Life After Registration · Chapter 7
Closing a Company or LLP properly
In short
To close a company, bring ROC filings up to date, clear all liabilities and file Form STK-2 with the Registrar; an LLP applies in Form 24. Cancel GST and other Registrations too.
To close a Company properly, bring all ROC filings up to date, clear every liability, and apply to the Registrar in Form STK-2 to strike off its name; an LLP applies in Form 24. Then cancel GST and other Registrations too. Simply stopping business does not close the entity.
Not every business works out, and that is fine. What is not fine is abandoning a registered entity. It keeps generating obligations — and penalties — until it is formally closed.
Why not just stop filing?
An entity that is left alone keeps collecting late fees of ₹100 a day on each missed ROC form, GST late fees if the GSTIN is active, and income tax notices. After three years of not filing, its directors are disqualified from all companies for five years. The Registrar may eventually strike the name off on its own, but the directors still carry the consequences. A voluntary, clean closure avoids all of this.
Closing properly also protects the founders personally. A clean record keeps directors and designated partners free to start or join another company or LLP later without old defaults following them.
How do you close a Company (strike off)?
A Company that has no business and no liabilities can apply to the Registrar to remove its name, in Form STK-2. Typically you need:
- Pending ROC filings brought up to date.
- No assets and no liabilities, shown in a recent statement of accounts.
- Consent of shareholders by special resolution.
- Indemnity bonds and affidavits from directors.
- Closure of the bank account.
A company can use this route if it has not started business within one year of incorporation, or has not carried on any business for the two financial years just before applying. The government fee for STK-2 is ₹10,000. Applications are processed centrally by the Centre for Processing Accelerated Corporate Exit (C-PACE), which publishes a public notice before the name is removed.
- Stop business, collect dues and pay all creditors, loans and taxes.
- File all pending AOC-4, MGT-7 and other ROC forms and income tax returns.
- Cancel GST and other Registrations, and close the bank account.
- Pass the board resolution and the special resolution of shareholders.
- Prepare the statement of accounts (certified by a chartered accountant), director indemnity bonds and affidavits.
- File Form STK-2 on the MCA portal and wait for the strike-off notice in the Official Gazette.
If a company still has assets or liabilities to settle, strike off is not available. It must first settle them or use voluntary liquidation under the Insolvency and Bankruptcy Code, which is a longer, formal process.
How do you close an LLP?
An LLP that has not carried on business, or has closed its business with no liabilities, can apply to the Registrar to be struck off, with the consent of all partners and up-to-date filings.
The application is made in Form 24 when the LLP has not carried on business for one year or more. Form 8 and Form 11 must be filed up to the year it stopped business, and a statement of accounts showing nil assets and liabilities is attached. LLP strike-off applications are also processed by C-PACE.
Don't forget the other Registrations
- Cancel GST Registration and file the final return.
- Close PF, ESIC and Professional Tax Registrations, if any.
- File the last income tax return.
GST Registration is cancelled by applying in Form GST REG-16 on gst.gov.in, and the final return GSTR-10 is due within three months of the cancellation order. Surrender the Shop and Establishment Registration as your state requires. Keep books and records safely even after closure, since tax authorities can ask questions about past years.
Which closure route fits your situation?
| Situation | Route |
|---|---|
| Company with no business, no assets and no liabilities | Strike off by Form STK-2 |
| LLP with no business for a year or more and no liabilities | Strike off by Form 24 |
| Solvent company or LLP with assets or liabilities still to settle | Voluntary liquidation under the Insolvency and Bankruptcy Code |
| Proprietorship | No ROC closure; cancel GST and other Registrations and file the final tax return |
Key takeaways
- An unused entity still owes filings until it is closed.
- Clear pending filings, liabilities and bank accounts first.
- Company: Form STK-2 (₹10,000 fee). LLP: Form 24.
- Close GST and other Registrations too.
Frequently asked questions
What is Form STK-2?
Form STK-2 is the application a company files with the Registrar of Companies to have its name removed from the register, also called strike off, under Section 248(2) of the Companies Act, 2013. It is filed with a government fee of ₹10,000, a statement of accounts, director indemnities and affidavits, and the special resolution or consent of shareholders.
How do I close an LLP in India?
An LLP that has not carried on business for a year or more, or has closed its business with no liabilities, can apply to the Registrar in Form 24 to strike off its name. All partners must consent, pending Form 8 and Form 11 filings should be completed, and a statement of accounts showing nil assets and liabilities is attached.
Can a company with liabilities be closed by strike off?
Not directly. A company must first extinguish all its liabilities, such as loans, dues to creditors and tax demands, before applying for strike off in Form STK-2. A solvent company with assets or liabilities to settle may instead use voluntary liquidation under the Insolvency and Bankruptcy Code, which is a longer, formal process.
Should I cancel GST Registration before closing a company?
Yes, it is best to cancel GST Registration as part of closure. Apply in Form GST REG-16, file all pending returns, pay tax on any stock held, and file the final return GSTR-10 within three months of the cancellation order. A GSTIN left active continues to create return obligations and late fees even after the company stops.
