Company Strike Off & Winding Up: Complete Guide
When a company ceases operations or becomes dormant, proper closure through strike off or winding up is essential. Leaving a company without formal closure creates ongoing compliance obligations, penalty accumulation, and potential director disqualification. This guide covers the complete process for closing a company in India.
Strike Off vs Winding Up: Key Differences
| Parameter | Strike Off (Section 248) | Voluntary Winding Up (IBC) |
|---|---|---|
| Initiator | Company or ROC | Company (creditors/members) |
| Applicable When | Company not carrying on business for 2 years | Company wants formal dissolution |
| Process | Application to ROC (Form STK-2) | Through NCLT or IBBI |
| Timeline | 3-6 months | 6-12 months |
| Cost | ₹5,000-10,000 (filing fees) | ₹50,000-2,00,000 (legal fees + NCLT) |
| Assets/Liabilities | Must have NIL assets and liabilities | Can have assets/liabilities (distributed/settled) |
| Best For | Dormant companies with no assets | Companies with assets, creditors, or complex structures |
Strike Off Process (Form STK-2)
Eligibility Criteria
- Company has not commenced business within 1 year of incorporation, OR
- Company has not carried on business for 2 immediately preceding financial years
- No pending liabilities (all creditors settled)
- No pending regulatory proceedings
- All assets disposed of or transferred
Step-by-Step Process
- Board Resolution: Pass resolution approving strike off application
- Member Approval: Obtain consent of at least 75% shareholders
- Settle All Liabilities: Clear all debts, dues, and statutory obligations
- File All Pending ROC Forms: Complete all overdue filings (with penalties)
- Close Bank Accounts: Transfer/withdraw all funds
- Obtain NOC: Get no-objection from income tax, GST, and other regulatory authorities
- File STK-2: Submit application on MCA portal with required documents
- ROC Review: ROC publishes notice and waits 30 days for objections
- Strike Off Order: If no objections, ROC strikes off the company
- Gazette Publication: Company name published in Official Gazette as struck off
Fast Track Exit (FTE) Scheme
MCA periodically offers Fast Track Exit schemes for dormant companies, offering simplified closure with reduced penalties. Check MCA notifications for current FTE availability.
Consequences of NOT Closing a Dormant Company
- Penalty Accumulation: Annual filing penalties continue to accrue (MGT-7, AOC-4)
- Director Disqualification: Directors of defaulting companies face DIN deactivation under Section 164(2)
- ROC-Initiated Strike Off: ROC can suo motu strike off, which carries adverse implications for directors
- New Company Restrictions: Disqualified directors cannot be appointed to other companies for 5 years
Frequently Asked Questions
How much does it cost to close a company in India?
Strike off via STK-2 costs ₹5,000-10,000 in government fees plus any pending filing penalties. Voluntary winding up through NCLT costs ₹50,000-2,00,000 including legal fees. Professional CS/CA fees for managing the process range from ₹15,000-50,000.
Can a struck-off company be revived?
Yes, a struck-off company can be revived within 20 years by filing an application with NCLT under Section 252. The applicant must pay all pending fees, penalties, and demonstrate valid reasons for revival.
What happens to directors when a company is struck off by ROC?
Directors of ROC-struck-off companies face DIN disqualification for 5 years under Section 164(2). They cannot be appointed as directors in any other company during this period. Self-initiated strike off does not carry this disqualification.