at the time of filing the application.

Step-by-Step Process

Step 1 - Review Eligibility

Verify thatcompany satisfies all the conditions prescribed underCompanies Act and the applicable Rules.

Step 2 - Settle All Liabilities

Pay all liabilities, clear statutory dues, close bank accounts, and dispose of assets, if any.

Step 3 - Hold Board Meeting

The Board approves the proposal for voluntary strike off and authorises a director to complete the necessary formalities.

Step 4 - Obtain Members’ Approval

Pass a Special Resolution in a general meeting or obtain consent from members holding at least 75% of the paid-up share capital.

Step 5 - Prepare Supporting Documents

Prepare

• Form STK-3 (Indemnity Bond)
• Form STK-4 (Affidavit)
• Form STK-8 (Statement of Accounts)
• Oth
   

  Step 6 - File Form STK-2

  File Form STK-2 with all prescribed attachments and pay filing fees.

  Step 7 - Verification by ROC

  The Registrar examines the application and may seek additional information if required.

  Step 8 - Publication of Notice

  The ROC publishes a public notice in Form STK-5 inviting objectionsfrom public, if any, within prescribed period.

  Step 9 - Notice to Regulatory Authorities

  Registrar simultaneously issues Form STK-6 toconcerned regulatory authorities, includingIncome Tax Department andother authorities, seeking objections, if any.

  Step 10 - Dissolution

  If the Registrar is satisfied that all legal requirements have been complied with and no valid objections are received, the company’s name is removed from the Register of Companies and the company stands dissolved.

  Important Points to Remember

  • Once Form STK-7 has been issued by the Registrar under Section 248(1), the company cannot file Form STK-2.
  • Directors continue to remain liable for obligations incurred before dissolution.